China Xiangtai Partners With Chongqing Good Helper to Expand Meat Business
The pork wholesaler will receive up to $4.97 million in financing.
China Xiangtai Food Co. Ltd. (Nasdaq: PLIN) announced Tuesday that it has partnered with a financing company, Chongqing Good Helper Commerce Co. Ltd. (CGHC), backed by the local government, to expand its meat business.
Under the deal, China Xiangtai and CGHC have agreed to collaborate on purchasing, packaging, and sales of pork, beef, and lamb. The two parties will also handle staffing, renting, and managing more facilities.
CGHC will provide China Xiangtai with up to $4.97 million in financing, which will carry an annual interest rate of 10%, according to the report.
"We appreciate CGHC's trust in PLIN, and are pleased to have reached this agreement. We need to increase our sale volume for premium quality product with diversified distribution channels to meet the strong domestic pork demand," Zeshu Dai, the chairwoman and chief executive officer of China Xiangtai, said in a statement today.
She added, "This collaboration would offer us the opportunity to expand to new retail channels and access to considerable working capital for its business."
Despite the announcement, the stock in China Xiangtai fell nearly 3% to $3.43 per American depositary share in early trading on Tuesday. Over concerns of the coronavirus, China Xiangtai has slipped to a historic trading low of $2.39 per share this month.
Based in Chongqing, China Xiangtai provides operations in pork processing. That includes slaughtering, packing, distribution, and wholesale of a variety of pork meat and parts. It also offers other fresh and processed products, including beef, lamb, and poultry.
Earlier this month, China Xiangtai announced that its supermarket achieved sales growth of 300% during the Chinese New Year.
The company noted the outbreak of the coronavirus and said it will focus on keeping its pork products clean and fairly priced, as well as deliver them in a timely fashion.