Inner Mongolia Yili Industrial Group targets a net profit of 600 million yuan (US$84.5 million) this year after losing money last year due to rising costs brought about by a stock-incentive plan.

China's largest dairy company also said sales revenue is projected at 21.6 billion yuan this year, according to its statement to the Shanghai Stock Exchange yesterday.

Yili said it would step up efforts in developing suppliers, upgrading its product structure by adding more value-added items and increasing operational efficiency to stay competitive and ensure profitability, the statement said.

Yili's shares rose 1.48 percent to close at 24 yuan yesterday.

The company reported a loss of 115 million yuan last year due to a stock-incentive plan. It churned out a profit of 145.5 million yuan a year earlier, the statement added.

Yili, the dairy partner of 2008 Beijing Olympics, said it expected market demand for dairy products to remain upbeat in the following years on rising income.

Yili said intense market competition has dented its profit. It also faces mounting cost pressure brought by soaring prices of raw materials and a tight supply of fresh milk and milk powder.

"Yili's core business is likely to see stable growth in the following years,'' a Shenyin Wanguo Securities report said, citing analyst Wang Peng.

He said domestic demand for dairy products is seen to rise 12.8 percent annually to 38 million tons by 2010.

(Shanghai Daily March 12, 2008)