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Is China's Stimulus plan going to make Agriculture firms soar? in 2009..



April 13, 2009 – Comments (0) | RELATED TICKERS: FEEDQ , MON , POT

China's Stimulus Fattens Its Agriculture Firms Lisa LaMotta, 03.18.09, 05:35 PM EDT Consumers hitting the stores lift NY-listed shares.
AgFeed Industries, Inc.04/13/2009 9:49AM ET$2.72$0.3112.86%
04/13/2009 9:30AM ET$1.44$0.053.60%1 day3 mo1 yearAdvancedAt A GlanceChartNewsPeopleBATS Real-Time Market Data by Xignite

Stimulus plans in China are helping consumers to keep their jobs and are providing a lift to the country's agriculture industry. Several New York-listed companies have been posting strong gains this week.

Among them, AgFeed Industries (nasdaq: FEED - news - people ), a Chinese-based producer of pig feed, has been experiencing a significant boost of late as the price of feed increases and hog prices come off their highs of last year -- giving it good reason to expect strong margins as China's stimulus plans begin taking affect.

The stock has jumped 134.0% in the last two weeks, trading at $2.34 on Tuesday. Over the past 52 weeks, the company's shares have traded between 90 cents and $21.31.

The company released its 2008 financial results on Monday. AgFeed reported earnings of $16.9 million, or 53 cents per share, up from $6.7 million, or 25 cents per share, in 2007. Excluding $6.26 million in one-time charges related to investor conversion of a note offering, the company posted a 2008 profit of $23.2 million, or 74 cents per share. Revenues nearly quadrupled, to $143.7 million, from $36.2 million the year before. The company acquired hog farms last year. (See "China's AgFeed Pigs Out.")

"AgFeed’s management believes that Chinese market should regain its double-digit growth rates in 2010-2011 due to increasing urbanization and growth of the Chinese middle class," wrote Rodman & Renshaw analyst Joe Giamichael in a note to investors.

In December, the Chinese commercial hog producer and premix feed company suspended a previously announced share buyback program and announced a secondary offering to raise gross proceeds of $8.75 million, citing uncertainty in the capital markets heading into 2009 as the primary reason for the need for new funds. (See "AgFeed In Need.")

In New York trading on Wednesday, Origin Agritech (nasdaq: SEED - news - people ) jumped 19.0%, or 47 cents, to $2.95. The company, which provides seeds, plans to result its 2008 results on Monday. Meanwhile, corn seed, sheep breeding and seedling company Agria (nyse: GRO - news - people ) gained 40 cents, or 50.1%, to $1.19.

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