Asian Citrus Share Discussion Threads

[hosede] 08/3/2016 18:59

5 million buy today - someone must think this is improving

[cordwainer] 26/2/2016 13:53

(Carve up and) sell Hepu and Xinfeng at whatever price they can get to cut costs and consolidate?

1st harvest from Hunan due this year (grapefruit!), unless that too is destroyed by disease and typhoon?

BPG perhaps only profitable in 2nd halves because of harvests?

I sold out here just over 18 months ago.

[varies] 26/2/2016 12:03

This announcement strikes me as cursory. Amongst other information missing are any details of progress at the new plantation. This should be yielding fruit soon.
Perhaps more info will soon be posted on ACHL's web-site.

[cockerhoop] 26/2/2016 11:32

Entering the beginning of the end game here imo, cash(if it even exists)at the current burn rate will run out in 6-9 months assuming they don't find a stunning acquisition (from a related party?) to buy in the mean time.

What does consolidation mean in the context of ACHL and it's assets?

[rupe1958] 26/2/2016 10:56

These H1 results are as grim as expected.
Orange production has crashed, the fruit concentrates business has increased its turnover but is losing money.
Cash in the business is now down down to about £55m, about the same as the market cap.

It would be nice if the Chairman's statement gave a bit more detail about his strategy for H2, the outlook for Hepu and Hunan, etc. But it's all a bit vague and he even talks about acquisitions, which seems a bit odd as the company is in operational crisis.

From the Chairman's statement:

"...we have promptly adjusted our business strategies and will actively consolidate our business. We shall focus on improving efficiency and utilisation of all our assets as well as the implementation of the cost control program to reduce the operating costs of the Group. All these measures will enable the Group to reallocate its resources to strengthen its core operations and improve its operational efficiency and profitability.

Moving forward, the Group will seek to identify attractive investment and acquisition opportunities, so as to enhance profitability and maximise our shareholders' value. We keep an open mind when exploring new opportunities, but will only invest in high potential projects on a selective and prudent basis, without compromising the financial stability of the Group.

[rupe1958] 18/2/2016 09:22

There's still a big gap between the Hong Kong price and the London price, which suggests there are no buyers for ACHL in London.

Hong Kong is .56 hkd to sell, .57 to buy (which is .05gbp vs .051gbp)

London is .035gbp to sell vs .04gbp to buy

[rupe1958] 28/1/2016 09:25

Turnover at the concentrates business is recovering (up 36%), but the profit margin is down (1.6% of approx £33m turnover in HI = about £500k).

Revenue from oranges will be minimal in July-Dec (H1) - 15,600 tonnes x maybe £300 per tonne = c.£4.5m

We knew about the Xinfeng disaster from the previous update. But it looks as though plenty of expensive pesticides were thrown at the problem during the autumn before a decision was finally made to abandon the planation and focus on Hepu and Hunan.

A core loss of around £40m looks inevitable for the year to June. But we have £90m in cash so this is survivable.

What we need to know is projections for revenue and costs from here. Are costs coming down? And what can we expect from the summer orange harvest at Hepu and Hunan? We should know more when we see the interims at the end of Feb..

[liquid millionaire] 27/1/2016 17:57

Yeah yeah but now the share price is rising!

Wonder why?!?!?

[lennonsalive] 23/1/2016 19:33

All the money is gone, it's a shell. Do they even own any plantations?

They paid a dividend for a bit, then came all the bad news after bad news.

[cockerhoop] 13/1/2016 09:11

Thanks..........ultimately it boils down to who you believe!

[zangdook] 13/1/2016 08:57

If you want to read this thread back to 2011 you'll find discussion. I think the company put out a rebuttal too.

Edit: Was it this or was this something else?

[cockerhoop] 13/1/2016 08:53

By whom? Do you have a link?

[zangdook] 13/1/2016 08:50

That Seeking Alpha article has been discredited long since.

[cockerhoop] 12/1/2016 13:27

Rupe1958,

The only Chinese based company I've owned RCG Holding many years ago was also listed in HK as well as Aim which appeared to have no effect regarding the quality of reporting or it's corporate governance.

Here we has the situation that the old auditors found a significant anomaly with the purchase of fertilizer & pesticide (which incidentally are much higher costs than similar operations in Florida for example). The auditors involved have walked. New lower profile auditors have been appointed.

They have also recently discontinued using a plantation that in 2011 SeekingAlpha after speaking to local officials suggested:

Asian Citrus appears to be exaggerating its biological assets in Xinfeng. The company claims to have 53,000 mu in Xinfeng, but our research indicates the actual plantation size is only around 3,000-5,000mu. The company’s claims for plantation size in Hepu appear to be accurate, but there appears to be a large discrepancy on output volumes. In contrast to the company’s claims, the brand “Royal Star 新雅855;” is not well known in the market. Company management was cooperative and timely with regard to our questions but provided no hard evidence or persuasive explanations to support its position on these issues.

Based on our findings, it appears Asian Citrus suffers from loose internal management controls, and there are strong indications that key information provided to shareholders on assets, output volumes and profits are not accurate. We await further updates from company management.

My view is why invest in a company which has this many red flags?

[cockerhoop] 12/1/2016 12:10

Rupe1958,

Your analysis starts from a belief in the accuracy of the accounts which is a big leap for me (and it seems the outgoing auditors!).

[rupe1958] 12/1/2016 11:29

I've just tried to estimate what the core loss will be for the year June 2015- June 16 (i.e. without non-cash writedowns of biological assets.)

Turnover should be around £70m, down from £96m in 2014-15.
£20m is from fruit sales (assuming 66,000 tonnes combined summer and winter oranges, with a small first contribution from Hunan, at an average sales price around £310 per tonne).

I'm assuming that turnover in the concentrates business will remain steady at around £50m.

Cost of sales was a massive £138m in 2014-15. Abandoning Xinfeng should reduce that a lot. But by how much? Not by a full third, but by maybe 20%. There may be an opportunity to reduce the employee headcount (which grew about 10% last year to 1,960 people).

So I'm assuming cost of sales around £110m. That's a core loss of around £40m.

We had cash in the bank of £93m at 30/6, so that is survivable. It looks like the cash reserve will reduce to around £50m (which is our market cap.).

We have to hope for a better 2016-17, with Hunan producing and Hepu recovering, and a better control over costs. We need to see revenue rising to around £100m and cost of sales returning to the 2011-12 level, which was around £70m.

[taffer87] 11/1/2016 16:40

Okay so now a mom and pop auditor is in place, nice.

[edmundshaw] 01/1/2016 11:13

BTW, I cannot imagine a chinese company with a bundle of cash lists on a foreign exchange with the express desie to shift the cash out of their coffers and into the pockets of dividend seeking investors. I do not think that is the chinese way. At all.

A chinese co. has to carry more cash typically (we are told) as it is difficult for smaller companies to get bank loans (or loans without strings attached). Anytime a business in China is in trouble, that float of cash seems to have to be paid to someone outside the company - this happens with remarkable frequency - and stock for some reason becomes worthless, before the company delists. Whether the cash disappears in apparent abortive attempts to build a factory, invest in a new line of enterprise, or as in this case pay for large quantities of anti-pathogenic chemicals; there always seems to be something. So of course on delisting the company always seems to have minimal value and shareholders get diddly or close to it. Coincidence? You decide.

[edmundshaw] 01/1/2016 11:05

WCC have used the phrase several times recently. They are in the process of being taken over (effectively) in the slightly complicated chinese style. The first time the phrase was used was actually probably meant to warn shareholders to be wary of selling as the price was likely to rise (and it has). Boilerplate stuff when there is uncertainty.

[hosede] 30/12/2015 14:48

Spob
I agree - biological assets will be a big part of the 850m, but there will also be cash losses and they will be bigger than last year I think

[spob] 30/12/2015 13:10

a write down is a non-cash item in accounting terms

however in this case the cash 'MAY' be a non-cash item too. LOL :)


time will tell