China Yurun Food Group Limited Announces Its Interim Results for the Six Months Ended 30 June 2008

   Continued Strong Revenue Growth as a Result of Premium Brand Recognition
         Obtained HK$450 Million Loan to Support Continued Expansion



                                          For the six months ended 30 June
    Financial Highlights                         (HK$ in millions)
                                            2008         2007       Change(%)
    Turnover                               6,043        3,450         +75.2%
    Gross profit                             821          512         +60.3%
    (Gross profit margin)                 (13.6%)      (14.8%)            --
    Profit attributable to
     shareholders                            672          393         +70.9%
    (Net profit margin)                   (11.1%)      (11.4%)            --
    Diluted earning per share           HK$0.435     HK$0.270         +61.1%
    Proposed interim dividend per
     share                              HK$0.110    HK$ 0.070         +57.1%

HONG KONG, Aug. 26 /Xinhua-PRNewswire-FirstCall/ -- China Yurun Food Group Limited ("Yurun" or the "Company", together with its subsidiaries, collectively the "Group") (HKEx: 1068.HK), a leading and well-established food brand in China, today announced its interim results for the six months ended 30 June 2008 (the "Period").

During the Period, Yurun's turnover amounted to HK$6,043 million (1H2007: HK$3,450 million), representing a significant increase of 75.2% as compared to the corresponding period last year. The chilled meat business and low temperature meat product ("LTMP") business remained the main revenue drivers for the Group during the Period. Gross profit and net profit during the Period amounted to HK$821 million (1H2007: HK$512 million) and HK$672 million (1H2007: HK$393 million) respectively, representing a significant growth of 60.3% and 70.9% respectively over the first half of 2007. Gross profit margin and net profit margin remained stable at 13.6% (1H2007: 14.8%) and 11.1 %( 1H2007: 11.4%).

The board of directors of the Group has proposed an interim dividend of HK$0.110 per share for 2008 (1H2007: HK$0.070).

Mr. Zhu Yicai, Chairman of Yurun, said, "Our robust 2008 interim results were mainly driven by our premium "Yurun" brand and sophisticated operating system which includes our nationwide production network, highly efficient supply chain system and outstanding sales and marketing strategies. Operating in an environment of tight domestic hog supplies and high procurement costs during the Period, we maintained our strong revenue growth and stable margins by expanding our marketing and sales efforts at CCTV and other mobile media platforms, focusing on mid to high-end markets and enhancing our product mix. At the same time, we optimized our product distribution network, production facilities and production capacities, which continued to strengthen our operation. Going onward, we will continue to strengthen our brand recognition, enhance our pricing abilities and expand our market penetration. Our strong financial performance coupled with the opportunities created from the acceleration in the industry consolidation gives us confidence that we will maintain our leadership position as we strive to maximize our shareholders' returns."

Mr. Zhu added, "Subsequent to the announcement of the remarkable interim results, the Group successfully entered into a loan agreement with a syndicate of banks for up to HK$450 million at an interest rate of approximately 4%. The loan will be used to support the Group's future development by providing capital to further expand its production capacity and marketing and sales efforts. Our ability to obtain financing in today's tight credit environment is a testament to the strength of our operations and our future prospects."

Segmental Information

The Group's business segments are divided into downstream processed meat products and upstream chilled and frozen meat.

                                 For the six month ended 30 June
                                        (HK$ in millions)
                                Revenue             Change     Proportion to
                         (Gross Profit Margin)                 Total Revenue
                            2008         2007          %       2008      2007
    Downstream Processed
     Meat Products,
     inter alia:
       -- LTMP          1,273(27.5%)   771(27.0%)    +65.2%    90.6%     87.5%
       -- HTMP            132(18.5%)   110(18.3%)    +19.8%     9.4%     12.5%
       -- Segment Total 1,405(26.7%)   881(25.9%)    +59.5%     100%      100%

    Upstream Chilled
     and Frozen Meat,
     inter alia:
       -- Chilled Pork  3,728(9.5%)  1,702(11.5%)   +119.0%    72.3%     60.7%
       -- Frozen Pork   1,425(6.4%)   1,104(8.1%)    +29.1%    27.7%     39.3%
       -- Segment Total 5,153(8.6%)  2,806(10.1%)    +83.6%     100%      100%
    Inter-segment
     Elimination              (514)         (237)       N/A       --        --
    Total Revenue            6,043         3,450     +75.2%       --        --

The Group was able to slightly increase its gross profit margin in the downstream segment as a result of the Group's ability to rapidly adjust the price of its LTMP in response to market conditions as well as optimize its product mix. The Group also successfully maintained a stable gross profit margin for its upstream segment due to its premium brand position and strong pricing ability, optimized production scale and quick response to market fluctuations despite the challenging environment.

Business Review

Sales and Distribution

The Group focused on increasing overall sales and profitability by enhancing its flagship "Yurun" brand. During the Period, the Group continued to strengthen its advertising and promotion efforts, develop higher profit margins products to enrich its product mix, optimize its product distribution network to further extend its reach to existing and potential customers and expand its direct sales to supermarkets and chain stores. At the same time, the Group strengthened its co-operation with upscale hotels and catering chains in an effort to enhance profitability by increasing sales of higher profit margins products.

Production Facilities and Production Capacity

In the downstream business, the Group focused on increasing market coverage and upgrading key production facilities. During the Period, the new plants in Nanjing and Maan Shan commenced operations. Annual production capacity of the Group's downstream meat processing business increased by 10,000 tons from the end of 2007 to 228,000 tons at the end of the first half of 2008. Moreover, the Group's meat processing factories in construction are expected to be completed by the end of this year.

The market coverage for the upstream segment in the Northeastern region was enhanced with the completion of the Shenyang factory during the Period. As at 30 June, 2008, the Group's annual slaughtering capacity was 14.55 million heads, representing an increase of 500 thousand heads compared to the corresponding period last year. By the end of the Period, the Group completed three acquisitions located in Heilongjiang province, Gansu province and Hebei province.

Post Balance Sheet Date Event: Syndicate Bank Loan

On August 2008, the Company entered into a facility agreement pursuant to which a syndicate of banks agreed to grant the Group a 3-year term loan of up to HK $450 million for financing capital expenditures and general corporate funding requirements of the Group and its subsidiaries.

Future Prospects and Development Strategies

Looking to the future, the Group will continue to capitalize on the "golden opportunity" created by the current industry consolidation as a result of new government policies and an increasing number of Chinese consumers purchasing high quality premium meat products. As one of the largest meat processing enterprises in PRC, Yurun is continuing its marketing campaign in the mainstream media to expand its market share of its LTMP and chilled meat products and increase awareness of the Group's flagship brand "Yurun." The Group is also expanding its upstream and downstream production capacity through acquisitions and green field and brown field projects to meet the rapid growth in market demand for the Group's "Yurun" brand products. Meanwhile, the Group is committed to enhancing the sales and development of higher margin products to maintain its stable gross margin and expanding distribution and sales channels to sustain its leading market position.

About Yurun Food (HKEx: 1068.HK)

Leveraging on its vertically-integrated business model and strategically located production plants, Yurun Food is the leading meat-processor and meat products supplier in China. With its well-established food brands, state-of- the-art production facilities and diversified distribution channels, Yurun Food has achieved a solid track record with robust growth for five consecutive years. By further enhancing its brand names and product quality, Yurun Food will further strengthen its leading market position.

    Company website: http://www.yurun.com.hk .

    For further information, please contact:

     China Yurun Food Group Limited
     Email: ir@yurun.com.hk
     Fax:   +852-3927-3300

     Elite Investor Relations Limited
     Investor Relations:
     Ms Gloria Chan
     Tel:   +852-3183-0227
     Fax:   +852-2155-9165
     Email: gloria.chan@elite-ir.com

     Media Relations:
     Mr. Bunny Lee
     Tel:   +852-3183-0282
     Fax:   +852-2155-9165
     Email: bunny.lee@elite-ir.com

SOURCE China Yurun Food Group Limited