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Home  Story Archive 2008 CHINA ANGEL: seasonally weakest Q2 sales up 16%
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CHINA ANGEL: seasonally weakest Q2 sales up 16% |
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Written by Sim Kih
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Friday, 08 August 2008
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 2nd quarter is seasonally weakest, while 3rd quarter is strongest as moon-cake festivities fall in Aug-Sep.
SHENZHEN’S LEADING moon cake maker China Angel ended its seasonally weakest quarter (2Q) with y-o-y sales increase of 16% to reach Rmb 22.4 million.
It reported a loss of Rmb 2 million due to expenses that increased as a result of implementing its expansion plans.
China Angel’s core business is in the production and sale of moon cakes, which contributes about half of the company’s top line.
Non-Chinese skeptics may question the strength of China Angel’s product life cycle, but executive chairman Patrick Liang is convicted that the age-old festival will remain celebrated by future generations.
The Chinese government appears to hold the same view: the Mid Autumn Festival was gazetted as an official public holiday with effect from this year in recognition of its value in strengthening Chinese cultural values.
As moon cakes are only consumed for the Mid Autumn Festival, which takes place during Aug-Sep, sales spike seasonally during 3Q08.
2Q08, on the other hand, is seasonally the weakest as a large portion of the company’s annual sales and marketing budget goes to promotion activities for the Mid Autumn Festival.
 Mooncakes contribute significantly to top line each year.
In addition to higher selling and distribution expense, like most Chinese companies, China Angel’s performance was hit by rising costs of raw materials and labor.
The company’s new plant in Baoan, which trebles its annual moon cake production capacity, also contributed to higher manufacturing overheads.
Snacks and other foods such as nuts and cookies contributed Rmb 9.8 million to 2Q08 top line. This business segment peaks seasonally during the first quarter as the snacks cater to Chinese New Year celebrations, which take place during Jan-Feb.
Pastry contributed Rmb 12.6 million to 2Q08 top line, and was more than double the pastry sales in 2Q07 (up 167%).
Pastry sales was strong because the company’s presence in the form of 31 Angel cake shops as at 30 Jun 2008 was more than double that of what it had a year ago (11 shops). Furthermore, wholesale supply of pastry products to corporate entities such as Foxconn Technology Group was also robust.
Mr Liang believes the 31 Angel cake shops throughout Shenzhen carry intangible brand value in increasing consumers’ awareness of the China Angel brand name for moon cakes throughout the year.
3Q08 will look good, according to Mr Liang.
Order book as at 5 August 2008 was already more than double y-o-y (up 110.8% to RMB 45.4 million).
Read report on China Angel’s new Baoan plant: CHINA ANGEL: The making of a top festive food brand
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