HONG KONG: Tingyi (Cayman Islands) Holding Corp, China's biggest maker of packaged food, said first-half profit increased 41 percent on higher demand for noodles and bottled drinks.

Net income in the six months to June 30 climbed to $179.4 million, or 3.21 cents a share, from $127.6 million, or 2.28 cents, a year earlier, the Tianjin-based company said in a statement to the Hong Kong stock exchange yesterday. Sales increased 22 percent to $2.5 billion.

Rising incomes and economic growth in China are increasing demand for bottled drinks and packaged foods. Tingyi sells high-end noodles under its Master Kong label and targets low-income consumers with its Fumanduo brand.

"Tingyi is a stable company with good branding and has a dominant market share position," said Jane Wu, a Hong Kong-based analyst at KGI Securities, before the earnings announcement. "Tingyi's raw material costs are also lower comparatively from a year ago and that helps its margins."

Instant noodle sales gained 9.4 percent to $1.07 billion in the first half and beverage sales rose 37.8 percent to $1.3 billion, Tingyi said in the statement.

Prices of major raw materials including palm oil and plastics "have sharply decreased" from the second quarter last year, the company said.

Tingyi has a market share in China of 41.2 percent for instant noodles, by sales volume, and 51 percent for ready-to-drink tea, retaining its top positions for the two products, the company said yesterday, citing a survey by ACNielsen in June.

"Since the occurrence of the financial crisis, the Chinese economy exhibited a typical V-shaped recovery driven by the pull of internal demand," Tingyi said. "This trend will not be reversed in the short to medium term."

Tingyi's shares fell 2.01 percent to HK$14.60 in Hong Kong yesterday. The stock has climbed 63 percent this year, outperforming the 41 percent gain in the benchmark Hang Seng Index.

Bloomberg News

(HK Edition 08/18/2009 page2)