Guangnan Hong Company Limited ("Guangnan Hong") is a wholly-owned subsidiary of the Group. Its businesses include the distribution of livestock and poultry, sale of live pigs, wholesaling of poultry and foodstuffs trading. Currently, sale and distribution of livestock is the main profit contributor of the company.
Guangnan Hong holds a 51% interest in Guangnan Live Pigs Trading Limited, a 18.66% interest in an associate, Hubei Jinxu Agriculture Development Co., Ltd. (formerly known as Hubei Liangyou Livestock and Poultry Co., Ltd.), and a 34% interest in an associate, Guangdong Zijin Baojin Livestock Co., Ltd.
Distribution of livestock and poultry
The Group is originally the sole distributor in Hong Kong of poultry and livestock imported from the Guangdong Province as authorized by the then Ministry of Foreign Trade and Economic Cooperation and the People's Government of Guangdong Province in the PRC. On 21 July 2007, the Ministry of Commerce of the PRC granted the Group the distributorship for importing live pigs from Mainland China (including and beyond Guangdong province) to Hong Kong. In December 2008, Guangnan Hong's fresh and live product category includes large pigs, medium-sized pigs, cattle and chicken, representing 45%, 20%, 7% and 85% of the market share imported from Mainland China to Hong Kong respectively. Income arising from the distributing business is the commission income based on specified percentages of commission rate applicable to the transaction value of fresh and live foodstuffs imported to Hong Kong.
Sale of live pigs
Guangnan Hong mainly operates and sells live pigs distributed by the Company. The overall market share in the live pigs supply into Hong Kong was above 40%. This provided a steady contribution to the earnings of the Group.
Wholesaling of poultry
Guangnan Hong also imports black chickens, yellow chickens and quality yellow chickens from the Guangdong Province for distribution to wholesalers and retailers in markets in Hong Kong.
Guangnan Hong' foodstuffs trading businesses are the trading of chilled poultry and pork, frozen poultry, rice and starch, of which chilled foodstuffs is the main profit generator for this sector. As one of the main suppliers of chilled poultry in Hong Kong, Guangnan Hong imported chilled poultry from the mainland of China for supply to the supermarket, mega-stores and the major fast food chained-stores in Hong Kong. It also imports frozen poultry and frozen meat products and is the sole distributor in Hong Kong of the branded rice "Golden Way" in Hong Kong. Corn starch, corn gluten meal and corn gluten feed of Yellow Dragon Food Industry Co., Ltd., an associated company of the Group, are also distributed through Guangnan Hong to Hong Kong and overseas.