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Wednesday, 1 August 2007

United Food Holdings 2Q results on 1st Aug 2007

I last commented the acute live pigs shortage in PRC might help United Food Holdings (Unifood) to turn around. Lets see whether there is evidence in the 2Q results to suggest this.

2Q results
On the whole, profits attributable to shareholders tumbled 42.6% year on year, comparing 2Q '07 with 2Q '06. Quoting the financial statement issued by Unifood:
The Q207 should be read with the following in mind:
The heavy impact of a poorer performance in Q107 when aggregated with Q207;
There is an improvement (on pre-tax profit ) in Q207 over Q107 (for processed meat products, fresh
chilled frozen pork, pig rearing and animal feed divisions)

Is there really an improvement?

2Q 2007 compared with 1Q 2007 (Profit before tax)

1Q 2007 2Q2007 Change % Change
Processed meat products 7697 8474 777 10.09%
Fresh, chilled and frozen pork 8360 8937 577 6.90%
Pig rearing 3538 5254 1716 48.50%
Animal feed 3860 6419 2559 66.30%
Healthcare supplements (1,320.00) (1,160.00) 160 12.12%
Soybean processing 17461 12194 (5,267.00) -30.16%

There are indeed an improvement across most segments, particularly Pig rearing and Animal feed segment as anticipated due to the acute live pig shortage in PRC. Soybean processing is however disappointing.

Comment on performance
The results is somewhat inline with expectation (my expectation, not market analysts) as already pointed out in my earlier post on Unifood. However, I am still not optimistic that acute live pig shortage (resulting in improvement in 2 segments) is enough to breathe new live into Unifood.

Next quarter, 3Q '07, will allow more light to be shed on the chance their revival. Until then, this cigar butt (50% discount to NTA of 2.04 RMB ~ 40.8 cts SGD compared to last done price of 19 cents today, not that accurate due to market correction) will continue to remain neglected by the market.

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