China Minzhong

China Minzhong: Company reported unaudited 4QFY13 net profit of Rmb162.7m (-5% y/y) while revenue stayed flat at Rmb811m. Although the revenue growth in its processed vegetables (+10%) and beverages (+51%) was due to increased product categories and domestic demands were strong, this was mitigated by a contraction in its fresh vegetables produce (-14%) from lower yielding crops as the weather patterns normalized. For the full year, earnings grew 11.1% to Rmb0.8b while revenue expanded 26.4% to Rmb3.2b, as overall gross margins was brought down by higher processing costs in its processed vegetables segment and new productive farmland for the fresh vegetables segment. Management cites the healthy demand for vegetables in China, buoyed by rising urbanization and change in dietary habits. Also, due to the rising affluence in China, Minzhong is poised to benefit from the increased focus on its higher value products such as edible fungi. For growth, the Group is expanding its industrialized farming footprints in major cities across China. While out of China, Minzhong is actively expanding its market presence through tradeshows, marketing campaigns and the setting up of new sales representative offices across the globe. Due to the positive environment, China Minzhong is paying its maiden dividend of 1¢/share.