Asian Citrus Share Discussion Threads

[wigwammer] 19/3/2015 10:46

Rjm - same for any plantation business.They only harvest twice a year, so revenues are only realised in two months of the year.But costs are taken all year long - so they need a large cash buffer.

[rjmahan] 17/3/2015 22:29

Does anyone have any idea why they said on the conference call they needed cash of 800m RMB for working capital - I cant see they need it when I look at the balance sheet.

[rupe1958] 26/2/2015 15:22

There's not a lot that's cheery in this, but it's encouraging to read that that ACHL has approx 1.18m summer orange trees between 3-4 years old. In only another 2-3 years these should all be producing. Mostly they are at Hunan, but there are also over 100k immature trees at Hepu.

The numbers are a bit grim. A core loss of £19m is bit higher than I was expecting. Fertiliser costs are up 15%. Pesticides costs are up 32%. The concentrates business suffered because of a shortage of pineapples to concentrate.
Cash on the balance sheet is down to £150m from £180m at 30/6.

The forward looking guidance doesn't sound that cheery either:
"Due to the weak condition of the orange trees it will take a number of years for harvests at Hepu Plantation and Xinfeng Plantation to fully recover to previous levels."
"While it is still early in the financial year to fully judge the materiality of the challenges highlighted above to the Group's likely full year performance, we anticipate that conditions in the second half will continue to be demanding."

'Continue to be demanding'. I guess that's a warning to expect the full year loss to be quite a bit higher than at this half way stage. Importantly, he is not yet putting a line under the losses. Hopefully that will come with the final results.

It's good to see that the Share price has held up reasonably well so far. Hopefully we'll now start to attract some new long-term institutional shareholders.

[wigwammer] 26/2/2015 14:57

Post 4023. Long on rhetoric, short on numbers.If your basic premise is that the auditor, baker tilly, have got it all wrong, then of course there are no assets. But then you could make the same claim against any set of accounts that's ever been produced. No idea what the connection is with langbar.

[jeffian] 26/2/2015 13:51

"The productivity of citrus fruit trees increases for the the first 20 or so years of their lives". Aye, as long as the entire crop hasn't been washed out of the ground within the first year as happened to ACHL. My point was in response to the post about the strength of the Balance Sheet. Other than the cash, I wouldn't be so sure about those "assets" and, after Langbar, I'm none too sure about cash held outside the UK either.

[jimcar] 26/2/2015 13:32

Biological assets are not always wasting assets. The productivity of citrus fruit trees increases for the the first 20 or so years of their lives hence gains on biological assets are allowable in accounts. Ha goodwill is true for most businesses

[jeffian] 26/2/2015 11:52

Yes, well look at the Balance Sheet - then look at the 'assets' behind it. Most (all?) of the land is leased from the Government; plant, machinery, "Biological assets" (Ha!) are wasting assets (look at the impairment and amortisation figures); "Goodwill" (Ha!). The only thing that keeps the company afloat is the cash (which was raised for quite another purpose but not used and is now being eroded by annual cash outflows) and bearing in mind scandals like Langbar, I'd want to be reassured it's all there!

[morro] 26/2/2015 10:59

The latest in the long line of disasters to hit this company is the lack of water at one of its plantation sites. I might be wrong but it seems all of its plantations have been badly affected by one thing or another.

What would be interesting to know is the state of the orange industry in China in general. Are there orange growing regions in China prospering? Are there growers within the regions ACHL operates that have not suffered similar problems? We know there was an issue concerning some farmers using colourants I believe which caused Chinese consumers to turn away from buying oranges, but what is the general state of the orange market in China - have prices been falling in a market of falling production?

[wigwammer] 26/2/2015 10:15

Piedro -1) think we both know you didn't answer the qn and think we both know why... Cursory look at the balance sheet, right? 2) today's report is terrible - yet the shares hardly move. The market already knows the negs you highlight. In the meantime, they're making easy comps in 2014+15. The pt about it falling from 14p isn't really relevant to where we go from here. If ACHL hadn't had capitulation on capitulation I wouldn't be here. Anyway, genuinely appreciate the market knowledge. My background is finance - not farming. But I've seen plenty of instances where experts in all kinds of fields get it wrong. I'm guessing the weather is statistically quite unpredictable yoy, but interested in evidence to the contrary.

[cockerhoop] 26/2/2015 10:07

'The assets are a liability are they not ?'

Experience suggests when they're in China they are!

[envirovision] 26/2/2015 10:06

Is it true they have to pollinate a lot of produce by hand. I know they don't pay the workers much but that's gotta cost a fortune right ?

[piedro] 26/2/2015 09:57

Liability is a risk with or without assets.

How much does canker cost?

[envirovision] 26/2/2015 09:53

The assets are a liability are they not ?

[piedro] 26/2/2015 09:52

wigwammer,
The argument re:asset value has been used all the way down from
14p or more.

Obviously the assets have value.

The question is when to buy is it not?

[wigwammer] 26/2/2015 09:39

Post 4011. "The point is you should have taken advice from a farmer."The current mid price is above the level I bought the stock, and after a weak report today (albeit a reiteration) the stock has hardly moved. Does the farmer think the assets are worth zero?If not, what value does he put on them?

[piedro] 26/2/2015 09:02

Re: the weather

It's not usually a case of one year dry the next wet, or wind then no wind.
The climate goes through phases getting wetter or dryer, higher winds or less winds
- and the bugs know it
AIMO

[cockerhoop] 26/2/2015 08:44

There was better weather in the Old Testament! Floods and drought at the same plantation......you couldn't make it up.

All going on while the insiders sell out at any price.

[piedro] 26/2/2015 08:44

wigwammer 24 Feb'15 - 14:18 - 4004 of 4009
"Not sure I'd take investment advice from a fruit farmer.
The evidence suggests they have already put their cards on the table and lost.
The point is - will they carry on losing?"

The point is you should have taken advice from a farmer.
As indicated in the report, the problem in their plantations may take many years
to work through (possibly 5-10 IMexperience)

DYOR

[mrx9000] 26/2/2015 08:34

This one seems to run into more weather/disease problems than most... so one has to ask is it wise to be situate plantations in such an area that does not afford any kind of natural protection?

[this_is_me] 26/2/2015 08:32

The market cap. is still near £100 million which is not that far off projected revenue, which seems far too high given the problems. It seems a well run company, but any agriculture business is bound to run into weather/ disease problems on a regular basis.

[mrx9000] 26/2/2015 08:15

Why do they release RNS's at stupid times, why not at around 0700 like most other companies...

[wigwammer] 25/2/2015 08:55

AIM listed Chinese stocks have been on the radar recently following the apparent collapse of one or two names. It appears to have tainted the story for all and a bandwagon has emerged. ACHL has had its own rumours to deal with in the past - not least because of its historic links with Chaoda - but as far as I can see it has defended itself very capably - see RNS letter dated feb 2012, for example.So the rumours create a threat and/or an opportunity depending on how you see it. The threat being that the corporate governance may be a risk - though ACHL has a 10 year listing history, a track record of returning cash, a HK and UK listing, baker tilly as an auditor etc.The opportunity is I doubt we'd be trading at this level, just over 7p, if it wasn't for the rumours, despite the difficult operating circumstances they find themselves in.

[rjmahan] 24/2/2015 19:59

What corporate governance issues specifically do you mean wigwammer?

I tend to think farming is that sort of business some years good some bad. Things go in cycles....