China Minzhong Food Corporation

[investingsgx]

China stocks come with accounting frauds and hidden debts. Although fundamentally food prices will rise due to the lack of farmers, i cannot trust China stocks due to a string of poor historical performances despite its good earnings.

With references from Dukang Distillers. Luckily managed to sell it at a higher price.

With the lack of consistent performances of China stocks, i am determined to stay away from them.

Food price will raise with inflation, cost of production will raise in the short run along with wages, but in the long run cost will go down once China automate everything like their western counterpart (ie the industrialized farming that Minzhong is trying so hard to push for). It is just a necessary and inevitable path that they will take. The question is only by whom and by when.

By performance, you mean stock price performance? Usually it has little to do with underlying fundamentals and more to do with market sentiments.

That said, I'm not sure you can say S-Chip definitely will never have good share price performance. Check out Sino-Grandness or even the recent Sound Global (although it cheated a little by listing on the HK exchange, but those who bought it back in Singapore has a good run for their money).

And now with Indofood owning 80+% of the shares, I don't think we should hold the same standard to it like ordinary S-Chip shares. For one thing, we know it can never be delisted on the cheap easily.

With Indofood as their major and controlling shareholder, I don't think legal accountability is an issue any more. The intrinsic value of China Minzhong has fundamentally changed when Indofood took over.

Definitely there are exceptional cases. But given a choice between a singapore company competitor and a china competitor for food related sectors, i would prefer to choose a singapore one like SATS, which showed better transparency and provides better shareholder value than a company like China Minzhong.

[specuvestor]

So how do you conclude there is no financial DD? Or u assume it is only done when there is GO? I think companies do open their books to potential sizable investors upon the Board discretion. Venture capital or pre-IPO investors get access without GO. And the Board tends to "respect" major shareholders' requests. Not to mention when the Board themselves are selling.

because listed companies do not open their books unless it's a GO.

AFAIK it is the board's discretion. Some selectively open some part of their books to minority shareholders as well during AGM aftermaths.

Conversely they can refuse to open their books to even external auditors, as in the case of some companies...

[morten]

because listed companies do not open their books unless it's a GO.

I just asked a CF professional. What you said above is not true.

It all depends on the relationship betwen the selling shareholder and the Board of Directors. If they are on cordial terms, the seller can request the Board to open up to the buyers for some form of DD.

[Wildreamz]

because listed companies do not open their books unless it's a GO.

I just asked a CF professional. What you said above is not true.

It all depends on the relationship betwen the selling shareholder and the Board of Directors. If they are on cordial terms, the seller can request the Board to open up to the buyers for some form of DD.

Glad to know, thanks! Sounds logical.

[mkmk]

3QFY2014 Results: http://infopub.sgx.com/FileOpen/CMZ_3QFY...eID=294299

Press Release: http://infopub.sgx.com/FileOpen/CMZ_3QFY...eID=294303

Presentation Slides: http://infopub.sgx.com/FileOpen/CMZ_Resu...eID=294304

CHINA MINZHONG POSTS REVENUE OF RMB2.2 BILLION AND NET PROFIT OF RMB383.6 MILLION IN 9MFY14


- Better sales performances recorded in cultivation and branded business segments.

- Net cash from operations increased 39.7% to RMB1.2 billion, on healthy receivables collection and better working capital management.

- Continued expansion into industrialised farming across PRC.

(not vested)

[Nick]

Declares interim dividend of 4.19 SG cents.

http://infopub.sgx.com/FileOpen/declarat...eID=303927

(Not Vested)

[greengiraffe]

No choice liao got to extract as much cash as possible to recoup expensive investment

Declares interim dividend of 4.19 SG cents.

http://infopub.sgx.com/FileOpen/declarat...eID=303927

(Not Vested)

[weijian]

No choice liao got to extract as much cash as possible to recoup expensive investment

Declares interim dividend of 4.19 SG cents.

http://infopub.sgx.com/FileOpen/declarat...eID=303927

(Not Vested)

Cash ballooned to 3bil in 3Q14, thanks to reducing receivables (partly due to reducing revenue as well), doubling of long term loans to 922mil and a 348mil deposit return for delaying a new industralized farm in Sichuan...A larger than previous cash dividend was anticipated.

The weird thing is that an interim dividend came before the final results were announced. The current dividend will be paid on 31st July and FY13 results were announced on 29th Aug 2013, implying that the dividend will be paid out ~1 month before full year results' release. Including the time it takes to hold AGM/approve dividend, the difference between declaring this interim vs coupling with the final is ~4months.

- Is Indofood in desperate need of cash? (i can wonder the amount of arm twisting behind the scenes if it were so)
- Are we expecting a seperate and final dividend as well?

[sykn]

Yes, I have to agree that this looks rather strange, almost like someone is desperate to receive dividends. But anyhow, more cash in my pocket cannot be that bad! (vested)

[freedom]

interim dividend does not go through AGM. if final dividend, another 5 or 6 months are required to get the money.

They must have some very urgent needs so that they can't plan it ahead.