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

Thanks PP, just about 6mill in free float, not many, any amount of Buys/sells will see
this move.....Chaoda must be one of the large holders...Who as you say are locked in.......Have a small holding but will add in stages.....

Market Ahead 41.96

Huge Market 40.31

Henderson Global Investors 4.28

Kingston Corporate Finance Limited 3.26

barwoni make that not selling until earliest Oct 2006 and not 2007, will add to a shortage of stock later I think.

http://www.aastocks.com/eng/News/newstext.asp?source=AFX&item=AFX200562990088

2005-7-29 09:18:00 a.m. HKT, AFX
Hong Kong-listed Chaoda Modern says associate to list on London's AIM on Aug 3

HONG KONG (XFN-ASIA) - Chaoda Modern Agriculture (Holdings) said associate company Asian Citrus Holdings will be listed on London's AIM on Wednesday (Aug 3).
It said its shareholding in Asian Citrus will be diluted to 40.31 pct from 49 pct as the associate will be placing 9.1 mln new shares and 1.7 mln existing shares ahead of its listing.
It noted that it is not selling any its shares until after the release of Asian Citrus' financial results in October next year.

(1 usd = 7.8 hkd)
leonora.walet@xfn.com

i read something recently about a shortage of oranges somewhere...but i think that it was maybe only to do with the US areas that were hit by the hurricanes

US area's yes, but an reduction in US exports will make domestic prices rise in countries that take a lot of US farm produce as imports, like China. Could be very beneficial to ACHL ?

Chaoda use huge markets at their investment vehicle...40.3%
Googled Market Ahead, but had no luck, suspect that is the directors holding company!

Have a few K holding, but I would not bet the farm on it......

barwoni its worth a few k punt, lock it away and wait for the harvest at Oct results next year, it might be a very good harvest and it might not, but worth the minimal risk. If there are more Supermarket deal announcements that will be much better. As they are based in Guangxi look for any deals with neighbouring Yunnan, Sichuan or Guangdong (Guangdong or Sichuan would be massive deals if they could pull something off there or of course Walmart China).

The relaxing thing here will also be it will be driven by hedge funds and Institutions and if they want to get in it will suddenly shoot up as they move in. Sit back and relax on a 12 month wait here.

AGM is next week, is anyone going ?


Annual General Meeting

The Annual General Meeting of the Company will be held at 9.00am on 14 November
2005 at 9/F, 100 Wood Street, London EC2V 7AN, United Kingdom.

Interesting there was an MM buy of 25K in the trades today.

http://www.fao.org/documents/show_cdr.asp?url_file=/DOCREP/003/X6732E/x6732e02.htm

Oranges

World consumption of oranges grew at a compound rate of 3.5 percent over the period ranging from 1986-88 to 1996-98. While consumption of fresh oranges grew at an annual rate of 2.9 percent, this was superceded by growth in processed orange consumption, which grew 4.2 percent per annum. Increased consumption of processed oranges in Europe was one of the primary forces supporting expanded world consumption. Even though per capita consumption of fresh oranges in the EU declined from 13 to 9.7 kg, per capita processed orange consumption nearly doubled to 30 kg (fresh fruit equivalent). Per capita consumption of processed oranges also grew in Canada and the United States, offsetting decreases in fresh orange consumption.

Processed orange consumption, however, is still concentrated in the developed countries of North America and Europe. These two regions collectively account for over 88 percent of world consumption. In other regions, however, particularly Latin America, markets for processed orange products appear to be evolving. Processed orange consumption in Mexico more than doubled and Brazilian consumption increased by 50 percent over the period from 1986-88 to 1996-98.

While fresh orange consumption declined in many of the developed countries, it expanded in many developing countries, especially in the emerging economies of Mexico, India, Argentina and Brazil. Strong consumption growth was also observed in China. Fresh orange consumption is declining in the developed countries for two reasons. First, it is being replaced by orange juice consumption. The evolution of not-from-concentrate (NFC) orange juice in both North America and Europe has been supported by the perception that NFC closely duplicates fresh-squeezed in flavor but offers greater convenience. Second, with advancements in transportation and storage, fresh citrus is now confronted with more competition from other fruits such as bananas, grapes and strawberries.

The projections for 2010 for orange production and consumption are predicated on two assumptions. First, the rapid expansion of world orange production will slow. Brazil is currently facing two major disease problems: citrus canker and citrus variegated chlorosis (CVC). Growers are also receiving lower prices for oranges used for processing, which has slowed the rate of new plantings. Florida is also facing disease challenges from the citrus tristeza virus and citrus canker. Lower grower prices in Florida have also slowed new plantings. These lower prices will also affect other Western Hemisphere orange producing countries such as Mexico, Belize, Costa Rica, Argentina and Cuba. These countries allocate a sizeable proportion of their orange production to processed utilization which is dominated by Sao Paulo and Florida.

The second assumption is that fresh orange consumption in the developed countries will continue to decline on a per capita basis. Processed orange consumption will continue to expand in the emerging economies of Latin America, Asia and Eastern Europe, although its main markets will still be found in North America and Europe.

Projected orange production in 2010 is 64 million MT, approximately 10 percent greater than that realized over the 1996-98 period. The projected annualized rate of growth of 0.76 percent is substantially lower than 3.9 percent which occurred from 1986-88 to 1996-98. The projected 64 million MT of production is expected to be utilized as 35.7 million MT fresh and 28.3 million MT processed. The share of production claimed by processed utilization is projected to increase marginally.

Orange production in developed countries is projected to grow at an annualized rate of 0.6 percent with most of that growth coming from the United States. Production in Europe is projected to show little change, with a small increase in Spain offset by declines in Italy and Greece. Production in South Africa is expected to continue to grow as it continues to exploit its advantage as an off-season supplier to the northern hemisphere. On the other hand, production in Israel will continue to be affected by population growth, urbanization and access to adequate water supply. Japan's orange industry is also projected to continue its secular decline as imports become more available.

Production in developing countries is projected to increase at an annualized rate of 0.8 percent. Production in both Mexico and Brazil are expected to contract modestly. Over the next 10 years, it is likely that Brazil will experience a sizeable contraction of production as the combined effects of disease and low grower prices are felt. By 2010, however, the Brazilian industry should be in full recovery and be able to maintain its dominance of the world processed orange market. Mexico is highly vulnerable to the citrus tristeza virus which has been found in the Yucatan peninsula. Mexican producers have also thus far been unable to take advantage of preferential access to the United States market offered under the North American Free Trade Agreement (NAFTA).

Smaller Western Hemisphere orange exporting countries such as Argentina, Cuba, Belize and Costa Rica should find market opportunities as the larger orange producing regions undergo adjustment. Cuba is noteworthy in that it has expanded its orange processing capacity and been able to stabilize and begin to increase its orange output despite the trade embargo imposed by the United States. The processing sector of Belize and Costa Rica has also undergone consolidation, which should lower costs. These two countries, however, are the only two significant processed orange exporters with duty free access to both the United States and the EU. Therefore, they are both vulnerable to further trade liberalization in the processed orange market.

Orange producing countries in Asia are expected to continue to expand production, but nearly all of this production will be consumed in domestic markets. China is projected to overtake Mexico as the third largest orange producing country, and India will challenge Spain as the fifth largest producer. Huge domestic markets in both of these countries, however, mean that virtually all production will be consumed internally. Trade liberalization in these countries could open these markets to off-season imports. Other large Asian orange producing countries such as Iran and Pakistan will also continue to send most of their production to domestic markets. The exception to this observation is Turkey which can, because of its location and its membership in a Customs Union with the EU, compete in the European market. The Mediterranean countries of Morocco and Egypt are also expected to benefit from their proximity to Europe, although they compete directly with Spain, which benefits from being within the EU and TRQs of the EU.

The relatively small projected increase in production will support small increases in consumption of fresh and processed oranges. Per capita citrus consumption in both North America and Europe is expected to change little from current levels. Relatively flat per capita consumption growth in these regions is a direct result of slower domestic production growth and the projected small increase for the main supplier of processed orange products: Brazil. Most increases in consumption will be found in developing citrus-producing countries such as India, Pakistan, China, Mexico, and Brazil.

Brazil and Mexico are notable in that all Latin American countries have historically consumed oranges through the purchase of fresh oranges and then the production of fresh squeezed orange juice at home. In recent years, however, consumers in Brazil and Mexico have begun to buy ready to drink orange juice. This trend is expected to continue as rising incomes in these countries will provide support for switching from home production to direct purchase of orange juice. Rising incomes in Chile and Argentina may also support increased consumption of processed orange products.

The recent trade agreement between China and the United States has opened the Chinese market to imports of fresh and processed citrus. While a sizeable middle class has evolved in China, that country is still faced with infrastructure issues that work against large-scale importation of fresh and processed orange products. It is likely, however, that consumers in the large coastal cities of China will have increased access to imported citrus products. The large population living in these areas and their growing purchasing power should provide a significant outlet for citrus exports.

Expanded consumption of fresh and processed orange products in other East Asian economies is hampered by declining domestic production and trade barriers which increase the cost of these products to consumers. The Japanese processed orange market has failed to live up to expectations generated by the signing of the U.S.-Japan Beef and Citrus agreement in 1986. The long distances that oranges and other citrus products must travel from the major producing countries in the Western Hemisphere also hamper citrus consumption in East Asia. These observations notwithstanding, per capita orange consumption in nearly all of the countries of the Far East is projected to show small to moderate increases. Nearly all of this consumption growth will come from increased domestic production.

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