Dukang Distillers

Dukang Distillers: Grp recently spoke in China Investment Strategies 2013 conference in Shenzhen. Grp is currently very strong in Henan province, but looking to be a national name. Grp is the leading brand in Henan Province, home to over 103m people, which currently has a baijiu market size of Rmb35b, or around 10% of China’s entire baijiu mkt. China’s baijiu market is a fast-growing but highly fragmented sector with a CAGR of over 30% for the past five yrs and over 5,000 baijiu liquor enterprises operating across the country. Total baijiu sales across China from all players in 2011 amounted to Rmb374.7b and profits stood at Rmb57.2b, while in the first half of 2012, the baijiu sector maintained an impressive 17.2% growth. Grp is on track to increase annual grain alcohol production capacity for the Dukang brand by around 40%, or 3,000 tonnes, in 2013. Dukang is also increasing its distribution channels to attain national coverage, with the total number of distributors increasing from 170 to 222, covering 25 provinces in 2012. For FY12, Dukang’s rev rose 28.1% yoy toRmb1.83b on faster sales of products sold under the Dukang brand. The sales mix from Luoyang Dukang’s premium series and regular series increased to 26.6% and 34.8%, respectively, from 22.1% and 32.0% for FY2011. More recently, Dukang saw its bottom line surge nearly 75% yoy during the July-Sept 2012 quarter (1Q2013) to just under Rmb 64m, boosted mainly by the contribution from the Luoyang Dukang brand series. Note also that the firm recently inked an agreement with Taiwan's Tobacco and Liquor Corp (TTL) for the latter to produce Japanese sake products that will be sold in PRC under the Dukang brand name.