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AGRIBUSINESS | Tony Chua, Hong Kong
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North Asia Strategic profit up 239% to $7mln

Hi-tech distribution & services division increased 167.7% and 19.8% respectively as Group continues to monitor risks.

North Asia Strategic Holdings Limited (“NAS”, and its subsidiaries and jointly-controlled entities, collectively the “Group”) on Thursday announced its first quarter results for the three months ended 30th June 2010.

The Group continued its positive profit trend and recorded unaudited consolidated revenue of approximately HK$954,553,000, representing an increase of approximately 43.5% from the same period last year. At the same time the Group recorded a total unaudited consolidated net profit attributable to owners of the Company for the quarter of approximately HK$6,529,000, an improvement of 239.3% from the same period last year. Coupled with management actions taken to streamline operations and improve efficiency, three of the four business divisions were profitable in the quarter with the branded food division continuing to narrow its operating loss per store with increasing scale, according to an NAS report.

“Coming out of recession, we have captured the leading position in markets we serve. We are continuing to see strengthening and stabilisation of customer demand and prices across our businesses in the last quarter. With actions taken in the past quarters our businesses have continued their earnings improvement trend, I’m pleased that we achieved a significant increase in both the Group’s top and bottom lines. With an improving business outlook, the management teams are accelerating the growth plans that were in execution before the downturn to increase and realise both company and shareholder value,” said Chief Executive Officer John Saliling.

CORE OPERATING BUSINESSES

Fishmeal and seafood product division

For the fishmeal trading business, the Group continues programs to manage pricing and demand, by continuously monitoring market data and implementing smaller lot purchases (made possible by the change in the fishing policies in South America). This benefited the core fishmeal trading business of the Group’s 40% jointly-controlled fishmeal and seafood product division conducted through Coland Group Limited and resulted in a shared revenue of approximately HK$100,019,000 with a net profit of approximately HK$11,703,000 in the quarter, versus revenue of approximately HK$130,435,000 and a net profit of approximately HK$978,000 for the corresponding period last year. The continuing growth of value added businesses in feeds and fish oil in both domestic and export markets were satisfactory.

Demand for fishmeal has started to rebound in July 2010. Going forward, the Group will continue to take a well balanced approach in monitoring its trading operation and growing the processed product businesses.

Hi-tech distribution and services division

With improving customer orders and management actions taken on cost control and operation efficiency, this division recorded a revenue of approximately HK$325,260,000 and a net profit of approximately HK$3,709,000 for the quarter. The quarter’s sales increased by about 167.7% and 19.8% respectively compared to the corresponding period last year and preceding quarter.

“The consumers’ sentiment continues to improve after the quarter end with increasing demand from global accounts as global electronics manufacturing companies are increasing capacities at a rapid rate. Our management team is focused to further build on our strong distribution and sales capability in China, Vietnam and India which serves the majority of leading manufacturing customers in high technology around the world.” said Mr. Saliling.

Chemical operation division

For the chemical operation division conducted through TKC, the Group shared 33.74% of its revenue of approximately HK$498,285,000 with a net profit of approximately HK$29,193,000 for the quarter, versus revenue of approximately HK$391,790,000 with a net profit of approximately HK$17,438,000 for the corresponding period in last year. During the quarter, demand and pricing improved across TKC’s product lines, especially spandex.

On 13th July 2010, the Group completed the disposal of the entire stake held by North Asia Strategic (Singapore) Pte. Ltd., a subsidiary of the Group, in TKC for a cash consideration of KRW77 billion (equivalent to approximately HK$500.5 million as disclosed in the company’s circular dated 22nd June 2010).

With the disposal of TKC completed on 13th July 2010, the turnover and earnings from TKC will no longer be included in the Group results subsequent to the completion of disposal.

Branded food division

During the quarter, the branded food division continued to gain good momentum with opening of one restaurant in a renowned residential district in Tuen Mun of the New Territories. The division recorded revenue of approximately HK$30,988,000 with narrowing loss of approximately HK$7,252,000 for the quarter. With the improved economies and increasing presence in the Hong Kong market arising from increased number of restaurants and management actions taken to streamline operations and managing efficiency, operating loss at restaurant level per restaurant was further reduced by approximately 8.8% in the quarter compared to the preceding quarter.

Mr. Saliling said, “We have opened 16 restaurants in renowned retail spots, commercial districts and residential districts in Hong Kong and we will continue to look for attractive locations to grow our business. With the improving economy and increasing scale of our presence, we will focus to execute plans to accelerate financial performance improvement.”

Outlook and strategy

Although the global economy has not fully stabilised, the Group continues to monitor the risks to the business, the management are continuing to observe continual improvement in customer demand.

Mr. Saliling concluded, “Our focus will continue to be active management to capture new sales, continuing to align costs and closely monitor risks. Our companies are leaders in their respective markets and we will continue to build their strength by working with their management teams to improve capability and efficiency. We will continue to seek attractive investments to grow shareholder value.”

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