CONTIUED TIP21 Feb 2012 20:34
During the winter growing season, up to December 2011, orange production at Asian Citrus's two producing plantations rose by 19 per cent, with selling prices up 3-4 per cent. And the company still has plenty of production growth built in. Its Hepu plantation is fully planted, with 1.1m trees, but undergoing a replanting programme. While at the Xinfeng plantation just 1.2m of its 1.6m trees are currently producing, with the balance maturing. It is a similar story at the Hunan plantation, where only around 500,000 of the planned 1.8m orange trees have been planted.
A shift in the classification of Asian Citrus's trees from young to mature will produce more so-called 'biological gains' on paper when its interim results are announced. Despite that, its trading results are expected to show a strong increase in profitability.
And there are 'value' credentials on offer: Sue Munden, an analyst at broker Seymour Pierce, which advises Asian Citrus, calculates the net asset value of the company at 65p a share and points out the healthy cash balance of almost 19p per share as another source of comfort.