China Minzhong Food Corporation

[Stocker]

Chinaman can be trusted, but the last one .

[Contrarian]

Shareholders better pray they dont privatise this one. It is dirt cheap from IPO price...

[Stocker]

They won't privatise but will kill u softly with their songs.

[Nick]

CHINA MINZHONG MARKS OFFICIAL START AT NEW INDUSTRIAL PARK WITH HEALTHY ORDERBOOK

- Processing capacity at New Industrial Park approximately 3 times the current capacity
- Sees no slowdown in demand for vegetables so far despite European crisis and global economic uncertainty and expects the entire export order book to be higher in FY2012 compared to FY2011
- Expects positive contribution from New Industrial Park in FY2012, alongside with maiden harvests from 22,176 mu of new productive farmland.
- Opening ceremony held in conjunction with China Minzhong’s 40th year anniversary celebration – testament to the Group’s long operating track record

http://info.sgx.com/webcoranncatth.nsf/V...200821A0B/$file/Minzhong_PressRelease_27Dec11.pdf?openelement [Press Release]

CMZ soared 10% and is trading at 79.0 cents.

(Not Vested)

[dzwm87]

Wow, just an announcement of the completion of its plant + some simple photos of the new plant, it became a catalyst for a more than 10% rally in its stock price.

Last done at 0.855... does reiterated how investor mood swings like a pendulum

*not vested*

---

Have done up a detailed research on China Minzhong..

Please take a look if you're interested!

China Minzhong Research



*not vested*

[weijian]

Therefore, now, we know that not only a portion of depreciation & amortisation is allocated to COGS but quite a significant portion of it is under COGS - since other items can't possible contain such non-cash charges.

I did some digging (link) and realised that such an accounting practice is not fraudulent and very much depend on what fixed or intangible asset is being used in its production.

Perhaps, for CMZ, land improvement, land rights or PP&E are considered part and parcel of its farming processing activities? And thus, such non-cash charges are attributed to COGS?

---

hi dzwm87, i met up and understood more about the above from my accountant friend. Basically, it is normal to have majority depreciation allocated under COGS, depending on the industry and mfg type.

Accounting 101:
Depreciation/Amortisation can be allocated under 'COGS' or 'bottom line', depending on how the asset is directly involved in the production of the product.

Imagine a factory that has a production line and also an office. Assume total factory area = 100sqm, production line and office each occupy 50% of area, and yearly depreciation cost=100sgd.
If the machines that produce the goods use up 10% of the production line's floor area, then depreciation cost of the factory building allocated to COGS will be = 10%*50%*100sgd = 5sgd.

With CMZ, one can imagine that majority of the land area is covered crops, hence the bulk of the depreciation of the land leases/land improvement costs, is allocated to COGS for the fresh veg part of their biz.

[dzwm87]

Yep, dug out the same info from google as well.

In fact, if you read their IPO Prospectus, it is actually stated very explicitly on their COGS - which I don't think it will be a fraud - can't be as obvious as that right?

Nevertheless, CMZ has rebound quite fierce based on the commencement of its new processing facilities. It's still a bargain at that price, if measured against a decent 6x P/E hurdle but the recovery has rendered it to be too expensive (for me) given the poor sentiment over S-chips - which means that S-chip re-rating will take quite a while before it will be realised and also the downside factor of zero dividend payment at all. Potentially, there is also a likely share placement or bond issue if in any case, they are planning to expand (leased farmland can't be used as collateral for bank loans). Bond issue is less likely in my opinion, unless a 0-coupon bond is issued - as the others require periodic coupon payment which will eat in to CMZ's cash; which is needed for leased farmland expansion. IMO, share placement might be more probable.

With all these, there's too much downside risk for me to take a position..

*not vested* & happy new year guys!

[dzwm87]

Prudential has sold 575 lots and reduce their stake to below 5%.

It might prove to be a slight hinder to their recent bullish surge. A similar case was Aberdeen's stake reduction for Yanlord.

Will be interesting to see how this goes tomorrow.

[Nick]

CHINA MINZHONG 1HFY2012 NET PROFIT UP 28.4% TO RMB267.8 MILLION

- 1HFY2012 revenue grew 25.1% to RMB1,012.2 million, underpinned by strong demand in both Cultivation and Processed Business divisions.
- 1HFY2012 gross margin stable at 38.1%.
- Approximately 5,000 mu of new farmland started cultivation in 2QFY2012, while another 17,000 mu of new farmland to start in 2nd half of FY2012.
- Healthy export orderbook on hand to boost capacity utilization at New Industrial Park.

http://info.sgx.com/webcoranncatth.nsf/V...200837C4E/$file/2QFY2012_Results_Presentation_Final.pdf?openelement [PPT Slides]

http://info.sgx.com/webcoranncatth.nsf/V...200830E46/$file/Minzhong_2QFY2012_Press_Release_Final.pdf?openelement [Press Release]

http://info.sgx.com/webcoranncatth.nsf/V...20082CC3E/$file/2Q2012_Minzhong_Announcement_Final.pdf?openelement [SGX Announcement]

Minzhong share price is $1.04 now.

(Not Vested)

[dzwm87]

surprising fall on its price. think there was too much bullishness and expectation on CMZ?