DFM - Dongfang Modern Agriculture Holding Group - Aussie Stock Forums

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  1. #1

    Post DFM - Dongfang Modern Agriculture Holding Group

    Dongfang Modern Agricultural Holding Group is a leading grower/harvester of citrus and camellia tree produce in the Ganzhou City region of Jiangxi Province in the PRC.

    With production of over 200,000tpa of produce made up of Tangerines (mandarin oranges), Pomelos and Navel Oranges and also the fast growing Camellia fruit (seeds and nuts) Dongfang Modern generates annual sales revenue of over A$170m (RMB870m) and with high operating margins of over 40% expects to report earnings of A$75m in calendar 2015.

    It is anticipated that DFM will list on the ASX during August 2015.


  2. #2

    Default Re: DFM - Dongfang Modern Agriculture Holding Group

    The chairman, who seems quite young, will retain around 80% of the shares in the company. So this certainly offers some control risks in terms of management being trustworthy to look after the interests of shareholders.

    The company has seen revenue growth of over 20% and has an EBITDA margin of over 40%! This seems to have a strong tailwind into the future with the outlook forecast: 'The production of citrus fruit in PRC is expected to have further continual growth over the next five years with the production value and production volume growing at a CAGR of about 10.2% and about 4.9%respectively due to the initiatives carried out by the PRC government.'

    However, it appears that the high growth experienced since inception around six years ago, and the high margins have mainly resulted from regulatory intervention: 'Private land ownership is not possible in the PRC but individual farmers historically have been given a right to the usage of the land. However, the Ganzhou City’s government has allowed aggregation of these land usage rights to permit large-scale intensive farming.' Great when it is working for you but what happens when it goes the other way?

    Way too risky for me, though I do like the thought of buying a food producing company within the Chinese market and the long term demand that it presents...

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