China Yurun Food Group Limited Announces its Annual Results for the Year Ended 31 December 2010

By China Yurun Food Group Limited, PRNE
Monday, March 28, 2011

Turnover Increased Significantly by 54.8% to HK$ 21,473,000,000

HONG KONG, March 29, 2011 -

         Financial Highlights              For the year ended 31 December
           (HK$ in million)
                                             2010        2009     Change

    Turnover                               21,473      13,870     +54.8%
    Gross profit                            3,098       2,161
    (Gross profit margin)                   (14.4%)     (15.6%)   +43.3%
    Profit attributable to shareholders     2,728       1,745
    (Net profit margin)                     (12.7%)     (12.6%)   +56.3%
    Diluted earnings per share           HK$1.551    HK$1.074     +44.4%
    Proposed final dividend per share     HK$0.20     HK$0.15     +33.3%

China Yurun Food Group Limited ("Yurun Food" or "the Company", and
together with its subsidiaries, the "Group")(SEHK: 1068), a leading
vertically-integrated meat-product processor and supplier in China, today
announced its annual results for the year ended 31 December 2010 (the

During the Year, the Group recorded a turnover of HK$21,473 million
(2009: HK$13,870 million), representing a 54.8% growth over the same period
last year. In spite of volatility in hog prices during the Year, the Group
was able to significantly increase the sales volume of its products by
leveraging on the competitive edge of its "Yurun" brand, its optimized
nation-wide production network as well as abundant hog supply, therefore
driving the strong growth of its business.

During the Year, the Group's gross profit and net profit were
HK$3,098 million (2009: HK$2,161 million) and HK$2,728 million (2009:
HK$1,745 million) respectively, representing a considerable growth of 43.3%
and 56.3% respectively as compared to that of 2009. The Group's gross profit
margin slightly decreased by 1.2 percentage points to 14.4%, as compared to
15.6% in the same period last year. The slight decrease was attributable to
the segment mix change with extraordinarily strong growth of the upstream
business, which has a relatively lower gross margin. However, our
profitability remained strong with four major profitability ratios at their
historical best levels, namely the gross profit margin of our upstream
segment at 10.5%, the gross margin of low temperature meat products ("LTMP")
at 29.9%, the selling, general and administrative expenses as a percentage of
turnover at 5.1%, as well as the net profit margin at 12.7%.

The Board of Directors of the Company recommended a final dividend of
HK$0.20 per share for the Year (2009: HK$0.15). This final dividend together
with the interim dividend of HK$0.20 per share (2009: HK$0.15), will make a
total dividend of HK$0.40 (2009: HK$0.30) per share for the year ended 31
December 2010

Mr. Zhu Yicai, Chairman of Yurun Food said, "Amid the challenges
posed by increasing hog prices and production costs in 2010, by leveraging on
its experienced management and strong brand name recognition, as well as the
thorough implementation of the market based pricing strategy of upstream
chilled meat segment, and the continuous optimization of product mix and
distribution channel of downstream LTMP, the Group not only effectively
mitigated the pressures from various rising costs, but also propelled its
profitability to new heights. The Central Government aims to eliminate
outdated hog slaughtering capacity which does not conform to the hygienic and
technological management standards across the nation before 2015, further
facilitating industry consolidation. With its leading production capacity
network and brand name recognition, Yurun Food will be able to drive the
sustainable development of its overall business. In addition, with the
enlarging scale of industry consolidation and a continuously improving
product mix, Yurun Food proposes to achieve strategic upstream and downstream
expansion through greenfield projects, mergers and acquisitions, as well as
the enhancement and upgrading of equipment, with an aim to further strengthen
its leading position in the industry and capture the tremendous business
opportunities brought by industry consolidation."

Mr. Zhu continues, "Ensuring the highest quality of our products
has always been Yurun Food's philosophy. With our unrelenting effort and
determination in our quality control, we have established a positive image of
product quality and food safety among consumers. Benefited from robust market
demand and our brand, Yurun Food maintained its growth in 1Q2011. Looking
forward, the Group will continue to implement the most stringent quality
control procedures to ensure that rigorous tests are in place throughout
processes ranging from raw material procurement to production and in line
with national and international food safety standards. We will remain
committed to the highest level of quality and safety, and by upholding the
philosophy of "You trust because we care", we strive to bring meat products
of the highest quality to consumers as well as satisfactory returns to

Business Review

The Group's business is divided into downstream processed meat
products and upstream chilled and frozen meat segments.

                                 For the year ended 31 December
     (HK$ in million)
                               Turnover        Change     of Segment
                               --------        ------      Revenue
                            2010      2009        %      2010    2009
                            ----      ----               ----    ----
    Upstream Chilled
     and Frozen Meat:
        - Chilled Pork     15,198     9,421    +61.3%     81%     80%
        - Frozen Pork       3,635     2,325    +56.4%     19%     20%
        - Segment Total    18,833    11,746    +60.3%    100%    100%
     Processed Meat
        - LTMP              3,525     3,081    +14.4%     92%     94%
        - HTMP*               296       208    +42.9%      8%      6%
        - Segment Total     3,821     3,289    +16.2%    100%    100%
     Elimination           (1,181)   (1,165)
    Total Revenue          21,473    13,870    +54.8%
    -------------          ------    ------    ------

    * HTMP is defined as high temperature meat products.

                                For the year ended 31 December

                                       Gross Margin         Change
                                      2010     2009    Percentage Points
    Upstream Chilled and Frozen
     Meat, inter alia:
        - Chilled Pork                11.3%    11.5%        -0.2ppt
        - Frozen Pork                  7.2%     6.3%        +0.9ppt
        - Overall                     10.5%    10.4%        +0.1ppt
    Downstream Processed Meat
     Products, inter alia:
        - LTMP                        29.9%    29.0%        +0.9ppt
        - HTMP                        22.7%    21.4%        +1.3ppt
        ------                        -----    -----        -------
        - Overall                     29.3%    28.6%        +0.7ppt
        ---------                     -----    -----        -------

Production Capacity

As at 31 December 2011, slaughtering capacity of the Group was
35.60 million heads per year, representing an increase of 10.05 million heads
as compared to 25.55 million heads at the end of 2009, while the Group's
annual capacity of downstream meat processing was 304,000 tons. The Group
will continue to expand its capacity, accelerate the enhancement of its
nation-wide production capacity in the coming years and aim to reach a
slaughtering capacity of 70 million heads per year, as well as a downstream
capacity of 600,000 tons per year by 2015, so as to further strengthen its
leading position in the industry and capture the tremendous business
opportunities in both upstream and downstream markets.

Product Quality and R&D

Quality control and food safety are crucial to the success of the
Group as well as the whole industry. The Group has implemented rigorous
internationally recognized internal quality controls in every production
process, ranging from procurement, production, logistics to sales, to ensure
our products are in line with national and international food safety
standards. Looking ahead, Yurun Food will continue to enhance its quality
control procedures and maintain highest level of hygiene and product safety
in our production, and from transportation to distribution. Besides, the
Group continued to expand its R&D team and strengthen its research efforts,
focusing on mid-to-high-end products and new competitive products, as well as
to lead the trends of meat product consumption in order to gain competitive


Following the continuous prosperity of the Chinese economy and
continued improvement in the business environment, as well as a series of
favorable policies by the Chinese Government to stabilize hog prices and
support the development of the hog slaughtering industry, the hog
slaughtering and meat products market is set to maintain its ongoing

The Chinese Government promulgated the "Guideline for National
Hog Slaughtering Industry Development (2010-2015)" in late 2009. The plan
aims to accelerate industry consolidation, significantly eliminate outdated
hog slaughtering plants nationwide and systematically increase the sales
percentage of chilled meat and small packaged pork products in China. As a
leading enterprise in the hog slaughtering and meat products industry, the
Group will further strengthen its advantages in its production network,
brand, distribution and food safety standards, which will become a strong
driving force for future development of its core businesses of chilled meat
and LTMP, allowing the Group to further expand its market share, and
strengthen its leading status in the industry to ensure long-term business

In the future, Yurun Food will continue to steadily enlarge its
upstream and downstream production capacity, further leverage on its
competitive advantages in branding and products, so as to capture the
business opportunities from the rising demands for quality meat products in
the market. Specifically, our 100,000 ton production facility in Nanjing,
which is under construction and is expected to commence operations next year,
will become a significant driving force for continued downstream growth in
the future.

Looking forward, Yurun Food will continue to thoroughly implement
stringent quality control procedures, and steadily realize its capacity
expansion strategies, so as to increase its competitiveness and market share,
as well as to enhance its brand competitiveness, thus fuelling business
development and maximizing returns for shareholders.

For further details about the Group's 2010 Annual Results
Presentation, please kindly click:

About China Yurun Food Group Limited (Stock Code: 1068)

Leveraging on its vertically-integrated business model and strategically
located production plants, Yurun Food is the leading meat-processor and meat
products supplier in China. With its well-established food brands,
state-of-the-art production facilities and diversified distribution channels,
Yurun Food has achieved a solid track record with robust growth for five
consecutive years. By further enhancing its brand names and product quality,
Yurun Food will further strengthen its leading market position. Yurun Food
was included in MSCI Global Standard Index (MSCI China Index) on 29 August,
, which is an important recognition of Yurun Food as a leading company
in the meat processing industry by the investment community.

Company website:

For further information, please contact:

    China Yurun Food Group Limited
    Fax: +852-3927-3300

    Elite Investor Relations Limited
    Investor Relations                 Media Relations
    ------------------                 ---------------
    Ms Cindy Xin                       Mr Bunny Lee
    Tel: +852-3183-0226                Tel: +852-3183-0282
    Fax: +852-2155-9165                Fax: +852-2155-9165
    Email:      Email:

China Yurun Food Group Limited, Email: ir at, Fax: +852-3927-3300; or Elite Investor Relations Limited, Ms Cindy Xin, Investor Relations, Tel: +852-3183-0226, Fax: +852-2155-9165, Email: at, or Mr Bunny Lee, Media Relations, Tel: +852-3183-0282, Fax: +852-2155-9165, Email: bunny.lee at

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