Asian Citrus Share Discussion Threads

[wigwammer] 17/4/2015 08:56

Post 4150. Any investment involves a degree of speculation, but I'm willing to speculate with some confidence - the plantations are real, the sales are real, the cash is real.What is not real is the belief that this is China-tropicana, or Asia-coca cola, or whatever else you and the other bears (ex bulls) dreamt it was at a much higher price.ACHL is a plantation business - nasty, brutish, unpredictable. The point is - it now trades at a (steep) discount to nwc, a situation that (contrary to consensus here) has not been the case frequently or for a long period of time in ACHL's history. In the past it has proven to be a positive trigger. That's why I'm here. The business is not managed as badly as you suggest - you just have to quit being naive about what the business is. It is a plantation business that barely existed 15 years ago - they now have three plantations, diversified by location, diversified by summer/winter fruit, diversified by fruit type, sales, logistics, contracts, they have also diversified vertically into juices. That makes sense when the core business is high risk. The unpredictability goes with the territory - weather, flooding, disease. But they will be learning from it, and likely come out a stronger and more robust entity. The above is a rather more reasonable assessment of what has happened than your rather muddled perception that this is a badly managed China-tropicana, and/or it doesn't really exist anyway. While it is possible, it is not likely that baker tilly have missed the point that the plantations and sales don't really exist over the last 10 years, is it? The point that your fantasy is now accepted as reasonable by so many bears (ex bulls) is simply testament to the state of capitulation. Among them will be a growth investor who got it wrong (60%+ GM not sustainable selling oranges), a chartist who got it wrong (but of course, never lost money here), an expert that got it wrong (and now predicts perma doom), someone who sold half way down but thinks that makes him smart because he only lost half his money. Etc etc. All of them would rather believe ACHL is a fraud than accept that, despite their perceived invulnerability, they just plain got it wrong.Bottom line though - ACHL does likely have a positive value as a plantation business, and I suspect it's somewhere above 0.5x nwc.

[hereford29] 16/4/2015 14:15

Then why didn't they get someone competent to run it? When I asked then in 2010 at an investor presentation why they didn't hire a Cargill Senior Manager with experience in this area of argibiz, they said we don't need anyone like this, we have all the relevant expertise ourselves.

[rupe1958] 16/4/2015 13:57

hereford - I'm sure there are plenty of Chinese of even HK companies that are frauds, but Asian Citrus isn't one of them.
There may be things to worry about here - like the cash balances being held in the PRC, or perhaps there being too much family involvement in the management, and now the canker outbreak at Xinfeng. But to worry about the assets not existing, the whole thing being a fraud, etc etc is a mistake and a conspiracy theory almost as elaborate as believing that Mossad blew up the twin towers or that the Malaysian airlines flight out of Kuala Lumpur was landed safely in Siberia.
The assets exist, the company has respectable auditors, non-exec. directors etc. My view is that if there's no light at the end of the tunnel onhte operational side within a year the board will dispose of the company's assets and return cash to shareholders. The concentrate business alone could be worth the current market cap.

[edmundshaw] 16/4/2015 12:22

Citrus Greening was, I believe, the last serous disease left that could affect the oranges. Now they have that too.

It may be very bad luck; but I suspect less than perfect practices in the managment of disease prevention here. I asked some questions of management a couple of years back on specific safety practices (about isolation of young trees), and got no response, which was a worry to me. The previous CFO was reasonably approachable on questions, and I lost faith in management when he left, and also when the last CEO's son took over as the new CEO.

Shame, a few years ago this was a profitable company with good prospects. Now it is beginning to look like a punt on survival.

[hosede] 16/4/2015 11:16

It's a bit like the biblical Ten plagues of Egypt. What can go wrong next? Death of the first born.
Seriously, one of the problems of global warming seems to be an increase in tree diseases Sudden Oak death Ash dieback etc. All of which kills off the very species that absorb CO2 and are capable of reversing the problem

[hereford29] 16/4/2015 10:35

Wigwammer, I have a question for you: how do you know they actually own any viable orange plantations at all? How do you know their stated historical sales numbers were real and not fictitious? The IPO document claims both of their plantations are in favourable areas with good climate conditions, plenty of sunshine and not subject to severe storms or adverse weather, it also claims the management have significant experience of agricultural management. Look at the storm history of these regions and the performance of the Management, the statements are entirely at odds with the facts. As to the plantations themselves, has anyone on the BB actually seen them, or just pictures on the website and reliance on a dubious auditors report that isn't worth the paper it is written on? What would be stop the Board from IPOing a company, raising cash, then offloading the marketable shares via related parties whose connections of family relations could never be traced or proved. How can you verify the expenditure? They buy some plots of agricultural land for $1m, get together with their friends and family, put two or three of them in charge as directors of the new company, IPO the company, inflate sales and profits to pay out dividends and drive up the share price, offload the shares before the first of many profit warnings (no notification) into the market. Take money out of the company by various back door methods. Later they could lend this money back to the company - on the books, take a charge over the assets on the loan, takes the money back out of the company (back door). Use this money to buy 51% of the company (issue new shares) and takes this money back out of the company (back door). What proof would there be? What actually happened we will never know, you can’t audit the books without proving fraud first. this is just speculation on my part, but it isn't any less plausible than a supposedly highly experienced and risk aware Agribiz Management team entirely destroying the value of a company in the space of a few years is it?

[rjmahan] 16/4/2015 10:18

I am lightening up here - bought quite a bit at 7p - cant see it going up much in the short term - selling to cut risk and maybe get in lower when impact of this is clearer.

[wigwammer] 16/4/2015 08:13

"one day you'll wake up and it'll be bust/suspended"Based on what?

[wigwammer] 15/4/2015 21:48

Nope. Didn't see any smug bulls here as the shares rallied 50% off the lows.Quite right.

[spob] 15/4/2015 21:21

I didn't see anyone mention profit taking before 9am this morning

LOL


seriously guys, do yourselves a favour

smell the coffee

[wigwammer] 15/4/2015 21:00

Zzzzz... Bears out in force.One wonders where their advice went when the shares rallied above 8p.Meanwhile, buyers quietly went about their biz taking profit.

[lennonsalive] 15/4/2015 18:43

I did say I wouldnt invest until a real change came along, I don't think this will ever happen. Another Asian sham.

[wigwammer] 15/4/2015 15:05

Yes, last time you said this was at 5.5p.The shares consequently rallied 50%+ in the space of a week, and even post a further warning trade above that level.I'll leave posters to ponder whether hereford took out a large short position at 8p... or not.

[hereford29] 15/4/2015 14:53

the only thing compelling about this company is the drive to destroy shareholder value and eschew good risk management.

[muffinhead] 15/4/2015 13:45

Sold my sipp shares for break even and sold my isa shares for good profit
Only reason was HK price had hit my initial chart target of 1 but when London opened, large daily volume failed to move the price any further

Feel sorry for HK investors that have driven this up and then news 9:30am after HK closed... will be interesting next 24 hours but this new infection is totally unwelcome

[jotoha2] 15/4/2015 13:02

This surely must be the most accident prone company on the LSE , could it all have been a lovely scam.

[wigwammer] 15/4/2015 12:22

Wonderful trade between 550p and 850p and I hope many participated.Fact that the shares are still trading above prior lows despite today's news is testament to how little risk ACHL carries at the lower levels.Interesting point piedro, good to read the views of an informed bear.

[envirovision] 15/4/2015 11:47

Hope many of you managed to get out on the last spike, this clearly has tremendous downside risks.

A Chinese company registered in Bermuda listed in London on Aim that owns an orange plantation in deepest darkest China riddled with rot and connected parties sole suppliers of millions of pounds worth of insecticide & fertilizer products.

all they need now is a bucket shop to sell the spare shares imo.

[taffer87] 15/4/2015 11:34

a large wad of cash - that management says is needed for working capital purposes and is not available for "general" uses.

[varies] 15/4/2015 11:03

What a tale of woe we have here. I have been buying ACHL shares steadily in recent days at about 8p !
Supposing that Xinfeng's orange trees are all doomed, we left with one other plantation now in production, another that comes on stream next year, the bottling and canning plants and a large wad of cash.
The Xinfeng trees could be grubbed up and the land replanted with something else not vulnerable to this beastly mite, bananas perhaps. It will obviously be many years before a satisfactory replacement is effected.
We should also worry, I suppose, about the vulnerability of the other 2 plantations and whether the processing plant will have enough oranges.
At some point our luck will turn but it is hard to see when.

[taffer87] 15/4/2015 10:43

finkie... if this was announced on 1 April, then and only then would the CEO be entitled to say "whilst this is an unfortunate blip we remain FULLY confident of blah blah blah!" here.

[rupe1958] 15/4/2015 10:32

Piedro - yes, beans might be an idea!