Harbin, China, Aug. 13 - China Yingxia International, Inc. ("China Yingxia" or "the Company"), a leading provider in the nutraceutical industry engaged in the development, manufacture and distribution of nutritional food products, dietary supplements, and personal care products in the People's Republic of China ("PRC"), today announced it has completed the acquisition of Shanghai Jin Ao Food Co., Ltd ("Jin Ao") a soybean milk manufacturer and distributor based in Shanghai, China. The facilities were acquired from King International Food Corporation Ltd. ("King"), a Sino-Australian joint venture. The Company first announced the agreement on March 28, 2008.
China Yingxia paid the full price of $4.1 million in the first quarter of 2008. Upon the assignment of the business license to China Yingxia on June 26, 2008, the Company has finalized the transaction.
The acquisition entitles the Company to utilize Jin Ao's production equipment for the production of soybean milk and related products under the associated brand Kingland, the production technology and know-how, and marketing and distribution resources.
"We are excited about the potential of this acquisition to strengthen our position in the market for health food related products in China. Scientific research has shown that substituting animal protein with soy protein can lower blood cholesterol levels and benefit overall health, and we are committed to focus on research, production, marketing and distribution of pure soybean- based soy yogurt and soy milk, the two core products of Jin Ao," said Ms. Yingxia Jiao, Chief Executive Officer of China Yingxia. "We have been working to complete the closing of the acquisition and to ensure a smooth integration of Jin Ao into China Yingxia's operations."
Jin Ao utilizes advanced automated food processing technology on the production of soy yogurt and soy milk. The facility currently is producing approximately 2,000 tons of soybean-based products, but has the capacity to reach 14,960 tons annually. The Company expects Jin Ao to generate revenue of $1.6 million during the second half of 2008 with a gross profit of 30% and a net profit margin of 22%. Sales revenue has increased with a compound annual growth rate of 26% from 2005 to 2007. Jin Ao currently has 66 employees with 55% of staff engaged in the sales and marketing department. Jin Ao's current major customers are large metropolitan supermarkets located throughout China. Its top five customers, which contribute to over 31% of sales, include Carrefour, Metro, and other large international chain superstores based in China.
During the second quarter, China Yingxia injected $1.2 million in working capital to cover marketing expenses and to purchase existing inventory and production material. Through an aggressive marketing campaign, the Company expects to ramp up sales and thus better utilize the facility's annual production capacity of 14,960 tons.
The Company expects to secure supplies of high quality raw material to Jin Ao at low cost through contracts with soybean farmers in Heilongjiang province where the Company is headquartered. In times of high food prices, access to raw material will provide a competitive advantage.
Jin Ao is a pioneer in producing pure soybean-based products in China. The facility's soy milk and soy yogurt products do not contain any dairy, and are as such better suited for the Chinese market, where an inability to digest lactose is common. In addition, Jin Ao's production process ensures full extraction of the vegetable protein contained in soybean, making it a unique, healthy product.
''In connection with the Beijing Olympics, one of our products, sugar-free soy milk in a one liter container, has been appointed to be one of the official Olympic products sold at the Metro Supermarket in China. Our current market is focused in Shanghai and Shenzhen where over 80% of our revenue is generated. We plan to significantly expand the geographic distribution of Jin Ao's products across China. With the increasing standards of living in China, the soy milk market holds enormous growth potential as more customer segments are drawn towards healthier foods for a variety of reasons. Jin Ao's already established brand, Kingland, is a well known, high quality brand in soy protein related health food products,'' said Ms. Yingxia Jiao, Chief Executive Officer of China Yingxia.
About China Yingxia International, Inc
China Yingxia International, Inc., through its 100%-owned subsidiary, Harbin Yingxia Industrial Group Co., Ltd. ('Yingxia'), is primarily engaged in the development, production and sales of health food products in China. Yingxia is located in the Province of Heilongjiang, Peoples Republic of China. Yingxia's products include soybean-based foods and drinks, longgu golden millet enriched products, organic rice products, cactus-based herbal supplements, personal care products, Nestle products, and organic rice products.