China Minzhong: could benefit from China’s central govt plans to expand vegetable pdtn, citing an “increasingly serious” food supply situation in some major cities. The govt has pledged more funds and preferential policies to support the construction of major vegetable pdtn bases across the country, and banks have been advised to step up lending to vegetable producers. Special railway lines would also be set up to improve the distribution channel…
Separately, news that Potash Corp, the world’s largest listed fertilizer producer, has rejected a US$39b takeover offer from BHP Billiton, suggests that positive sentiment in the agri sector is strong, and demand will continue to be underpinned by increasing global consumption and increasing developing countries’ affluence...
All this is positive for China Minzhong, which sells fresh vegetables as well as processed vegetables domestically as well as for export (35/65 split). The company recently acquired two organic bases, and expects to start commercial production of organic products in the next three years. Stock not expensive at 8.7x PE. DMG has Buy call with $1.68 target.
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