On March 27, China Foods (00506.HK) released its annual report as of December 31, 2017. During the report period, China Foods derived total revenue of HK$ 15.461 billion (+37%) from its ongoing operational business and registered net profit of HK$ 2.27 billion (+205%), hitting a record high since its IPO. The net profit for ongoing operational business increased by 232% up to HK$ 1.83 billion.
In 2017, China Foods became a specialized beverage business platform under COFCO Corporation. In the same year, COFCO Coca-Cola Beverages, in which China Foods holds a controlling share, became Coca Cola’s fifth largest global bottling partner after further expanding its operation region and business scale through Coca Cola China’s realignment of “two bottling companies”. Under the agreement with Swire Beverages and Coca-Cola Bottling Investments Group, COFCO Coca-Cola Beverages sold its three bottling factories in Jiangxi, Hainan and Zhanjiang as well as stakes in four factories in Guangdong, Hangzhou, Nanjing and Shanghai for a lump sum of HK$1.57 billion, constituting a key factor that drove the profit of China Foods to a record-high level. As for revenue derived from ongoing operational business, COFCO Coca-Cola Beverages continued to deliver steady growth. With successful merging of newly-acquired bottling factories, the Company achieved stable transition and improved performance.
China Foods managing director Luan Xiuju noted that 2018 is the first whole year for China Foods to operate independently as a specialized beverage business platform. At present, given the relatively low consumption of non-alcoholic instant beverages per capita in China, the industry has more room for further development. As COFCO Coca-Cola Beverages evolves towards becoming a total beverages company, the sustained growth of traditional advantageous categories, the rollout and upgrade of new categories, and the consolidation benefits brought about by connected regions after realignment will significantly enhance China Foods’ profitability.