Friday, February 25, 2011

China MinZhong

China MinZhong: Could see some positive momentum. Following its recent Strong Surge following stellar 2q results, BNP Paribas maintains their Buy Rating, but increases TP to $2.19 from $1.76, based on 9.2x Forward PE….

Note that Grp is in the ‘Right industry at the Right time’, with Minzhong increasingly focusing on high-yield, high-margin products in the domestic market and aiming to increase fresh-produce sales to 50% of the total in 3-5 yrs. Expect gross margin to expand 1-2ppt pa, with an average IRR of 33% for new expansion…..

Add that PRC will continue to support the industry to reduce input cost and operating overhead costs through infrastructure development support and/or government grants and subsidies and also continue to support industrialisation to optimise output. Since IPO in Apr10, Minzhong has secured 15,300 Mu of farm land and appears to be on track for its three-year 90,000 Mu expansion plan…..

We note that Street has a unaminonus Buy Call on counter, and further note that counter has a good chance of rereating upwards going forward, on back of rising food prices, the tripling of its cultivation land and expansion of its processing facilities, which would see a huge jump in both its culativation and processed food segments.

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