Asian Citrus Holdings Ltd EPIC ACHL

WEB SITE : http://www.asian-citrus.com/gyen/index.php

Shares in issue circa 61 million

Interim period end 31/Dec

Full year end 30/Jun

AGM 14th Nov 05

Est next int : 29/03/06 Est next prelim : 11/10/06

Diluted EPS for year end 30/06/05 34p

NAV : 126p per share

PE ratio : 3

Info : LINK

In my opinion this could be a bargain and a potential large riser within 12 months if the sun keeps shining. Its a plantation share yes, so its not a trading share but one to invest in by tucking a few k away, and as a plantation share it has its risks, the natural occurring type ! But on a last year PER of times 3.52 on the diluted EPS figure there is too much risk in the price and a times 15 rating of current year forecasts would be more appropriate. The market in China is of course massive and oranges and OJ are only now starting to become more popular as the trend of fitness and vitamins starts to take off in China.

The potential is massive and the new supermarket agreement (LINK HERE) shows that margins are improving in the form of direct to supermarket deals, and that a deal with a supermarket chain (Guangxi is but a tiny province of China with a very small population level compared to others) in one province can take up a large amount of production.
The other benefit is that it is well known that the RMB will be appreciating to the US dollar over time, gradually. The RMB is at near historic high levels against sterling due to the weakness of the dollar and the conversions in results are at 14.25 where a more normal level is around 12 RMB to the pound (I can still remember when we used FEC and still have some locked away somewhere ).

The rise of the RMB over time will again assist in sterling profit terms. The company has also stated that from year end 2006 a dividend will commence being paid so this all adds to my large rise within 12 months cauldron thinking. I think Evo forecasts will be beaten as well.

Evolution Securities forecasts pre-tax profits of 14.6m for 2006, with EPS of 24p and a dividend of 7.3p.

People will say plantation, people will say China and a multitude of reasons of risk but from my experience in China ventures by Overseas Chinese (HK, Taiwan and Macau) do well and not to be confused with real foreign ventures which tend not to do well.

Final comment is a quote of the Shareholder Value paragraph of the full year results

Shareholder Value

To maximize shareholders' value, the Board is committed to observing a strict set of internal financial policies. Depending on the capital expenditure plan and working capital requirements of the Group, the Board intends to adopt a dividend policy that will recommend a dividend payout equivalent to at least 10% of the net profits starting from the year ending 30 June 2006. As opportunities
arise, management will consider different ways of fund raising in order to cater for the Group's investment needs whilst maintaining an appropriately structured balance sheet. As a yardstick, to avoid over-expansion, management considers that it is prudent to maintain gearing of less than 40% of the Group's net assets and an interest coverage of not less than four times.

But DYOR ! and remember its a plantation stock !


Major shareholders :

Market Ahead 41.96
Huge Market 40.31
Henderson Global Investors 4.28
Kingston Corporate Finance Limited 3.26

http://www.fas.usda.gov/htp/Hort_Circular/2005/04-05/04-04-05%20Orange%20Juice%20Feature.pdf

April 2005 World Horticultural Trade & U.S. Export Opportunities

China

Chinas consumption of orange juice continues to grow. In 2004/05, it is forecast that consumption will grow about 12 percent from the previous year. According to reports, demand for orange juice will continue increasing dramatically. Juicing companies increasingly advertise the nutritional benefits of orange juice through all media. Young consumers are driving consumption at a fantastic speed with demands for drinks with different juice contents. The Ministry of Agriculture (MOA) reports per capita consumption of orange juice in China was 0.1 liter in 2001 and it is expected to reach 0.5 liter in 2005 and 2 liters in 2010. This translates into 650,000 tons in 2005 and 2.6 million tons of orange juice consumption in 2010. Forecasts may be overly optimistic, but the growth rate remains amazing. The local juicing industry will not be able to produce such quantities of orange juice in the absence of sufficient raw materials. A few companies have invested in juicing facilities and commercial groves, but it will take years before a sizable orange juice volume is produced. Imports, mostly from Brazil, will satisfy the thirst for orange juice in the short to medium term.

The buying should be from them doing the rounds in the city at the moment, I hear they are putting over a very good impression with presentations.

April 2005 report on Situation and Outlook for Citrus

LINK HERE

China

Chinas production of citrus during 2004/05 is forecast at 12.9 million tons, up nearly 3 percent from 2003/04. Orange production occupies an increasing share of total citrus production in China, but the supply of high quality fruit will not be sufficient to meet growing demand anytime soon. Fruit quality is improving steadily, yet post-harvest handling such as grading, washing, waxing, and packing remains behind the times. There are no nationally recognized brand names, and there is very little domestic marketing. Domestic citrus is mostly early-to middle-arrival varieties harvested September through December. As cold storage facilities remain insufficient, domestic fresh citrus is rarely found on the market from April to August. Although domestic juice consumption is increasing dramatically, Chinese juicing companies source only a tiny share of domestic fruit. Large supplies of juicing oranges are simply unavailable, and the short supply season makes operation costs even higher.

Asian Citrus Holdings Ltd
14 November 2005
Asian Citrus Holdings Limited
('Asian Citrus' or 'the Company')
Result of AGM

At the first Annual General Meeting of the Company, held at 09h00 today, Monday
14 November 2005, at 100 Wood Street, London, EC2V 7AN, all resolutions
proposed, as set out in the Notice of Meeting, were duly passed.

Tony Tong, Chairman and CEO, said at today's AGM:

'This is the first AGM following our listing on 3 August 2005 and the company
has developed according to the strategy outlined at listing. The Company's
plantations are developing on schedule and we have also concluded a supplier
contract with a local Chinese supermarket chain, as announced on 26 October
2005.

We continue to evaluate further supplier contracts with several large-scale
supermarket chains and announcements will be made as appropriate.

With both the organic growth from the plantations and continued success in our
marketing efforts, we believe that the Company has a bright future.'


About Asian Citrus Holdings Limited

Asian Citrus Holdings Limited is the largest orange plantation owner and
operator in China and has two plantations in the Hepu county of the Guangxi
Zhuang Autonomous Region and the Xinfeng county of the Jiangxi province of
China. Its primary goal is to sell quality oranges at an affordable price and in so doing, strengthen its position as a leading, mechanised and industrialised orange grower and distributor in China.

For Further Information Contact:

Terry Garrett/ John Moriarty/Helen Thomas
Weber Shandwick Square Mile 0207 067 0700
14 November 2005

A 100K buy and then a 200K protected buy at the end, so more positioning by insti's.

I would imagine an amount left over from the IPO, and EVO are simply moving it up as it becomes less and less. Given the harvest time of Nov/Dec you would expect insti's to take their positions before year end, I think.

Just got this through today on email;

Buy Asian Citrus at 117.5p
Says Rob Cullum of Trendwatch.co.uk

HANDS UP all those of you who recall the saga of Polly Peck? You need to be a certain age.

Briefly, in 1980, a Cypriot businessman called Asil Nadir took control of a small UK textile company called Polly Peck and expanded it into a massive conglomerate involving textiles, electronic and electrical household goods, hotels and holiday resorts and citrus fruit growing and juice bottling. Its crowning glory was the 1989 acquisition of Del Monte, one of the world's biggest suppliers of fruit and vegetables.

The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares.

In less than 10 years, the capitalisation of Polly Peck went from 0.3 million pounds to 731 million pounds. Then, in 1990, the whole company collapsed like a house of cards with 1 billion pounds of debt. Nadir was charged with fraud. He fled back to Cyprus in 1993, never to return.

These musings were prompted by nothing more significant than the fact that company we're about to recommend is also a grower of citrus fruit. There the parallels with Polly Peck end. we hope. But then again Asian Citrus Holdings is a Chinese company. In China, anything is possible. Hopefully Tony Tong will be like Asil Nadir, minus the rotten bits.

Tony Tong, the founder of Asian Citrus, is a Hong Kong entrepreneur with over 20 years experience of doing business with mainland China; so if anyone can make a success of this business, he should be that man.

The company floated on AIM as recently as August, raising 12 million pounds. A quoted Hong Kong company called Chaoda Modern Agriculture has a 40% stake and has pledged not to sell until October 2007.

China is the home of the orange - most of the varieties grown around the world originated in China - and Asian Citrus is already China's biggest orange producer, with just over 1 million trees producing just under 100,000 tonnes of fruit. It has two plantations covering roughly 6,800 hectares, an area the size of Guernsey. Its first plantation is situated in the Hepu region of the Guangxi Zhuang region of China, and is already in production. The yield will rise steadily as the trees mature. Oranges take 3 year to come into fruit and 8 years to mature and reach their maximum yield. The productive life of an orange tree is about 20 years.

A second plantation is under development in the Xinfeng region of Jiangxi province. Planting should be completed by next year. It will start fruiting in the winter of 2007. The crop is sold to corporate customers and wholesalers within China. Tong's aim is to set up an orange sales network under a national brand name - a sort of Del Monte of the Chinese citrus business.

Asian Citrus is in the great position of operating in a market where demand already outstrips supply. Tong believes it will continue to do so for the foreseeable future, as the standard of living in China continues to improve. It has no intention of getting involved in exports.

The company is already highly profitable, highly cash generative (last year it generated 14.3 million pounds cash) and enjoys high operating margins. And it intends to pay out about 10% of the profits in dividends. In the year to June, its turnover and profits were:

2003: Turnover: 12.2 m; profit: 8.6 m.
2004: Turnover: 18.2 m; profit: 10.9 m.
2005: Turnover: 22.6 m; profit: 18.9 m

Evolution predicts a profit fall to 14.6 million pounds in 2006, as that will be a consolidation year, followed by bumper years thereafter as new trees start producing. So already the company is building a first-class track record. The 2005 figures beat the projections in July's AIM prospectus.

What could go wrong? Plenty. For a start, China is the Wild East. Private companies are not a natural state of affairs in China. Then there are the usual hazards of plantation companies: the weather, disease...

Against that, this is one investment that should benefit from the projected rise in the value of the renminbi - as the Chinese currency rises, so profits expressed in sterling terms will rise. And the shares are incredibly cheap on a forward p/e of about 4. We also find it reassuring that Mr Tong cares enough about the importance of accountability, transparency, corporate governance, investor relations and shareholder value to have a separate section for each in the results announcement. That doesn't sound like Asil Nadir.

As someone rather hilariously put it, if you lose your shirt on this share, you can put it down to a slip of the Tong!n BUY.

Key Data

EPIC: ACHL
NMS: 5,000
Spread: 115p - 120p
Market Cap: 12.7 million pounds

=TrendWatch is unique. It is the only publication that gives you complete listings of shares in uptrend and downtrend - vital information for investors and traders alike. Based on this, we make three fully researched share recommendations per fortnight. For a 3-issue free trial, contact us at http://www.trendwatch.co.uk/.

Some good buying volume today. A future income stock going very cheap at the moment !

Two recent articles to read on the yuan.


http://www.wjla.com/news/stories/1105/277510.html

Chinese Yuan Surges Against the Dollar
Monday November 14, 2005 6:03am



http://www.tuftsdaily.com/vnews/display.v/ART/2005/11/14/43781d8bf0f8c

Published November 14, 2005
A stronger yuan makes for a stronger China

A blue day yesterday and a few more buys today. At least the move up shows that strength is there and as more and more buys come in, we should see a few more blue days.

Thanks for all the excellent posts PapalPower

Welcome, moving up again today.

2 MM buys this morning at full offer of 122p, then an X trade of 35K at 122p.

Looking very strong at the moment.

Interesting trades, a 35K late reported buy at 123p is shown as a sell, so no sells today in fact so far. The 35K X covers the 35K late reported buy.

A couple more ticks up, nice and slow but consistent is good.

very good. Should keep moving up. Wish EVG would do the same. Another undervalued stock IMO

A good day for ACHL, lets hope for more of the same.

I like the line in the header on the AFN thread;

"The Future is Bright, The Future is Orange(s)" !! ;)

I once held shares in Orange. Guess there's a theme here! ACHl should be a nice long term hold.

Guess people are onto the stock. Will buy some more if it drops back!!

I should post on this BB more often. I see EVG has begun to move- still undervalued though.

This is motoring now

Baza

Its on a current year PER of 5, so there is plenty in the tank to keep on motoring, for many months to come.