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CASTLE MALTING NEWS in partnership with www.e-malt.com Greek
15 February, 2006



Brewing news China: Kingway Brewery aims over 30% jump in beer sales

Kingway Brewery Holdings Ltd. is planning to sell 700,000 tonnes of beer in 2006, a jump of more than 30% from 2005, its top executive said on February 13, according to Reuters.

Kingway, a major brewery in affluent southern China, sold 35% more beer in 2005, Chairman Ye Xuquan told reporters from their headquarters in the city of Dongguan. The company has previously said it sold 390,000 tonnes in 2004.

Shenzhen's leading regional beer maker Kingway Brewery will continue investing in new factories to support steady growth in beer sales, according to Asia Pulse News.

The Chairman of the Company, Mr.Ye Xuquan said on February 13 that the company plans to spend 390 million yuan (US$48.1 million) for a new brewery in Southwest China this year. That plan is awaiting board approval by the end of the week. The company also announced it had invested another 800 million yuan (US$98.6 million) in the second phase of the newly operated brewery, which will at least double the current production capacity upon completion.

“The company hopes such moves will help maintain a growth rate of 35 per cent and a two-digit profit surge. The new investment destination will most likely be Chengdu, capital of Sichuan Province, according to a company insider. This will expand the Shenzhen-based company's production network to cover nearly the whole nation except East China.”

----Kingway Brewery Holdings Limited announced on February 15 that the Company wishes to clarify that the comments made by Mr Ye Xuquan, the Chairman of the Company, were not intended to be profit forecasts by the Company and must not be construed as such.

The Company published on 16 September 2005 unaudited consolidated financial statements for the six-month period ended 30 June 2005, which showed year-on-year, increases of 21.7% and 12.2% in gross profit and net profit respectively. The Company is still in the process of preparing audited financial statements for the year ended 31 December 2005 and shareholders and investors should not rely on any financial information other than those officially published by the Company. Investors and shareholders of the Company are therefore advised to exercise caution when dealing in the securities of the Company.-----

The latest investment of the Hong Kong-listed company in South China's Guangdong Province, a brewery that will produce 200,000-tonne of beer annually upon the completion of the first phase, was put into official operation yesterday.

Another brewery underway in North China's Tianjin will add another 200,000-ton production capability to the company this April, which will allow the company to produce accumulative 1 million tons of beers a year.

"To fuel our fast growth, the annual expenditure by 2010 will amount to about 400 million yuan (US$49.3 million)," Ye forecast. The company is expected to generate 350 million yuan (US$43.2 million) cash flow this year, which could "definitely support the construction of a new brewery," he said. However, the company is not ruling out the possibility of taking out a bank loan.

Already with US$38 million in bank loans, the company is allowed to borrow another 300 to 400 million yuan (US$37.0 to 49.3 million) from the bank this year before the ratio reaches the "most reasonable and safest 30 per cent level," he explained.

To avoid competition with Dutch brewer Heineken, which holds a 21-per cent stake in Kingway, Ye said Kingway will not set up a new plant in East China, where Heineken is developing.





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