New Dragon Asia to buy Shandong Long Feng Peng Lai Flour Co; Yangpu mill to be biggest in China

by Chrystal Shannon
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HONG KONG, CHINA — New Dragon Asia Corporation is to acquire Shandong Long Feng Peng Lai Flour Co. Ltd. of Shandong, China.

Total production capacity of Shandong Long Feng Peng Lai is currently 32,000 tonnes a year (with 2001 sales worth approximately U.S.$4.7 million), about 20% of New Dragon’s total flour milling capacity following completion of the acquisition.

Announcing the acquisition, Song Xue Jun, chairman and president of New Dragon Asia Corp., said "This acquisition is the first step of our strategy to acquire additional plants with strong regional brand recognition in order to increase our market share in China. The market for instant foods in China is expected to grow 25% over the next year, and Shandong positions us to capture a large part of the market," Jun said.

Shandong Long Feng Peng Lai Flour Co. Ltd. produces high-quality wheat flour, primarily for domestic sale within China. The company’s milling facilities, which incorporate state-of-the-art equipment and technology, are certified to ISO 9002 standards, as are all of New Dragon’s facilities. Completion of the acquisition is anticipated for April 2002.

New Dragon operates four food processing plants on mainland China and is ranked among the top three flour manufacturers and instant noodle producers in the world’s most populous nation. New Dragon has a well-established network of 200 distributors and 20 regional offices in more than 27 Chinese provinces. New Dragon Asia also produces and sells animal nutrition products in the United States and is listed on the U.S. Stock Exchange.

Meanwhile, Haikou Agriculture, Industry and Trading Co. Ltd., has begun construction of China’s largest flour mill to date. The 500,000-tonne capacity wheat mill will use imported equipment.

With an investment of some U.S.$103.6 million, The Yangpu Flour Processing
Factory in the Yangpu Economic Development Zone, Hainan province, is scheduled for completion in five years. The first phase of the project is due to come on line in two years, with a flour output capacity of 500 tonnes and at a cost of about U.S.$24.1 million.