China Tracker - Details for China Nutrifruit (CNGL)


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 China Nutrifruit
 Analyst Coverage
2011-02-17Rodman & RenshawReiterationOutperform$5.00
 

We continue to see CNGL as an appealing investment for long-term investors, due to its low valuation (5.7x our FY'11 EPS estimate of $0.57) and positive pricing tailwinds, which we expect to continue near-term. We maintain our $5 PT, which assumes nearly 9x our FY2011 EPS estimate.

2011-02-01Rodman & RenshawReiterationOutperform$5.00
 

China Nutrifruit Group (NYSE Amex: CNGL) this morning announced that it has begun to supply concentrate fruit juice to Cargill Trading (Shanghai) Ltd. in January 2011, to be resold to Mongolia. This initial contract, although only 120 tons (~$200k), marks the first time in which the company has sold its products beyond China's borders, and is a step towards the company's long-term strategic plan to tap into the international markets. The combination of 1) this contract, in addition to the 2) more sizeable $2.1MM/1,500 tons apple concentrate juice contract with Doehler Rizhao announced on January 24th, 3) the upsized production of seabuckthorns and blackcurrants, and the 4) across-the-board double-digit increases in selling prices are expected to offset the two-quarter delay in fruit & vegetable powder revenues. These offsetting factors result in no change to CNGL's FY2011 guidance of $90-$95MM revenues and $22-23MM net income. Recall that the powders were originally expected to begin production in earnest in September 2010 and contribute ~$13.5MM revs. to FY'11 (ending in March 2011).

Update on TDR Listing. CNGL is still looking to sell 5MM primary shares, along with 2.3MM secondary shares (sales by existing shareholders) on the Taiwan Stock Exchange, the proceeds of which will be used to build out production capacity to meet demand. Note that most of CNGL's production lines are operating near full-capacity. Importantly, the company has engaged Deloitte Touche Tohmatsu as ongoing auditor for its Taiwan listing, which should differentiate China Nutrifruit from many of its U.S.-listed Chinese peers and instill a higher level of confidence into the accuracy of the company's financials. Marketing of this round of equity raise is expected to begin after Chinese New Year.

Maintain Outperform Rating and 12-month PT of $5. We are pleased with the contingency plan that CNGL has put in place to meet its FY'11 revenue and net income guidance, which shows the company's commitment in delivering results to shareholders. We are also cautiously optimistic with regards to its pending TDR listing. We note that the Taiwanese have arguably the highest annual fruit consumption per capita of 93.6kgs compared to the world average of ~47.8kgs, according to Euromonitor, and should be more receptive to listings of specialty fruit companies. We are maintaining our FY2011 EPS estimate of $0.56, but are adjusting our F'3Q11 (ending in December 2010) and F'4Q11 EPS estimates to $0.15 and $0.19, from $0.13 and $0.22 respectively. Our 12-month price target remains at $5 given that CNGL is currently trading at 5.5x our FY'11 EPS estimate. We believe that CNGL merits a higher multiple of 9x, given peer trading levels and growing visibility into its guidance of 24% topline and 18% net income expansion in FY'11, respectively.

2010-07-30Rodman & RenshawReiterationOutperform$5.00
 

Our FY'11 EPS estimate bumps up to $0.58 from $0.57 previously due to a modestly higher gross margin expectation. For FY’11, we are now looking for 46.1% GM vs. 45.3% previously.

2010-07-27Rodman & RenshawReiterationOutperform$5.00
 

In light of growing visibility into robust supply and demand over this harvest season, which is feeding into our growing confidence around mgmt's FY'11 guidance, we are maintaining our F'1Q11 EPS estimate of $0.05, but adjusting our FY'11 EPS estimate to $0.57 from $0.55 previously.

2010-06-28Rodman & RenshawReiterationOutperform$5.00
 

We maintain our 12-month price target of $5 given that CNGL is currently trading at 5.8x our FY'11 EPS estimate of $0.54. We believe that CNGL merits a higher multiple of 9x given peer trading levels and growing visibility into its guidance of 27% topline and 16% net income expansion in FY’11, respectively. Our current estimates are under review.

2010-05-19Rodman & RenshawReiterationOutperform$5.00
 

We are maintaining our Market Outperform rating and EPS estimates. At $3.10, CNGL shares are trading at 5.2x FY’11E P/E and 3.1x FY’11E EV/EBITDA compared with average peer multiples of 6.8x and 8.4x, respectively. Note that we are comparing CNGL's FY’11 estimates with the group’s FY’10 estimates, as CNGL's fiscal year ends nine months prior to the majority of its comparables. We are comfortable with our $5 price target, which applies a P/E of 8.4x to our FY’11 EPS of $0.54 and FY’11 EV/EBITDA of 5.4x.

2010-02-10Rodman & RenshawReiterationOutperform$6.00
 

We now expect the Company to report FY10 and FY11 revenues of $69.5mm and $89mm, respectively, compared to our prior estimates of $70.8mm and $94.2mm. We have also adjusted our gross and operating margin assumptions and now expect CNGL to report FY10 and FY11 net income of $18.5mm and $22.4mm, marginally below our previous estimates of $18.6mm and $22.9mm. While this does reflect a reduction in our expectations it should position the company to meet the profitability requirements in the remaining make good provisions.

2010-01-05Rodman & RenshawReiterationOutperform$6.00
2009-11-13Rodman & RenshawReiterationOutperform$6.00
CNGL
Food
SCORE
4
UNDER REVIEW
READ: Score Cards Explained
SAFETY/RISK SCORE
HIGH RISK
DETAILS: Safety/Risk Model for CNGL
Current Price:  n/a
F10k Day (2009-08-13): -100.00%$3.90
2009 Close: -100.00%$4.26
2010 Close: -100.00%$2.79
2011 Close: -100.00%$0.76
High (2012-02-01): -100.00%$0.60
Low (2012-07-13): -100.00%$0.01
Exchange:
Market Capitalization: n/a
Total Shares: 40.38 mill
Float: n/a
Avg Volume: 46.10 k
Short Interest: 10.20 k
Short Ratio: 0.06%0.2 d
Last Quarter: 2010-12-31
Revenue (MRQ): 22.14 mill
Net Income (MRQ): 6.24 mill
Op. Cash Flow (MRQ): 16.95 mill
all financial data provided without warranty