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Commentary

Wal-Mex - A growing behemoth from the South

Wal-Mart subsidiary offers double-digit net income growth

Ever wonder what your life would be like today if you or your parents had possessed the foresight to invest in Wal-Mart (NYSE: WMT) back when it was just a young, upstart company from Northwest Arkansas?



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China Organic Agriculture, Inc. (CNOA) Boosted by New Retail Distribution Agreement

According to the global survey on organic farming 2007, conducted by the Foundation Ecology & Agriculture SOEL and the Research Institute of Organic Agriculture FiBL, organic agriculture is developing rapidly and is now practiced in more than 120 countries of the world. Almost 31 million hectares are currently managed organically by at least 633,891 farms.  China Organic Agriculture, Inc. (CNOA), one of the largest producers of organic rice in China, controls all aspects of the process from seeds to planting and processing, R&D and sales. The Company also has an extensive sales network, located in the major cities in China.  The general market in which the company operates is enormous, growing and highly fragmented.

 

Since its inception in 2002, CNOA has experienced significant growth, and as an agricultural company is exempt from Chinese taxes. CNOA has put solid plans in place to markedly expand revenues. The quality of CNOA’s products results in the ability to command and receive prices 15% higher than competitors. 

 

With annual rice production of approximately 30,000 tons, including 4,000 tons of organic rice production, CNOA has a significant share of China’s organic rice market. CNOA has plans to increase production capacity significantly to meet the expected surge in organic rice demand driven by China’s expanding middle and upper classes. The long-term organic trends globally and more recently in China seem to support CNOA’s view of the company’s growth prospects.

 

China Organic Agriculture recently announced that it has reached a milestone 3-year retail distribution agreement with Shunda Grain and Oil Company of Songyuan City, one of the largest cities in the northeastern province of Jilin.  The agreement is expected to contribute revenues of 30 million Yuan, equivalent to approximately USD$4 million within calendar year 2007. The agreement states that Shunda Grain and Oil will become one of CNOA’s authorized retailers in the supermarket chain store industry, selling “ErMaPao” award-winning series of products to the Fuyu region with more than 2.8 million consumers. 

 

As stated by Huizhi Xiao, Chairman of China Organic Agriculture, “China Organic continues [to] expand revenues and earnings from an ever-growing list of agreements with some of China’s largest retail distribution systems.  This agreement as well as [with] other major retail distributors such as Suguo and Hualian will only help to increase our growth as we look to move forward with expanding our distribution systems and broaden our share of the large rice market in Songyuan City.”

 

About China Organic Agriculture (CNOA)

China Organic Agriculture is among the largest producers of organic rice in China. CNOA controls all aspects of the process from seeds to planting and processing, R&D and sales. The Company also has an extensive sales network, located in the major cities in China.  CNOA has experienced significant growth since its inception in 2002, and as an agricultural company is exempt from Chinese taxes. CNOA has put solid plans in place to markedly expand revenues. The quality of CNOA’s products results in the ability to command and receive prices 15% higher than comparables.  CNOA has in excess of 6260 acres dedicated to green and organic rice. The irrigation system is fed from the Nen River, one of the last unpolluted rivers in China, and no chemicals or fertilizers are used in the process. The Company’s flagship brand, ErMaPao, has won several quality awards and holds the highest organic certification.
 
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