Suning Appliance Chains Group Co Ltd, China's second-largest home appliance chain retailer, posted a year-on-year net profit growth of 83.22 per cent in 2004, due to its rapid network expansion.

The company, which got listed on the small to medium-enterprise board of the Shenzhen Stock Exchange last July, released its first annual report yesterday.

It said the group's major business revenue totalled 9.1 billion yuan (US$1.1 billion) last year, an increase of 50.94 per cent over 2003.

The company's net profit surged 83.22 per cent to 180 million yuan (US$21.7 million) in 2004.

Its operating profit was 292.3 million yuan (US$35.3 million), and its earnings per share stood at 1.95 yuan (23.6 US cents).

The main reason for the jump is the firm's commitment to increasing its number of chain stores, network expansion and maturing operations at existing stores, the company said in the report.

In 2004, Suning expanded its business into a further 23 cities and opened 46 new stores.

By the end of last year, the company had built a network covering municipalities, capital cities and third-tier cities. It had opened 84 chain stores in 46 cities around the country by the close of the fourth quarter.

However, the company's senior management seems unsatisfied with the results.

"We should have developed much faster last year," Suning's Vice-President Sun Weimin said yesterday in an interview.

Suning's business development was too slow considering the business opportunities available in this lucrative market, he said.

"We missed some windows and the lack of skilled workers affected the company's development pace," Sun said.

He expected the company to grow faster this year, but refused to disclose the company's goals.

According to Sun, the company is focusing on chain store expansion, the construction of logistics and information systems, and the training of personnel at all levels.

"Home appliance retail chains like Gome, Suning and Yongle will continue developing rapidly in the next two to three years," said Hu Hongke, an analyst from Merchants Securities.

According to him, sales at the home appliance chains account for some 30 per cent of the country's total home appliance market, meaning companies like Suning have a lot of market potential to tap.

"The company will maintain its good performance over the next few years," Hu said.

The company's share price has risen to more than 60 yuan (US$7.23) from 16.33 yuan (US$1.97) since its listing last July, despite China's sluggish stock market.

Its share price dropped 1.93 per cent to close at 60.85 yuan (US$7.35) yesterday.

Source: China Daily