Yamada Green Resources: Terminated a number of lease agreements to its eucalyptus plantations and shiitake mushroom cultivation bases to scale back output of less lucrative products.
Subsequently, Yamada's total eucalyptus plantations are expected to reduce from 39,735 mu to 38,334 mu (-3.5%) and shiitake mushroom cultivation bases to 1,184 mu (-65%).
Simultaneously, Yamada proposed to acquire a 10-year lease for a moso bamboo plantation situated in Fujian, China, for Rmb48.5m, boosting its moso bamboo plantation area by 15% to 115,992 mu.
As a gauge, Yamada's moso bamboo business provides a relatively higher gross margin of ~35-40% compared to its eucalyptus and shiitake mushroom products.
As the group enlarged its moso bamboo plantation in Sep '14, gross margin has been on a steady climb due to the favourable change in sales mix.
Earlier this month, Yamada proposed an $18m (Rmb83.8m) fund raising via a 1-for-2 fully underwritten renounceable rights issue at $0.07 each, intended for investments and acquisitions (40%) and working capital (60%).
Subject to SGX approval, the funds raised will turn Yamada into a net cash company with Rmb77.4m cash, on an equity base of Rmb849m.
At the current market cap of $59.5m, Yamada is valued at 3.4x trailing P/E and has no coverage by the street.
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