Donfang IPO raises $39.2 million

Published 16-OCT-2015 14:50 P.M.

|

2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.


Click Here to View Latest Articles

Chinese citrus fruit producer Dongfang Modern Agriculture (ASX:DFM) has completed its high profile ASX listing with its shares set to start trading next week.

DFM successfully raised $39.2 million as part of its Australian IPO to become one of the largest listed agribusinesses on the market, with a market capitalisation of $390 million.

The raising is among the largest amounts raised to date via the ASX by a Chinese company based in China. DFM’s total issued capital stands at 390 million shares with trading to start at $1 per share.

Dongfang’s Business Operations

DFM’s core business is growing and harvesting of citrus fruits (oranges, tangerines, pomelos) and camellia fruit for sale in premium hotels and restaurants. In 2014, DFM produced and sold over 200,000 tonnes of produce, generating revnues of more than $133 million and a profit of $67 million.

The citrus market in China is expanding year-on-year on the back of improving dietary trends fuelled by rising incomes amongst the Chinese middle-class. Consumption of citrus fruit in China totals 32 million tonnes per annum, and growing at 8% per year. According to research, China is exhibiting arising preference for fruit and nuts at the expense of grains.

The next stage in DFM’s development is to further upscale its business by large-scale acquisitions of new plantations dotted around China’s citrus heartland – the Jiangxi Province in Eastern China.

Location map of DFM operations in Eastern China

DFM is currently China’s 2nd largest citrus fruit producer and aspire to expand its overall market footprint by increasing annual output from 200,000t to 230,000t in 2015. To do this, DFM will add to its existing portfolio of 19 plantations, spanning 8600 hectares.

Sales revenue in 2015 is expected to grow 17% to $176 million with earnings estimated at $75.5 million.

One of its main pitches to new investors was DFM’s strong operating margin of 40% and retained earnings of over $213 million to be deployed towards new acquisitions.

According to DFM’s Chairman Hongwei Cai, DFM could potentially go beyond expanding domestic operations in China and focus on Australia directly.

“Our strong growth history since foundation in 2009 has been achieved without any additional equity or debt,” he said. “Our strong balance sheet will enable us to consider acquisitions in Australia”.

The calendar 2015 earnings per share is 19c and DFM expects to pay a 20% payout as part of a planned dividend payment – estimated to be 3.8c per share, paid in April 2016.



General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.

 

Discover Small Cap
Biotech Stocks

Join thousands of other Investors following our stock commentary for Free

X