Shares of three listed units of State-owned China National Cereals, Oils and Foodstuffs Corp rose sharply on Wednesday [22 February 2017], after the country’s biggest food supplier by volume announced further plans for mixed-ownership reform on Monday. COFCO Biochemical (Anhui) Co Ltd stocks reached their 10 percent daily limit in early trading hours, and settled at 14.66 yuan ($2.13) per share, up 6.85 percent from the opening price. Another two listed subsidiaries-COFCO Property (Group) Co Ltd and COFCO Tunhe Sugar Co Ltd-also closed more than 3 percent higher than their opening prices…Full Article: Feb 2017

Key Points

  • In 2017, subsidiaries of COFCO Group’s fodder (animal feed), liquor and tea businesses will try to go public (IPO).
  • COFCO Group announced they would implement mixed-ownership reform in each of its 18 specialized divisions by 2018. Mixed-ownership reforms include transformation, restructuring, IPO of core assets, and Employee Stock Ownership Plans (ESOP). A total of 12 out the 18 specialized divisions have diversified their shareholding structures, with four of these divisions (real estate, engineering technology, meat processing and packaging) having received non-state (government) investments in 2016.

ChinaAg Comments

  • By 2020 (end of China’s 13th Five-Year Plan), COFCO plans to have the annual capacity to process 30 million MTs of corn, 20 million MTs of soybeans, 10 million MTs of wheat, 10 million MTs of rice, and 5 million MTs of sugar.
  • In December 2016, Thailand’s Charoen Pokphand Foods (CPF) acquired COFCO Meat Suqian for ~US$27.4 million via Chia Tai China Investment (CTCI). CPF owns 50.43% of Chia Tai China Investment (CTCI) via CP China Investment, a wholly owned subsidiary of C.P. Pokphand Co. (HKG:0043).
  • In November 2016, COFCO Meat Holdings (HKG:1610) was listed on the Hong Kong Stock Exchange.
  • In October 2016, COFCO announced it would invest US$27 million to further develop its dock complex [former Noble Group] at the Port of Timbúes, Santa Fe Province [Greater Rosario]. This includes improving its grain processing and loading/unloading facilities.
  • In August 2016, COFCO announced it would buy out the remaining outstanding stake in Nidera BV from Cygne BV.
  • In July 2016, COFCO and Chinatex merged, with COFCO subsuming Chinatex within its corporate structure.
  • In late June 2016, COFCO announced it would open a crop trading office in Winnipeg, central Canada. COFCO’s Winnipeg office will focus on canola (rapeseed), canola oil, canola meal, wheat, barley, and soybeans. In general, Canada harvests these crops from August to October.
  • In June 2016, COFCO announced it would reduce the number of legal entities under its control by 20%. In total, COFCO noted 65 subsidiaries will need “improvement”, 95 subsidiaries will need better management, and 102 subsidiaries will be to be restructured via mergers and acquisitions. For example, acquired in November 2014, China Huafu Trade & Development Group added 70 subsidiaries to COFCO’s payroll. Huafu Group manages non-staple food reserves in addition to processing and distribution of food products.
  • In May 2016, two new COFCO funded (US$75 million) shipping berths opened in the Mykolaiv Commercial Sea Port, Mykolaiv Oblast, Ukraine. Located along the Black Sea, the COFCO-backed berths at the port will have an annual grain (e.g. corn) transit capacity of 2.5 million MTs, along with 143,000 MTs of storage facilities.
  • In March 2016, COFCO Property announced it would raise CNY 5 Billion via the private placement of shares. COFCO Property is traded on the Shenzhen Stock Exchange (000031) and is a subsidiary of the state-owned China National Cereals, Oils and Foodstuffs (COFCO) Corporation. According to a representative of Shanxi Securities, COFCO is looking to increase profits by investing in real estate in Beijing, Shenzhen, Guangdong, Yantai, Hangzhou, and Nanjing.
  • In January 2016, the head of SinoGrain (Zhao Shuanglian) became the new chairman of COFCO Corp as Ning Gaoning was tapped to lead Sinochem Group.
  • In 2015, COFCO’s revenue totaled CNY 405 billion (~US$62 billion). However, COFCO’s net profit was only US$200 million and the company also received CNY 4.7 billion (US$719 million) in government subsidies.
  • In December 2015, COFCO announced it would buy out the remaining 49% of Noble Group’s Noble Agri division.
  • In April 2014, COFCO acquired a 51% stake (estimated at US$1.5 billion) in Noble Group’s Agribusiness Division (trades in grains, oilseeds, sugar, cocoa, cotton, and coffee).
  • In February 2014, COFCO purchased a 51% stake (estimated at US$1.2 billion) in Nidera, a Dutch grain trading company. As a result, COFCO will be able to source oilseeds, corn, soybeans, and edible oils directly from Brazil, Argentina, and Uruguay.
  • From 2005 to 2013, COFCO spent CNY 14.6 billion (US$2.2 billion) on 50 mergers.
  • In March 2013, COFCO announced that it received $4.82 billion in loans from the China Development Bank in order to stabilize food prices and improve productivity.
  • In November 2012, COFCO announced that for the next four years it had approximately US$10 billion to fund overseas mergers and acquisitions.
  • Founded in 2009 and headquartered in Beijing, COFCO Meat (subsidiary of COFCO Group) is a major Chinese pork producer whose product line includes pork ribs, pork belly, pork loin, sausage, bacon, and sliced ham. COFCO Meat has hog breeding operations in Tianjin, Hubei Province, Jiangsu Province, Jilin Province, Hebei Province, and Inner Mongolia Region. The company also imports meat products from Brazil (chicken), Chile (beef, chicken), Germany (pork), Denmark (pork), Australia (beef), and New Zealand (lamb).

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