China Minzhong Food Corporation

[CityFarmer]

Shanghai engineer (local or graduate from local good university) demand higher salary, due to their international exposure. 5-10 years relevant engineering experience, will able to demand 15k-30k RMB / month salary, translated to 2.5k-5k US$ / month

May I ask engineer in which field?

Engineer with Electronic/Computer or related qualification (prefer post-graduate), with experience of working in MNC, able to communicate in English "internationally", work experience on semi-conductor / advance software projects.

The similar group of engineers that Intel research lab in Shanghai are recruiting.

[ValueBeliever]

The china man always refer to their country stock as rubbish stock. This is another typical eg. of rubbish being dumped in SGX. I just wasting my time reminding myself NEVER to buy any super cheap china stock!!

Today Orient education, muddy water again uncover any fraud... hahhhaaa. If china economy is not in decline, why so many Co. reporting more than 40% drop. The problem could well be much worse.

Property price however remain super strong in the face of all the Co. trouble..How could it be?

[dzwm87]

Engineer with Electronic/Computer or related qualification (prefer post-graduate), with experience of working in MNC, able to communicate in English "internationally", work experience on semi-conductor / advance software projects.

The similar group of engineers that Intel research lab in Shanghai are recruiting.

Criteria looks fair to consider them at the upper class of "elites".. hence probably US$2.5K is the upper limit.

Is CMZ positioned among the elites? (i.e. MNCs) Does their technology warrants such a high pay? I don't think. At least they are not performing some high-tech genetic crop transplant.

Think 4Q result will still be the game changer.

[CityFarmer]

As second thought, will the salary quoted include necessary supplementary cost of staff?

We add supplementary cost per head when we evaluate the cost of staff in Singapore e.g. cost of medical insurance, cost of entitlement etc.

All previous figures are in pure salary, exclude the "hidden" cost.

[D123]

Bringing the discussion back to the topic of the press release, here are a few thoughts:

1. The stacked farming of king oyster mushrooms is not a new venture. They have been doing this for more than a year. So why do they need to do a press release on this? Enterprising shareholders who ask questions would already know this a long time ago. Heck, there are even non-shareholders in this forum who know this. Furthermore, in my book, the terms "commercial farming" and "industrial farming" are just marketing spiel. They are both forms of industrialized farming, the differences in their definitions are the degree and type of industrialization. Many of the touted advantages of "industrialized farming" such as the first four ticks on Pg. 2 and last three points on Pg. 6 can also be achieved by greenhouses and are not unique to the stacked farms that they seem to be selling.

2. They are not comparing apples to apples in their presentation. "Industrialized farming" figures are based on king oyster mushrooms while "commercial farming" figures are based on overall fresh vegetables. I don't think you can stack chives and capsicums the way you stack king oyster mushrooms. Even if you assume that they can stack black fungi and champignon mushroom crops like they stack king oyster mushrooms, collectively, the fungi crops only account for about 38% of revenue, and this is presumably with a part of the king oyster mushroom crop already ramped up using the stacked farming method. Even if you use FY2011 figures, the proportion is 50%. We shouldn't be too quick to extrapolate the gains to the operations of the whole company.

3. This might be a bit picky, but here are some additional dodgy numbers in the presentation.

Pg. 8 - payback periods and ROIs do not tally. E.g. An ROI of 35% implies a payback period of less than 2.5 years, not 3 years, and an ROI of 29% implies a payback period of less than 3 years, not 3.5 years. The second example shows that these are not rounding errors but calculation errors.

Pg. 9 - An increase in capacity from 4 tons/day to 24 tons/day is a 6-fold increase, not 5-fold.

In summary, this press release seems like a slightly sloppy marketing job and does little for me. I think the company is just paving the way for added capital raising. Assuming that the general investment public is more pliable than corporate bankers, I'd say a placement of securities that involve some form of equity (straight, convertibles, hybrids etc) is more likely.

[dzwm87]

Of course, we shouldn't be quick to extrapolate the gains to their business. It is also not a reiteration of industrialized farming. Their key message was a shift towards industrialized farming. In other word, they are no longer continuing to push for the aggressive 120mu (if I rmb correctly) farmland expansion goal. They can't compare it from exact apple for apple but it illustrate the main factor behind most analyst issues - that "CMZ has no room to grow".

So, while most analyst highlighted that CMZ cant meet their expansion goal, this news release is to announce its strategic shift.

Now, the question is how much more are they expanding?

Based on 3Q conference call, they indicate a rough but unconfirmed plan to expand another 50tons/day capacity.
.At current, its Tianjian industrialized farm (at 210 mu) is able to produce 20 tons/day with a possibility in hitting 30 tons.
..We simply assume 20 tons/day capacity for 200 mu (simple calculation):
...To meet that additional 50 tons/day, CMZ will need to expand an additional 500mu.
...Based on the supplement slides, investment cost is at RMB 475K/mu - this translates into around RMB 240m in gross investment cost.

.On an additional 50 tons/day, let's see how much additional revenue can they generate:
..Based on supplement slides, average selling price is RMB10/kg - this translates into around RMB 180m in additional gross sales. (around 7.5% of sales)

.Now let's compare this to open farmland:
..To meet same amount of RMB 180m sales, we need approx. 12.5K mu of land (based on annual yield of RMB 14K)
...Based on supplement slides, investment cost for open farmland is at RMB 24K/mu - this translates into around RMB 300m in gross investment cost.

From this, we can know a few things:
1. IMO, their shift to industrialized farming won't be a major gamebreaker - at least for FY2013.
2. Shift to industrialized farming is indeed less costly - subjected to the accuracy of the figures provided.

==

1. Correct me if I am wrong, but payback for ROI of 35% should be 2.8 years (1/0.35; round up to 3 years)
2. I think they are implying a 5-fold gain. It's akin to saying a 5-bagger.

[dzwm87]

I think CMZ may have understated the amount of workers ratio for its industrialized farmland.

From its supplement ppt slides (pg 6):
"For example, a typical 100 mu of open-field farmland will require approx. 30-40 farmers for peak period harvesting, compared to just 10-20 production workers for industrialized farming of similar size."

I came across this article about a reporter visit to the CMZ Tianjin industrialized farm: http://news.enorth.com.cn/system/2011/08...9927.shtml

The most interesting observation is that there are approx. 160+ workers in this 210mu industrialized site. This means that in terms of gross workers ratio (regardless of job role), 100 mu of industrialized farmland should have about 80 gross workers.

From my earlier post, total annual labor cost is approx. RMB2.4m. This means average monthly salary is RMB2500 - approx. US$390.

Two things to note:
1. Somehow, the figure of a monthly RMB2500 reconcile with the monthly figures stated on the article provided by yeokiwi. (link)
2. Probably, in hoping to create a good analogy of cost savings, CMZ did not disclose on the full worker amount and chose to use the term 'production worker'. In contrast, we know that open farmland has no role distinction - everybody is just a farmer.

[Nick]

CIMB did a site visit to king oyster mushroom facility and wrote a report with an 'Outperform' call:

http://www.remisiers.org/cms_images/rese...12cimb.pdf [Report]

(Not Vested)

[Underdogger]

CIMB issued a buy for China Essence a few years ago with a target price of more than 50 cents.

Now, essence is only 7 cents.

[ValueBeliever]

Better go read the HongXin sport report! The chinese of China are terror when it comes to swindling. No auditor can find out or dare out right declare their facts and findings without qualification!!

I bet you they will get away with this but the CFO is going to jail for not uncovering the problem earlier to the bod. Bod if they ever reside in USA jurisdiction will be sue to bankrupt but this Spore. Your friends never get into trouble if the law knows you - haaahhaa!

I have yet to see any ID being sued?