China Organic Agriculture, Inc. is a growth-driven agricultural products company leading China's organic foods revolution.
 
Sam's Club, Costco limit rice purchases as prices rise.

CNOA $1.41
Shares Outstanding 65.7 M
Float: 23.7 M
4/24/2008
 

 I believe this company has it all right now in today's market. The recent earnings and growth just cant be ignored. On top of this there is speculation of rice shortages and companies like Wal-Mart have limited sales of Rice as of yesterday. Lets have a look at this Chinese company and its recent growth. China Organic Agriculture is among the largest producers of green and organic rice in China. CNOA controls all aspects of the process from developing seeds to planting, processing, R&D and distribution. The Company has an extensive sales network, located in the major cities in China. CNOA has experienced significant growth since its inception in 2002, and as an agricultural company is exempt from income taxes in China. CNOA has put solid plans in place to markedly expand sales. The quality of CNOA’s products results in the ability to obtain prices approximately 15% higher than comparables. 

 
 CNOA has in excess of 6,260 acres dedicated to green and organic rice. The irrigation system is fed from the Nen River, one of the last unpolluted rivers in China. The Company’s flagship brand, ErMaPao, has won several quality awards and holds the highest organic certification and it is one of the most popular brands in the country.

Recent Earnings

Net sales for the fourth quarter of 2007 more than tripled to $15.7 million compared to $3.5 million for the fourth quarter of 2006. Fourth quarter net income was $3.9 million, compared to $1.3 million for the fourth quarter of 2006, with earnings per share increasing to $0.08 per diluted share compared to $0.03 per diluted share for the comparable period of 2006.

Net sales for the full year 2007 were up nearly fourfold to $44.5 million compared to $9.0 million for the full year 2006. Full year 2007 net income was $13.5 million, an increase of $10.1 million, or 297%, from the full year 2006 with earnings per share increasing to $0.26 earnings per diluted share compared to $0.07 per diluted share for the comparable period in 2006, based on 51.6 million and 51.5 million diluted weighted average shares outstanding, respectively. Please note that the 2006 share count reflects an adjustment resulting from the reverse merger that took place in March of 2007.

2008 Developments

Throughout the beginning of 2008 China Organic Agriculture has continued to meet its rice sales targets and shipments to its customers. None of its operations were hampered by the large-scale winter storms that affected many parts of China at the end of January and the Company has already begun seeding and preliminary plantation work. In addition to expanding its rice production capabilities, China Organic Agriculture is also looking for additional agricultural and food related acquisitions and asset purchases.

The previously announced acquisition of Dalian Baoshui District Huiming Trading Ltd. is pending the last stages of its due diligence. The acquisition is scheduled to be completed before the end of April, whereupon management will issue 2008 guidance that will take into account the effect of this acquisition on the Company as a whole.

On February 29, 2008, we contracted to purchase the Bellisimo Vineyard, a 153-acre operating vineyard located in Sonoma County, California. Our purchase was financed with third party debt. China Organic is using this asset purchase as an initial entrance into US-based agricultural land, with the possibility of exporting Sonoma Valley wine directly to Chinese consumers who hold these products in high regard.

Products

China Organic Agriculture’s flagship product is the “ErMaPao” brand of organic and green rice. ErMaPao is natural, healthy, tastes great and is irrigated by the Nen River, one of the few unpolluted rivers in China. ErMaPao was certified as “organic” and “grade AA” by the China Organic Foods Certification Group, which means that during the production process no chemical pesticides, fertilizers, or anything known to be harmful to the environment or human health are used. ErMaPao has won several quality awards, it holds the highest organic certification and it is one of the most popular organic rice brands in China.

In 2005, ErMaPao won the title of “Consumer Recognized Famous Brand in the Chinese Market” from the China Association for Quality Inspection, and in August 2006, ErMaPao was referred to as a “Famous Brand Product” at the sixth-annual China Changchun International Agriculture and Food Fair.

 ErMaPao products are distributed through individual retailers and supermarket chains and are available in a full range of sizes, including 1KG, 2KG, 2.5KG, 5KG, 7.5KG and 10KG containers. China Organic Agriculture only employs environmentally-friendly production methods with no harmful materials used during the shipping, selection, production, cleaning, storage, and packaging of its rice.
 
With the distribution agreements signed in 2007, combined with the more efficient manufacturing operations that we expect to achieve in 2008, China Organic Agriculture looks forward to strong increases in rice sales. We are excited about the opportunity to diversify the range of agriculture products we currently offer, including the possibility of wine sales to Chinese consumers. Our goal is to continue to be one of the leaders in the green and organic rice industry in China, while expanding the types of agricultural products we supply to our loyal Chinese customers, all while delivering significant value to our shareholders. - Mr. Xu|
 

Contact

 
China Organic Agriculture, Inc.
Kevin McEnery, 646-200-6302
Managing Director - Finance
kevin@chinaorganicagriculture.com
or
Steve Wan, 310-441-9777
Vice President
stevewan@chinaorganicagriculture.com
or
Winning IR Company, Ltd.
Darren Minton, 212-823-0523
darren.minton@winningir.com