BEIJING, China, Oct. 2 /PRNewswire-Asia-FirstCall/ -- Yongye International,
Inc. (Nasdaq: YONG), ("Yongye or "the Company") a leading manufacturer,
developer and distributor of Shengmingsu brand plant and animal nutrient
products in the People's Republic of China (PRC), today announced its 2010-
2012 strategic plan.
Following the Company's rapid business expansion in 2008 and thus far in
2009, Yongye expects to achieve at least 50% growth in revenue during each of
the next three years through a strategy focused on geographic expansion into
new markets, increased penetration in existing markets, additional marketing
and brand-building efforts, and expanded production capacity. The Company also
intends to improve its cost structure and gain greater control of its supply
and distribution through vertical integration so as to enhance its profit
margins.
Geographic Expansion
Building on the Company's success with its "branded store" network over
the past two years, during which revenue nearly doubled from $48.1 million in
2008 to an anticipated level of $89-$90 million in 2009, Yongye plans to
rapidly accelerate its expansion into new provinces, particularly those in
southern China, beginning in 2010. The Company expects continued successful
replication of the "branded store" model implemented by its distributors,
which involves adding stores to its network and providing them with technical
product training, sales leadership training, and integrated marketing
campaigns.
In conjunction with its new market expansion strategy, Yongye also expects
to see continued increases in the number of branded stores in existing markets
and market penetration for Shengmingsu.
Marketing and Advertising
Yongye will continue to invest significantly in its highly effective
channel development activities to support its planned geographic expansion.
The Company will strengthen and expand the brand recognition of Shengmingsu
through advertising on top-tier national and local media outlets, such as
CCTV, that serve rural farmers and agriculture product store owners and
distributors. Integrated advertising and promotion campaigns at the national,
provincial and village level will ensure that rural farmers receive the
Company's branding message that Shengmingsu reliably increases crop yields'
quantity and quality.
Production Capacity
Yongye plans to increase its production capacity to ensure that the
Company has sufficient capacity for sustainable long-term growth. Currently,
Yongye has annual production capacity of 10,000 tons of Shengmingsu branded
nutrient products. The Company's current highly automated and cost effective
facility operates at almost full capacity to meet peak season demand and
inventory requirements. Yongye will announce detailed expansion plans by the
end of fourth quarter of 2009.
Vertical Business Integration
Yongye intends to increase its profitability through upstream and
downstream business integration. Yongye plans to acquire a lignite coal mine
in order to directly secure the raw materials that drive the largest
percentage of its cost of sales. This acquisition will enable Yongye to
tightly integrate the production of its humic acid with its fulvic acid
extraction processes. The Company expects to reduce costs and ensure control
over the quality of the humic acid produced once the acquisition is fully
integrated. This is expected to enable Yongye to significantly increase its
gross margin.
In addition, Yongye plans to acquire the Shengmingsu distribution channel
from certain distributors that have strong, established branded store
networks. This initiative would enable Yongye to establish more direct control
over sales to end customers, improve its profit margin, and decrease the risk
of high customer concentration. Management anticipates that this acquisition
will only have a minor impact on Yongye's working capital requirements, since
the Company currently issues 3-6 month credit terms to its mature
distributors.
Following its increased investment in research and development, Yongye
also plans to launch new products and extensions of existing products, which
would substantially increase the value of the distribution channel and deliver
new revenue opportunities.
"Over the past two years, we have seen dramatic growth in Yongye's
business and brand recognition for Shengmingsu. We believe our comprehensive
development strategy for the next three years will enable us to achieve
stronger profit margins while growing revenue at least 50% annually,"
commented Mr. Zishen Wu, Chairman and Chief Executive Officer of Yongye
International, Inc. "By integrating our business vertically, upgrading our
production capacity, and leveraging our branded store model with our unique
sales and marketing strategies, we aim to expand our geographic footprint in
new markets and our penetration in existing markets. We look forward to
successfully executing our development strategy and creating long-term value
for our shareholders."
Yongye International Announces 2010-2012 Strategic Plan | Reuters
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