China’s single largest orange producer and largest orange plantation owner Asian Citrus has raised just shy of £32m to help fund the acquisition of a new citrus fruit plantation.
In a move broadening the shareholder base, existing shareholder Huge Market Investments has placed 12.11% of Asian Citrus’ equity with six new blue chip institutions at a discounted 47.82p-a-share. Huge Market has also subscribed for 68m shares at the same price, bringing fresh cash into the Asian Citrus coffers.
Some, though not all, of the funds, will go towards the purchase of a citrus fruit plantation – the Guangxi Lixin State Owned Farm – boasting around 1.1m citrus fruit trees and covering some 6.67 sq km in the People's Republic. Significantly, these trees yield satsumas as well as oranges and since Asian Citrus does not have a harvest from its existing orange tree plantations between June and August, the addition of a satsuma harvest will enable the group to provide fruit through its distribution network over an extended period of the year.
Adding RMB 100m (£9.5m) sales per annum to the top line and set to boost profits, analysts say the deal demonstrates management’s nimble response to China’s recently announced farm privatisation policy and investors can expect further acquisitions.
Asian Citrus, recommended by Growth Company Investor at 152.5p in late 2008, is a true growth stock, having nurtured an impressive 65% rise in pre-tax profits to RMB 248m for the six months to last December, on turnover up 36% to RMB 398m.
Though the price has wilted since our recommendation, we still think Asian Citrus offers huge potential upside and strongly urge investors to snack on the currently low-hanging shares.
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