Vitasoy Recorded Healthy Sales Growth for 1H FY2007/2008

Vitasoy Recorded Healthy Sales Growth for 1H FY2007/2008

November 26, 2007

Attributed to Aggressive Product Innovation and Effective
Marketing Strategy


    HONG KONG, Nov. 26 /Xinhua-PRNewswire-FirstCall/ --
Vitasoy International Holdings Limited (VIHL, Vitasoy or
"the Group") (HKEx: 0345), a Hong Kong-based
manufacturer and distributor of non-carbonated beverage and
food, today announced that its turnover for the six months
ended 30 September 2007 grew by 14.2%, to HK$1,514 million.
 The Group recorded a profit attributable to shareholders of
HK$105 million, a healthy growth of 5.0% compared to the
same period of the preceding year.

    Mr. Winston Yau-lai Lo, Executive Chairman of VIHL
said, "Under an orchestrated campaign of aggressive
product innovation and effective marketing initiatives, the
four operating markets reported satisfactory operating
performance.  These efforts have also helped strengthening
the leading position of many of our products in various
markets.  During the period, there was remarkable growth in
the Mainland China and Australian markets, while Hong Kong
also reported some solid growth.  We achieved our goal of
reducing the North American business operating loss, paving
the way for further improvement.  The Group strategically
increased its advertising and promotional expenses in order
to effectively launch new products and substantially
reinforce the brand value of `Vitasoy'.  We believe it will
benefit the Group's expansion and brand value in the long
run despite its short-term impact on the growth of
operating profit."

    The Group's basic earnings per share were HK10.4 cents,
representing 5.1% growth over the same period of the
preceding year.  The Board of Directors has declared an
interim dividend of HK2.8 cents per share (2006/2007
interim: HK2.8 cents per share).

    During the interim period, Vitasoy reported an
encouraging growth of 14.8% in gross profit, amounting to
HK$894 million.  Despite the general rise in production
costs, the Group's gross profit margin stood at 59.0%,
which is in line with the same period last year. 

    Hong Kong  

    In the Hong Kong market, Vitasoy continued its strong
focus on product innovation and brand building, and
recorded a 7.4% growth in domestic sales.  The number of
new products launched during the interim period was more
than double the number of new products launched during the
entire previous financial year.  New Vitasoy products
include VITASOY SAN SUI Tofu, VITASOY Jasmine Soya Bean
Milk, reformulated VITASOY Chocolate Soya Bean Milk, VITA
Double Chocolate Milk and VITA Less Sweet Lemon Tea.  In
addition, very hot weather during this year's summer months
in Hong Kong stimulated healthy growth in all business
segments, especially the on-the-go market.  The water
business also showed satisfactory sales growth, which was a
result of effective selling strategy and market
consolidation. 

    Mr. Lo said, "Our emphasis on building our brand,
expanding our product portfolio, and launching effective
marketing campaigns has strengthened our leading position
in the local beverage market. In the 2nd half of the fiscal
year, we will continue to invest in brand reinforcement and
promotion of our core products and newly launched items. 
Despite the challenges brought by increasing raw material
costs and inflationary pressure, we will closely monitor
all developments and adopt appropriate cost management
measures. In addition, we will plan our promotional
strategy carefully, in order to capture opportunities for
effective price increases brought about by the revived
economy and general inflation."

    Mainland China 

    Thanks to the successful strategy of "core
business, core brand and core city", Vitasoy China
maintained strong expansion during the interim period,
reporting a significant sales growth of 68.5% over the same
period last year. 

    "In spite of intensifying market competition, we
are still able to maintain our leading position in the
soymilk category in the Mainland market by offering premium
products at premium prices.  We have also applied our
successful experience in Southern China to the eastern
provinces.  These factors, together with greater awareness
of the benefits of soy and the Vitasoy brand among
consumers in our target cities, have resulted in
encouraging growth in our business in Eastern China."
Mr. Lo noted. 

    Mr. Lo added, "In the second half of the year,
Vitasoy China will increase investment in brand building
and customer education, continue to strengthen and expand
our distribution network, and introduce a range of highly
nutritious soymilk products. 
    
    Australia

    Vitasoy Australia continued to report outstanding
performance, posting growth of 28.1% in revenue and 15.0%
in operating profit, thanks to the Group's concerted
efforts in promoting existing products to capture a bigger
market share and its robust brand position, along with the
doubled production capacity of its production plant.  These
efforts have enabled Vitasoy Australia to pursue a more
aggressive growth and expansion strategy.  Vitasoy
successfully launched six new products in September, as
part of the result of its product innovation strategy. 

    "We note that Australia has entered a period of
slow growth and saw some market players recently cut their
product prices drastically.  However, since Vitasoy has a
very strong brand effect and high consumer loyalty, the
management believes that we can maintain our premium
product position and premium retail shelf prices, hoping
that we can beat our competitors and enlarge our market
share," Mr. Lo remarked.

    North America

    The Group's North American operation has successfully
reduced its operating loss by 41.2%, to HK$10 million, and
recorded a mild growth of 0.5% in sales during the interim
period, after the Group re-adjusted its business strategy
to focus on core products and competencies. 

    In order to further narrow its operating loss, Vitasoy
USA will implement a three-pronged strategy: the launch of
single-serve shelf-stable soymilk; enhancement of Vitasoy's
leading position in the tofu market, and further development
of the ethnic market. 

    "Our efforts to improve our financial performance
in North America will be further strengthened by cost
rationalization measures and price revisions on selected
products.  In spite of the challenges of the market, we
believe there is opportunity for Vitasoy USA to grow,"
Mr. Lo commented.
    
    Business Outlook

    Looking ahead, Mr. Lo said, "We will leverage our
core competencies and focus on areas we excel in, including
product innovation, brand building and cost management, to
drive revenue growth and capture larger market shares,
amidst the challenges brought by intensifying market
competition, inflationary pressure and rising costs of raw
materials.  We will also explore new business opportunities
to create greater long-term shareholder value."
    
    Vitasoy International Holdings Limited is one of the
leading manufacturers and distributors of non-carbonated
drinks with a base in Hong Kong.  Founded in 1940 and with
production facilities in Hong Kong, Mainland China,
Australia and the United States, Vitasoy currently provides
consumers in 42 markets worldwide with over 1,000 stock
keeping units (SKU).  Over the years, Vitasoy has
successfully established a corporate image as "the soy
expert". Vitasoy is a constituent of the Morgan Stanley
Capital International ("MSCI") Hong Kong Small Cap
Index. 


    For more information, please contact:

     Stella Lung, Public Relations Manager
     Tel:   [phone]
     Fax:   [phone] 
     Email: [e-mail]
    
     Angela Hui / Paul Sham, Ketchum Hong Kong
     Tel:   [phone]
     Fax:   [phone] 
     Email: [e-mail] / [e-mail]