Yamada Green

Yamada Green: Weak 2Q12 results which was in-line with grp’s profit warning guidance announced last mth. Rev at Rmb 179.6m, -17.7% yoy and net profit at Rmb 16.7m, -77.2% yoy. (QOQ comparison not meaningful due to seasonal patterns) Gross profit margins plunged to 15.8% vs 40.5% yoy. Decrease in rev was largely due to lower sales of self-cultivated shiitake mushrooms, whereby grp produced and sold approximately 25,000 tons of shiitake mushrooms in 2Q12 vs 20,500 tons in 2Q13. The lower yield in 2Q2013 was mainly the result of unfavourable weather conditions at the cultivation sites during the period. The unusually cold winter season also affected the quality of the shiitake mushrooms. ASP of self-cultivated fresh shiitake mushrooms was approximately 4% to 5% yoy. Gross profit margins plunged mainly due to the rising raw material cost of synthetic logs while the ASP of edible fungi did not increase. Going forward, expect to obtain the logging licence for harvesting of eucalyptus plantations by early this yr and will commence progressive harvesting of eucalyptus trees to produce sawdust which is the major raw materials for the synthetic logs for shiitake mushrooms harvest season from FY2014 onwards. The weather conditions at grp’s cultivation sites have improved since early Jan this year. It should have a positive impact on the yield of our edible fungi. Grp tips to benefit from rising consumer demand for shiitake mushrooms in the PRC ahead of the Lunar New Year.