(Yicai Global) Feb. 24 -- Shares in Qianhe Condiment and Food soared by as much as 9.5 percent today after the leading Chinese soy sauce, vinegar and cooking wine maker said its owner is preparing to invest as much as CNY800 million (USD126.6 million) in a private placement of newly issued shares to help finance the construction of a smart factory.

Qianhe’s share price [SHA:603027] closed up 6.97 percent at CNY21.03 (USD3.33), giving it a market capitalization of CNY16.8 billion (USD2.6 billion). Earlier in the day it had hit CNY21.53.

Company Chairman and President Wu Chaoqun, who holds 37 percent equity, is planning to inject between CNY500 million (USD79 million) and CNY800 million in a private issuance of new shares priced at CNY15.59 (USD2.50) each, Qianhe said yesterday. The shares will have a lock-up period of three years.

All proceeds will be used to fund the building of a smart plant costing CNY1.3 billion (USD205.7 million) that is expected to hike the firm’s soy sauce output by 500,000 tons a year and cooking wine by 100,000 tons. CNY295 million has already been spent on the new facility.

The new factory is projected to realize an annual net profit of CNY633.5 million (USD100 million) for the Meishan, southwestern Sichuan province-based company based on revenue of CNY3.3 billion.

Qianhe saw profits tank 41 percent in the first three quarters last year from the same period the year before to CNY132 million (USD20.9 million), as the soaring price of ingredients squeezes margins, but revenue advanced 10.9 percent to CNY1.4 billion, according to its latest earnings results.

Editor: Kim Taylor