HONG KONG, June 17, 2004 (PRIMEZONE) -- New Dragon Asia Corp. (AMEX:NWD) today announced it has acquired the assets of a flour manufacturing facility valued at $1.33 million, which is located in Penglai City of Shandong Province within the People's Republic of China. Terms were not disclosed.
"The acquisition will expand New Dragon Asia's production capacity by approximately 30 percent and contribute an estimated $3.0 million in additional sales annually. Furthermore, it will provide resources to address China's rapidly growing economy and strong consumer and commercial demand for instant noodles and other flour-related products," said Heng Jing Lu, chief executive officer.
He emphasized the company's ongoing commitment to expansion through organic growth and its intention to continue to pursue an aggressive strategic acquisition program.
The newly acquired facility, which utilizes Swiss machinery as well as production technology from Japan and Korea, has daily production capacity of 100 tons, operating in an area of approximately 17,000 square meters. It currently serves the north, northeast and central plains regions of China.
Lu said that the acquisition complements the company's ongoing strategy to expand New Dragon's geographic reach and product mix, with a particular focus on attracting commercial customers. As an example, he cited a recently announced follow-on order for specific use flour from purchasing agents of KFC in China. "The production of flour with specific commercial applications represents an important component of New Dragon's growth strategy and we intend to pursue these markets aggressively," said Lu.
He added that the company is focused on expanding its presence in international markets, as well as urban markets in China. Export sales in 2003 represented approximately $1.14 million. Lu noted that the company recently received trial orders for the Canadian market. He said that Korea continues to be an important market, with New Dragon exporting approximately 80 million (35g) packets of noodles to Korea in 2003, representing approximately 3 percent of total sales.
Lu noted the company is continuing its efforts to penetrate supermarkets and chain stores in China's urban areas by focusing on raising consumer awareness of New Dragon's name and products. "Once we establish stronger brand awareness of our products in these markets, we will be able to utilize distributors -- resulting in reduced selling expenses and higher margins," Lu said.
About The Company
Headquartered in Shandong Province, P.R.C., with a corporate office in Hong Kong, New Dragon Asia Corp. is engaged in the milling, sale and distribution of flour and related products, including instant noodles, to retail and commercial customers throughout China. The company markets its well-established product line through a network of 216 key distributors and 16 regional offices in 27 Chinese provinces with an aggregate production capacity of approximately 110,000 tons of flour and more than 1.1 billion packages of instant noodles.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the company's operations and financial performance and condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; changes in consumer preferences and tastes or perceptions of health-related issues; effectiveness of advertising or market-spending programs; market or weather conditions that may affect the costs of grain, other raw materials and fuel; the impact of labor matters; changes in laws and regulations; fluctuations in foreign exchange and interest rates; risks commonly encountered in international trade; and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.