Yamada

Yamada: 9MFYMar13 results light against estimates. Revenue at Rmb 453.3m (-8.4%), making up 72% of consensus forecast. Net profit at Rmb 69.0m (-57%), at 58% of forecast. For 3QFYJun13, revenue was flat at Rmb 242.9m, however net profit tumbled 37% yoy to Rmb 51.3m on lower gross margin, as cost of raw materials jumped without a corresponding rise in ASP of its shitake mushrooms. Yamada expects to utilize sawdust produced from its own eucalyptus trees for approx 60% of its shiitake mushrooms cultivation area in FY14. Separately, mgt recently acquired Moso bamboo plantation to expand its pdt range and secure raw materials for one of its main processed food pdts, ie. water boiled bamboo shoots. These upstream resource measures should help mitigate rising cost pressures. Despite the moderate growth of China’s economy and the uncertain global economy, mgt remains cautiously optimistic on the group’s operations and expects to remain profitable in FY13. At $0.265 at last close, Yamada trades at 1x P/B, 6.3x annualized 9MFY13 P/E. In comparison, peers China Minzhong and Sino Grandness trade at 4.0x and 6.4x P/E respectively.