Higher cost chips China Star Food's earnings

SINGAPORE (Feb 14): China Star Food Group, which produces snacks, has reported revenue of RMB104.1 million for 3QFY2020, down 8.2% y-o-y.
However, earnings in the same period dropped by 95.1% y-o-y to RMB579,000, as the company incurred higher costs in materials, administration, finance, marketing and distribution.
The company said higher expenditure on product development ate into its margins as well, as it tries to keep up with changing consumers’ and market preferences.
“We believe that constant product innovation to meet evolving snack food trends, complemented with targeted publicity campaigns to promote and drive sales for our proprietary brands of quality snack products through various distribution channels, will drive the Group forward in garnering market share in both existing and new markets,” says executive chairman and CEO Liang Chengwang.
The company’s production, like most other China-based operations, has been affected by the Covid-19 outbreak, and thus warns of near term impact.
“Despite the ongoing epidemic, the Group remains committed to build growth through investing in targeted marketing campaigns to promote and drive sales for its proprietary range of sweet potato snack food and to increase market penetration in both existing and new markets,” the company adds.
China Star Food Group shares closed at 2.4 cents on Feb 14, down 4%. At this level, the company is valued at $14.3 million.