Beijing Sanyuan Foods Co Ltd (Sanyuan) has posted a robust 87 percent growth in full year net profit, benefiting from the sharp decline in sales of other dairy firms due to the melamine scandal.

Sanyuan's growth momentum is expected to continue this year too, as the nation's top two dairy producers - Mengniu and Yili - have yet to recover, said analysts.

Sanyuan said yesterday that its net profit for 2008 surged by 87.2 percent from a year before to 40.75 million yuan, on sales of 1.41 billion yuan, up 28.2 percent.

The company remained unscathed from the tainted milk crisis last year that had brought down Hebei Sanlu, the largest milk powder maker and seriously tarnished the image of Mengniu and Yili, both of which had predicted losses for 2008. Mengniu said earlier this year that its 2008 losses could reach 900 million yuan.

Sanyuan shares rose by the 10 percent daily limit yesterday to close at 7.33 yuan.

"The business growth is within our expectations," Liu Xiaofeng, dairy analyst, China Minzu Securities said. "It is mainly driven by Sanyuan's increasing market share in the Beijing market," he said.

Among the corporate sales of 1.41 billion yuan, 870.73 million yuan was from Beijing, up by 63.11 percent year-on-year, while sales from the other regions fell by 3.24 percent.

In the past five years Sanyuan's main market, Beijing, had been firmly controlled by Mengniu and Yili. The melamine scandal saw Sanyuan seize the opportunity and establish itself as the lead player.

To enhance its national presence, Sanyuan applied and won the bid for part of Sanlu's assets for 616.50 million yuan earlier this month.

Sanyuan yesterday said in its announcement that the company expects to achieve sales of 1.8 billion yuan this year, or a 27 percent year-on-year growth.

"This is a conservative estimation. The target is not that difficult, given that consumer confidence in Mengniu and Yili are still low and they will keep losing money for some more time," said Liu.

Sanyuan said the company intends to add new production lines and develop new markets this year.

(China Daily March 19, 2009)