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CHINA: China Water & Drinks acquires Shenyang connections

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China Water & Drinks has acquired a majority stake in purified bottled water company Shenyang Aixin. The bottled water producer and distributor said yesterday (28 August) that it paid US$1.06m and 177,300 shares of its common stock for the 67% stake in the Liaoning province-based company.

Shenyang Aixin, which currently has an annual production capacity of 80m litres for purified bottled water, has plans to spend between US$1-$1.5m modifying its facilities and doubling its production capacity, said the company.

China Water & Drinks will also invest between $1m and $1.5m in a new production line to expand the capacity and modify existing facilities at Shenyang. The plant is expected to contribute annual revenue of around $7.5m.

China Water plans to use Shenyang Aixin's distribution network to push its Darcunk brand in Shenyang City, as well as shift the focus at its Changchun plant purely to its local market.

China Water & Drinks CEO Xing Hua Chen said: "This is a strategic location for servicing the markets of Shenyang City and its surrounding areas. By reducing our transportation costs we will improve our gross margin. Shenyang City represents one of the largest per capita consumption of bottled water cities in China and is an important market to build out our brand for quality purified bottled water."

The bottled water company recently reported that operating income in the six months to the end of June was up by 17.2% on the corresponding period a year earlier, hitting US$5.6m. The rise came on the back of a 16.2% lift in sales, which totaled $18.7m for the half. Net profit also came in at $5.6m, compared to $4.8m in H1 2006.

For the second quarter, sales totaled $12.5m, a leap of 41.5%. Operating profit was up a similarly impressive 48.4% at $3.9m, while net profit for the quarter was up 48.7%, also hitting $3.9m. The company credited the strong performance to an increase in demand for bottled water in the summer months and expanded production.


Sectors: Soft drinks, Water

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