China Minzhong Food Corporation

[weijian]

However, in Q2, there was totally no mention of the New Industrial Park. Anybody knows anything about this?

Not sure about dividends, but they did say they are open to share buybacks recently... but they might have some capex coming on, since they are starting the new industrialized farming in Jiangsu?

Hi I0ner, you can refer to pg19 of 2Q2013 result presentation to get the update on the processing Industrial Park at Tianjin. Seems like they are a tad late as they previously promised to complete Phase2 in Dec2012.

Previously, Mgt guided 2013 Capex to be ~400mil (at which ~170mil has been utilised by 1H2013 and i suspect this does NOT account for the newly announced industrial farm at Jiangsu.

Assuming the farm size is about 150mu and the cost=475k/mu, the industrial farm will incur capex of ~750mil. The share placement to PT IndoFood will have ~350mil earmarked for industrial farming. Operating cash flow (assuming it collects its receivables on time) can cover the remaining shortfall and leave some excess for dividend/sharebuyback.

For some time now, Mgt has always guided that it is prefers sharebuybacks over dividends. However, after issuing shares to PT IndoFood at a 10% discount to the market price, i am not sure it make sense to do any sharebuyback scheme if share price continues to be significantly higher than previous issue price. IMO, existing shareholders are penalized in the event a sharebuyback is done. A dividend would be better. (although my gut feel is, there will be no dividend)