Yamada

Yamada: Reported strong 4Q10 and FY10 figures, which were in-line with market’s bullish forecast on Co. 4Q10 Rev at Rmb115.4m, +17.8%YoY, and +252.3%QoQ (largely due to seasonality patterns). Result brings FY10 Rev to $313.9m, +32.9%YoY, while Net Profit at Rmb102.6m, +25.6%YoY, while Gross Margins saw a slight improvement at 41.7%, +1ppt YoY, due to increased cultivation of Shiitake mushrooms, which commanded higher margins....

Strong rev was mainly attributable to a 37.3% increase in the sales of self-cultivated mushrooms from Rmb125.5m in FY09 to Rmb172.3m in FY10, as grp expanded their cultivation base to approx 2,614 mu vs 2,213 mu YoY, while grp benefited from higher ASP of shiitake mushrooms, at Rmb6.60/ kg in FY10, up 13.8%YoY....

Rev of processed food products also increased 27.9% YoY mainly due to increased export sales as a result of the improved sentiments of Yamada’s Japanese customers towards PRC food products. Domestic sales of konjac instant noodles (a convenience food product) and other processed food items also improved, in tandem with rising food consumption in the PRC

We note that at current price, valuations remain compelling, with grp trading at 4.6x PE, with a Net Cash Position of almost 4c/share. Ex cash, grp will trade at 3.9x FY10 P/E. Grp has announced a div of Rmb0.043/share (S$0.01/share), translating to a yield of 3.7%....

Going forward, we remain positive on Co. fundamentals and expect further rerating, with Co. remianing on track to double up its Cultivation Output within the next 2 yrs and Increases its Processing capacity in tandem. Street has a unaminous Buy Rating on Stock.