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 Le Gaga Holdings (NASDAQ:GAGA)

Wednesday, September 24, 2014
Comments & Business Outlook

HONG KONG, Sept. 24, 2014 (GLOBE NEWSWIRE) -- Le Gaga Holdings Limited (GAGA) ("Le Gaga" or "the Company"), a leading greenhouse vegetable producer in China, today announced its financial results for the second half and fiscal year ended June 30, 2014.1

Highlights of the Six Months and Fiscal Year Ended June 30, 2014

  • Revenue increased by 3.7% to RMB401.1 million (US$64.7 million) for the six months ended June 30, 2014, compared to RMB386.8 million a year ago. Revenue increased by 0.7% to RMB580.5 million (US$93.6 million) in FY2014, compared to RMB576.3 million in FY2013.
  • Basic and diluted loss per share were RMB1.91 cents (0.31 US cents) for the six months ended June 30, 2014. Basic and diluted loss per ADS4 were RMB95.50 cents (15.39 US cents) for the six months ended June 30, 2014.
  • Basic and diluted earnings per share were RMB2.55 cents (0.41 US cents) for FY2014. Basic and diluted earnings per ADS were RMB127.50 cents (20.55 US cents) for FY2014.

Mr. Shing Yung Ma, the CEO of Le Gaga, commented, "We are pleased with the progress we made during fiscal year 2014 in upgrading our farms to the soil-less production system. We saw a strong increase in production volume of solanaceous vegetables, despite the operational disruption caused by the switch to the new system as well as the loss of a number of greenhouses at our Huidong farm due to a typhoon in September 2013. Our revenue for the second half as well as fiscal year ended 30 June 2014 did not materially increase compared to the same periods last year, primarily due to lower average selling prices. The lower selling prices were a result of the overall slowdown of the Chinese economy, leading to reduced demand of high end vegetables. Furthermore, more customers picked up the produce at our farms, compared to a year ago, which leads to lower selling prices because no transportation expenses were charged to these customers.

Although we did not add much greenhouse area, we did upgrade a substantial area of greenhouses to the new soil-less production system. We also replaced part of the damaged greenhouses at our Huidong farm and have a substantial area of land under construction among various cultivation bases. We added over 1,800 mu of land during the fiscal year and our land expansion plans are on track."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "We mitigated the effect of lower market prices by further upgrading our product mix towards solanaceous products. Our focus on high value products, which typically have higher selling prices but lower volume, remains important because four of our major expenses, including labor, fertilizer, packing and transportation, are all proportionally related to production volume.

Our adjusted cost of goods sold slightly increased year over year as a result of higher depreciation due to more greenhouse area, and partially offset by lower direct material costs, such as fertilizers, from the shift of product mix to solanaceous vegetables which have a higher gross margin. A large negative net impact of biological assets fair value adjustment was recorded for the six months ended June 30, 2014. The negative net impact was due to the completion of the solanaceous production cycle, which resulted in a switch from high value solanaceous crops on our fields at the end of December to lower value leafy crops as well as a smaller area of crops on our fields at the end of June. Our operating cash flow during the last six months as well as the fiscal year was lower compared to last year primarily due to the longer turnover days of trade receivables outstanding as at June 30, 2014."

Business Outlook for the Fiscal Year Ending June 30, 2015

For the fiscal year ending June 30, 2015, the Company expects lower revenue per mu as compared to the fiscal year ended June 30, 2014, due to operational disruption resulting from the conversion of a large area of our greenhouses to the soil-less production system. The Company estimates its revenue for the fiscal year ending June 30, 2015 to be between RM600 million and RMB625 million, representing a year over year growth rate of approximately 3.4% to 7.7% for the fiscal year ending June 30, 2015 from the fiscal year ended June 30, 2014. This forecast reflects the Company's current and preliminary estimate, which is subject to change. 


Wednesday, July 30, 2014
Going Private News

HONG KONG, July 30, 2014 (GLOBE NEWSWIRE) -- Le Gaga Holdings Limited (Nasdaq:GAGA) ("Le Gaga" or the "Company"), a leading greenhouse vegetable producer in China, today announced that it has entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with Harvest Parent Limited ("Parent"), a Cayman Islands exempted company with limited liability, and Harvest Merger Limited ("Merger Sub"), a Cayman Islands exempted company with limited liability. Pursuant to the Merger Agreement, Parent will acquire the Company for US$0.0812 per ordinary share or US$4.06 per American Depositary Share, each representing 50 ordinary shares ("ADS"). This represents a 21.56% premium over the closing price of US$3.34 per ADS as quoted by the NASDAQ Global Select Market ("NASDAQ") on May 21, 2013, and a 22.17% premium over the volume-weighted average trading price of the Company's ADSs during the 30 trading days prior to, and including, May 21, 2013, the last trading day prior to the Company's announcement on May 22, 2013 that it had received a "going private" proposal.

The consideration to be paid to holders of ordinary shares and ADSs under the Merger Agreement also represents an increase of US$0.05 from the original US$4.01 per ADS offer price set forth in the May 21, 2013 non-binding proposal letter from Ms. Na Lai Chiu, the chairperson of the Company's board of directors, Mr. Shing Yung Ma, a director and the chief executive officer of the Company, and SC China Holdings Limited, on behalf of funds managed and/or advised by it and its and their affiliates. On March 18, 2014, Yiheng Capital, LLC ("Yiheng"), on behalf of funds managed and/or advised by it and its and their affiliates, joined the consortium of investors (the "Consortium").


Tuesday, November 26, 2013
Comments & Business Outlook

HONG KONG, Nov. 26, 2013 (GLOBE NEWSWIRE) -- Le Gaga Holdings Limited ("Le Gaga" or the "Company") (Nasdaq:GAGA), a leading greenhouse vegetable producer in China, today announced that it will shift to reporting financial results on a semi-annual schedule, and stop announcing its first and third quarter financial results.

Because vegetable production is inherently highly seasonal, the Company believes that individual quarterly financial results may not serve as a very good indicator of its annual revenue and earnings capability. The Company believes that fluctuations in quarterly results driven by seasonality create unnecessary noise in evaluating its financial performance. Furthermore, results for a quarter may not be directly comparable year on year as the harvest timing within an annual production cycle can differ significantly year to year as the Company seeks to capture the best market prices.

For example, the financial results for the most recent quarter ended September 30, 2013 would not have been meaningful as most of the Company's farms were idle during July through September, as a result of an increasing focus on production during the winter months. By moving to a semi-annual reporting schedule, the Company believes it can better smooth out the seasonal fluctuation and make its interim financial results more indicative of its annual results.

The Company intends to announce its semi-annual financial results in due course after the close of its second quarter ending December 31, 2013.


Friday, October 4, 2013
Comments & Business Outlook

HONG KONG, Oct. 4, 2013 (GLOBE NEWSWIRE) -- Le Gaga Holdings Limited (Nasdaq:GAGA) ("Le Gaga" or "the Company"), a leading greenhouse vegetable producer in China, today announced damage caused by super typhoon Usagi at its production bases in Huidong, Guangdong Province.

Super typhoon "Usagi" hit the Company's production bases in Pingshan and Duozhu, Huidong, Guangdong Province, on September 22, 2013 and caused substantial damage. These two production bases have greenhouses of a total area of 2,000 mu (133 hectares), part of which experienced various degrees of damage. Management took prompt action and galvanized employees to undertake rescue efforts, during the most serious natural disaster experienced in the history of the Company.

Mr. Shing Yung Ma, the Company's chief executive officer, said, "The Company's management and employees have maintained a high morale in the face of this natural calamity. We have secured the seedlings and production materials for this winter, which is the peak season for our Company, and have begun implementing this winter's production plan. We are working hard to undertake repair efforts to minimize disruption to this winter's production and mitigate the impact to our operational results."

The damage caused by this natural disaster will affect production and the Company's business, results of operations and financial condition. The Company is still evaluating the extent of the damage and has not yet quantified the impact. The Company will announce in due course the results of any further assessment.


Tuesday, September 17, 2013
Comments & Business Outlook

Fourth Quarter  2013 Financial Results

  • Revenue increased by 22.6% to RMB151.1 million (US$24.6 million) for Q4 FY2013, compared to RMB123.2 million a year ago. Revenue increased by 11.0% to RMB576.3 million (US$93.9 million) in FY2013, compared to RMB519.3 million a year ago.
  • Basic and diluted loss per share were RMB0.59 cents (0.10 US cents) for Q4 FY2013. Basic and diluted loss per ADS5 were RMB29.50 cents (4.81 US cents) for Q4 FY2013.

Mr. Shing Yung Ma, the CEO of Le Gaga, commented, "Our performance in the fourth fiscal quarter and the fiscal year 2013 was affected by the overall slowdown of the Chinese economy and lower government spending, which resulted in significantly lower market prices during the winter months, as compared to the previous year. The milder weather in South China further contributed to lower market prices. Although production volume and product quality were in line with our expectations, the lower market prices resulted in lower revenue than initially expected. During fiscal year 2013 we upgraded our product mix and further focused on the off-season production of solanaceous products.

Favorable weather allowed us to make progress on greenhouse construction and we added over 900 mu of greenhouses during the quarter. During the fiscal year 2013 we have spent much R&D effort on soil-less production systems. Following the completion of the solanaceous season in May, we have started the conversion of part of our greenhouse area to soil-less production. Although we did not add any new land during the quarter, we added over 3,000 mu of land during the fiscal year and our land expansion plans are on track."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "Despite lower market prices, we achieved higher average selling prices in the fourth fiscal quarter compared to the same three-month period last year. The higher selling prices were partly a result of better product mix, product quality and more spending on product packaging. Furthermore, fewer customers came to our farms to pick up the products, which resulted in more transportation incurred by the company, but passed on to customers through higher selling prices. These also resulted in higher packing as well as transportation costs as a percentage of revenue. Our focus on high value products, which typically have higher selling prices but lower volume, remains important because four of our major expenses, including labor, fertilizer, packing and transportation, are all proportionally related to production volume.

Our cost of goods sold increased year over year as a result of higher direct material costs such as fertilizers, higher labor costs due to wage inflation, higher depreciation due to more greenhouse coverage, and higher rental expenses as recently leased land with higher rents came into production during the quarter. A large negative net impact of biological assets fair value adjustment was recorded for the quarter. The negative net impact was due to the completion of the solanaceous production cycle, which resulted in a switch from high value solanaceous crops on our fields at the end of March to mostly low value leafy crops on our fields at the end of June. Our operating cash flow during the current quarter was higher compared to last year primarily due to the collection of trade receivables outstanding as at March 31, 2013."

Business Outlook for the Fiscal Year Ending June 30, 2014

For the fiscal year ending June 30, 2014, the Company expects lower revenue per mu as compared to the fiscal year ended June 30, 2013, due to operational disruption resulting from the conversion of a large area of our greenhouses to the soil-less production system. The Company estimates its revenue for the fiscal year ending June 30, 2014 to be between RM585 million and RMB625 million, representing a year over year growth rate of approximately 1.6% to 8.5% for the fiscal year ending June 30, 2014 from the fiscal year ended June 30, 2013. This forecast reflects the Company's current and preliminary estimate, which is subject to change. See "Safe Harbor Statements" below.


Tuesday, May 28, 2013
Comments & Business Outlook

First Quarter 2013 Financial Results

  • Revenue increased by 65.8% to RMB235.7 million (US$38.0 million) for Q3 FY2013, compared to RMB142.2 million a year ago.2 
  • Loss for the period was RMB0.9 million (US$0.1 million) for Q3 FY2013, compared to a loss of RMB3.9 million a year ago.
  • Basic and diluted loss per share were RMB0.04 cents (0.01 US cents) for Q3 FY2013. Basic and diluted loss per ADS5 were RMB2.00 cents (0.32 US cents) for Q3 FY2013.

Mr. Shing Yung Ma, the CEO of Le Gaga, commented, "December through April is the key harvest season for solanaceous products for our company. Prices rose steadily during the months of November, December and January, but where overall much lower than the previous year. As a result, we postponed much of our harvest to later in the season in anticipation of further increases in market prices after January. Prices reached a peak right before the Chinese New Year Holiday in February, but then dropped immediately afterwards. We believe that the lower market prices during the winter season as compared to the same period of last year were primarily due to the milder weather in South China, the absence of extreme weather in other parts of the country, and the overall slow down of the Chinese economy. Prices increased again starting the end of March and reached a season high in April due to heavy rains in South China. Although production volume and product quality were in line with our expectations, the lower market prices resulted in lower revenue than initially expected.

We continue to spend much effort to enhance our greenhouse production system. This includes upgrading existing greenhouses, constructing additional nursery greenhouses and expanding the soil-less production system for peppers and tomatoes at more of our existing greenhouses. Favorable weather allowed us to make progress on our greenhouse construction projects, as we added over 400 mu of greenhouses during the quarter. We have also added a substantial area of new arable land during the quarter in line with our land expansion plans."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "Despite lower market prices, we achieved higher average selling prices for solanaceous products compared to the same three-month period last year. This was partly as a result of better product quality, product mix and harvest timing and partly due to more spending on product packaging and shipping products further away to markets with better prices. This also resulted in higher packing and transportation costs as a percentage of revenue.

Our focus on high value products remains important because four of our major expenses, including labor, fertilizer, packing and transportation, are all directly correlated to production volume. Our cost of goods sold increased year over year as a result of higher direct material costs primarily due to higher seed costs for solanaceous products, higher labor cost as wage inflation outpaced the increase in selling prices, higher depreciation due to more greenhouse coverage, higher rental expenses as newly leased land with higher rents came into production during the quarter and higher overhead expenses.

A large negative net impact of biological assets fair value adjustment was recorded for the period. The large negative net impact was due to the solanaceous production cycle coming to an end and thus a decrease in area planted with high value solanaceous crops as well as lower expected volume in those greenhouses still planted with solanaceous products at the end of March as compared to the end of December. Our operating cash flow was lower compared to last year, despite higher revenue, primarily due to trade receivables balances."

Business Outlook for the Fiscal Year Ending June 30, 2013

The Company updates its annual guidance for the fiscal year ending June 30, 2013 to reflect the markedly lower than initially expected market prices during the winter season as well as heavy rains in South China in May 2013 that the Company expects would lower its open field revenue in May and June. The Company estimates that its revenue for the fiscal year ending June 30, 2013 will be between RM570 million and RMB600 million, representing a year over year growth rate of approximately 9.8% to 15.5% for the 12 months ending June 30, 2013 from the 12 months ended June 30, 2012. This forecast reflects the Company's current and preliminary view, which is subject to change.


Wednesday, May 22, 2013
Going Private News

HONG KONG, May 22, 2013 (GLOBE NEWSWIRE) -- Le Gaga Holdings Limited (Nasdaq:GAGA) ("Le Gaga" or the "Company"), a leading greenhouse vegetable producer in China, announced today that its board of directors has received a non-binding proposal letter dated May 21, 2013 from Ms. Na Lai Chiu, the chairman of the Company's board of directors, Mr. Shing Yung Ma, a director and the chief executive officer of the Company, and SC China Holding Limited, a company indirectly wholly owned by Mr. Neil Nanpeng Shen, a director of the Company, on behalf of funds managed and/or advised by it (together with its and their affiliates, Ms. Na Lai Chiu and Mr. Shing Yung Ma, the "Consortium") to acquire all of the outstanding shares of the Company not currently owned by the Consortium in a "going private" transaction (the "Transaction") at a price of US$4.01 in cash per American Depositary Share of the Company ("ADS," each ADS representing 50 ordinary shares of the Company), or US$0.0802 in cash per ordinary share of the Company, as the case may be.

According to the proposal letter, the Consortium intends to form an acquisition company to implement the Transaction, and has held discussions with certain financial institutions that have expressed interest in financing the Transaction. A copy of the proposal letter is attached hereto as Exhibit A.

The Company's board of directors has formed a special committee consisting of three independent directors (the "Special Committee") to consider this proposal. The Company expects that the Special Committee will retain a financial advisor and legal counsel to assist it in its work. The Company cautions its shareholders and others considering trading in its securities that the Company has just received the non-binding proposal and has not made any decisions with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

Weil, Gotshal & Manges LLP is acting as U.S. counsel to the Consortium. Latham & Watkins is acting as the Company's U.S. counsel.


Friday, February 22, 2013
Comments & Business Outlook

Quarter Ended December 31, 2012

  • Revenue decreased by 31.9%, to RMB102.7 million (US$16.5 million) for Q2 FY2013, compared to RMB150.8 million a year ago.
     
  • Profit for the period decreased by 1.6%, to RMB65.7 million (US$10.5 million) for Q2 FY2013, compared to RMB66.8 million a year ago.
     
  • Adjusted profit for the period2 (non-IFRS measure) decreased by 49.1% to RMB32.8 million (US$5.3 million) for Q2 FY2013, compared to RMB64.5 million a year ago. A reconciliation of the adjusted profit for the period to profit for the period determined in accordance with IFRS is set forth in Appendix V.
     
  • Adjusted EBITDA3 (non-IFRS measure) decreased by 36.0% to RMB54.5 million (US$8.7 million) for Q2 FY2013, compared to RMB85.1 million a year ago. A reconciliation of the adjusted EBITDA to profit for the period determined in accordance with IFRS is set forth in Appendix VI.
     
  • Basic and diluted earnings per share was RMB2.89 cents (0.46 US cents) and RMB2.88 cents (0.46 US cents), respectively, for Q2 FY2013. Basic and diluted earnings per ADS4 was RMB144.5 cents (23.19 US cents) and RMB144.0 cents (23.11 US cents), respectively, for Q2 FY2013.

Mr. Shing Yung Ma, the CEO of Le Gaga, commented, "In October we completed the planting of solanaceous products in our farm bases. Harvesting of solanaceous products commenced from the end of November. Market prices rose steadily in November and December. Volumes and quality of products in our greenhouses were in line with our expectations. However, we postponed part of our harvest originally scheduled for December until January in anticipation of a further increase in market prices leading up to the Chinese New Year holiday, which fell in the second week of February. In contrast, during the previous winter season we accelerated our harvest activities towards the end of the December quarter as prices rose rapidly in the month of December in anticipation of the Chinese New Year holiday, which fell in the third week of January last year. A stronger focus on off-season solanaceous production also means that we have reduced the area of short-cycle leafy and cruciferous vegetables, planted and harvested during the period. This reduces leafy and cruciferous revenue in the second quarter but increases expected revenue from solanaceous vegetables during the entire winter season.

We are spending much effort to further develop our greenhouse production system. This includes upgrading existing greenhouses, constructing additional nursery greenhouses and trials with soil-less production techniques for peppers and tomatoes. Favorable weather allowed us to make good progress on our greenhouse construction projects, as we added over 600 mu of greenhouses during the quarter. We have also added a substantial area of new arable land during the quarter in line with our land expansion plans."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "Annual revenue per mu and profit continue to be our key performance indicators. This means continued specialization in off-season production of greenhouse vegetables such as peppers and tomatoes. While production during the summer months would result in higher volumes but lower prices, production during the winter months results in lower volumes but significantly higher prices. Four of our major expenses, including labor, fertilizer, packing and transportation, are all directly correlated to production volume. Utilizing our production capacity for off-season (winter months) production, would maximize both revenue and profit margins.

A large positive net impact of biological assets fair value adjustment was recorded for the period. The large net impact was due to an increase in area planted with high value solanaceous crops in our greenhouses at the end of December as compared to the end of September. Despite lower revenue, our operating cash flow was strong as a result of a lower receivables balance on December 31 as compared to September 30. Although market prices were lower in December 2012, as compared to December 2011, our average selling prices improved due to a more favorable product mix and better quality. The use of better packing materials further increased average selling prices."


Wednesday, November 28, 2012
Comments & Business Outlook

Highlights of the Quarter Ended September 30, 2012

  • Revenue decreased by 15.8%, to RMB86.8 million (US$13.8 million) for Q1 FY2013, compared to RMB103.1 million a year ago.
     
  • Profit for the period increased by 16.1%, to RMB101.4 million (US$16.1 million) for Q1 FY2013, compared to RMB87.3 million a year ago.
     
  • Adjusted profit for the period2 (non-IFRS measure) decreased by 64.1% to RMB11.7 million (US$1.9 million) for Q1 FY2013, compared to RMB32.6 million a year ago. A reconciliation of the adjusted profit for the period to profit for the period determined in accordance with IFRS is set forth in Appendix V.
     
  • Adjusted EBITDA3 (non-IFRS measure) decreased by 24.3% to RMB34.8 million (US$5.5 million) for Q1 FY2013, compared to RMB45.9 million a year ago. A reconciliation of the adjusted EBITDA to profit for the period determined in accordance with IFRS is set forth in Appendix VI.
     
  • Basic and diluted earnings per share were RMB4.44 cents (0.71 US cents) for Q1 FY2013. Basic and diluted earnings per ADS4 were RMB222.0 cents (35.32 US cents) for Q1 FY2013.

Mr. Shing Yung Ma, the CEO of Le Gaga, commented, "During the first fiscal quarter we have spent substantial efforts preparing for the upcoming solanaceous season. Planting of solanaceous products commenced at the end of August in Fujian and in September in Guangdong. We are also spending much effort to further develop our greenhouse production system. This includes upgrading existing greenhouses, constructing additional nursery greenhouses and trials for new production techniques for peppers and tomatoes.

Unlike the first half of calendar year 2012, the weather across China was relatively mild between July and September. Normally, July through September is the typhoon season in Southern China. However, we have not experienced any typhoons in Fujian and Guangdong province this year. Despite the mild weather, which resulted in ample vegetable supply to the market, thus lacking the driver for higher overall market prices, our average selling price improved due to more favorable product mix. Favorable weather allowed us to make good progress on our greenhouse construction projects, as we added over 1,000 mu of greenhouses during the quarter and are on track for our targeted greenhouse area for the winter season."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "Continued specialization in off-season production of greenhouse vegetables such as peppers and tomatoes and increasing greenhouse coverage, resulted in lower revenue in the first fiscal quarter as we are planting such products from August through October, with harvest typically commencing in November. A stronger focus on off-season production also means that we concentrate the necessary land resting and sanitation during the low season (July through September), which further reduces our ability to generate revenue during the first fiscal quarter.

Maximizing our annual revenue per mu and profit continues to be our key performance indicator. While production during the summer months would result in higher volumes but lower prices, production during the winter months results in lower volumes but significantly higher prices. As our labor, packing and transportation expenses are all strongly correlated to production volume, utilizing our production capacity for off-season (winter months) production, would maximize both revenue and profit margins.

A large positive net impact of biological assets fair value adjustment resulted in a strong increase in net profit for the period. The large net impact was due to the switch from low value leafy crops grown during the summer months to higher value solanaceous crops grown during the winter months. Our operating cash flow declined compared to last year as a result of lower revenue, higher inventory and plantation costs as we started the solanaceous production season and higher receivables."

Recent Developments

The Company reviews the productivity and efficiency of the utilization of its resources for each of its existing farms on a regular basis. We have decided to dispose of farms with a total land area of 2,242 mu during the three-month period ended September 30, 2011. Up to September 30, 2012, we have transferred/returned a total land area of 1,543 mu. We are currently in the process of returning the remaining 699 mu of farm land to the landlords.

Business Outlook for the Fiscal Year Ending June 30, 2013

The Company re-affirms its previous revenue guidance and estimates that its revenue for the fiscal year ending June 30, 2013 will be between RM600 million and RMB630 million, representing a year over year growth rate for the 12 months ending June 30, 2013 compared to the 12 months ended June 30, 2012 of approximately 15.5% to 21.3%. This forecast reflects the Company's current and preliminary view, which is subject to change.


Monday, August 27, 2012
Comments & Business Outlook

Highlights of the Three Months Ended June 30, 2012

  • Revenue remained stable from RMB123.3 million for the three months ended June 30, 2011 compared to RMB123.2 million (US$19.4 million) for the three months ended June 30, 2012.
  • Profit for the period was RMB12.6 million for the three months ended June 30, 2011, as compared to a loss for the period of RMB8.5 million (US$1.3 million) for the three months ended June 30, 2012.
  • Basic and diluted loss per share was RMB0.37 cents (0.06 US cents) for the three months ended June 30, 2012. Basic and diluted loss per ADS4 was RMB18.5 cents (2.91 US cents) for the three months ended June 30, 2012.

Mr. Shing Yung Ma, the Chairman and CEO of Le Gaga, commented, "During the three months ended June 30, 2012 we have completed the annual cycle of solanaceous plantation. As a result of the poor weather conditions from January through May, selling prices were very strong during the months of April and May but sales volume significantly down. As a result of continued poor weather conditions in April and May, the greenhouse construction experienced delay and the area of land in operation during the period and thus our revenue was lower than expected. Very low prices during the month of June further contributed to lower than expected revenue for the period.

As of June 30, 2012 we still had a large area of land under construction and land improvement and greenhouse construction on these lands are on-going. In preparation for the next annual cycle of solanaceous plantation, we are spending much effort to further develop our greenhouse production system. This includes adding additional ventilation capabilities to existing greenhouses, upgrading and construction of additional nursery greenhouses and initiating trials for new production techniques for peppers and tomatoes. Due to our increased focus on off-season solanaceous vegetables, we will see a further increase in seasonality of our revenue. We are concentrating our land resting and sanitation in the summer months and more planting of solanaceous products in August and September will further reduce our ability to generate revenues during those months. As a result, the winter months will account for an even higher percentage of our annual revenue."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "Our loss for the three months ended June 30, 2012 resulted from a negative net impact of biological assets fair value adjustment. The negative net impact was due to the switch from high value crops on our field during the winter months to lower value crops grown during the summer, more pronounced seasonality, and improvements in planting methods and schedules which resulted in a larger gain recognized in prior periods. The low vegetable market prices at the end of June further reduced the value of crops on land at the end of the period and thus increased the fair value change. Although our total revenue did not increase due to a decrease in average operating land and lower prices in June, revenue per mu, a key performance indicator for our company, increased slightly compared to last year due to product mix improvement. Despite the increased size of our operations compared to a year ago, which increased our fixed cost, our Adjusted Cost of Inventories Sold decreased as a percentage of revenue and our Adjusted EBITDA margin remained stable."


Wednesday, June 20, 2012
Comments & Business Outlook

Fourth Quarter 2012 Results

  • Revenue increased by 17.3% from RMB121.2 million for Q4 FY2011 to RMB142.2 million (US$22.6 million) for Q4 FY2012.
  • Basic and diluted loss per share was RMB0.17 cents (0.03 US cents) for Q4 FY2012.  Basic and diluted loss per ADS4 was RMB8.5 cents (1.35 US cents) for Q4 FY2012 vs earnings of $0.06 in Q4 2011

Mr. Shing Yung Ma, the Chairman and CEO of Le Gaga, commented, "We are pleased with our performance in the fourth fiscal quarter and full fiscal year 2012. The fourth quarter was characterized by poor weather conditions, with a large number of rainy days. With our greenhouses, not only could we mitigate the adverse weather effects as opposed to open field farming, we were also able to take advantage of the higher market prices as compared to last year because market supply decreased. As a result, our revenue per mu increased from RMB5,942 to RMB7,205. Continued product mix upgrades further contributed to higher revenue per mu. Although we benefitted in terms of pricing, our greenhouse construction experienced a delay as a result of the large number of rainy days during the quarter.

Our performance in fiscal year 2012 demonstrates the competitive advantage of our greenhouse business model as we achieved a significant increase in average selling prices. Our greenhouses provide the environment for improved quality of our products, allow us to upgrade our product mix as we are able to grow more solanaceous vegetables, and allow us to grow more off-season products (primarily solanaceous). Our greenhouses allowed us to capture the high prices during the off-season, as we can supply when open field farmers cannot. Going forward, we intend to continue our focus on high quality off-season products and further upgrade our product mix, in particular in the solanaceous product category by further expanding production of high-end and specialty tomato and pepper varieties. As a result we may see a further increase in seasonality of our revenues, with the winter months accounting for an even higher percentage of our total revenue for the year."

Business Outlook for the fiscal quarter ending June 30, 2012

The Company estimates that its revenue for the first fiscal quarter ending June 30, 2012 will be between RMB135 million and RMB140 million, representing a year over year growth rate of approximately 9.5% to 13.5%. This forecast reflects the Company's current and preliminary view, which is subject to change.



Mr. Auke Cnossen, the CFO of Le Gaga, added, "Our loss in the fourth quarter resulted from a negative net impact of biological assets fair value adjustment. The negative net impact was due to the switch from high value crops on our field during the winter months to lower value crops grown during the summer, more pronounced seasonality and improvements in planting methods and schedules which resulted in a larger gain recognized in prior periods of the fiscal year. More greenhouses resulted in strong improvement in key performance indicators, i.e., revenue per mu, adjusted profit and operating cash flow. Although our increased seasonality resulted in lower margins (before the net impact of biological assets fair value adjustment) in the second quarter, which is our low season, we achieved higher margins in the third and fourth quarter. Our margins and profitability for the fourth quarter improved significantly compared to last year, as we enjoyed high increase in ASP with a relatively stable production volume, resulting in lower material and labor costs as a percentage of revenue. Furthermore, we have generated continued strong operating cash flow, as a result of the significant volume of sales in December for which cash was collected in the fourth quarter."


Wednesday, February 29, 2012
Comments & Business Outlook

Third Quarter Results

  • Revenue increased by 41.0%, from RMB106.9 million for Q3 FY2011 to RMB150.8 million (US$24.0 million) for Q3 FY2012.
  • Profit for the period increased by 48.5%, from RMB45.0 million for Q3 FY2011 to RMB66.8 million (US$10.6 million) for Q3 FY2012.
  • Adjusted profit for the period2 (non-IFRS measure) increased by 54.4%, from RMB41.8 million for Q3 FY2011 to RMB64.5 million (US$10.2 million) for Q3 FY2012.
  • Basic and diluted earnings per share was RMB2.92 cents (0.46 US cents) and RMB2.91 cents (0.46 US cents), respectively, for Q3 FY2012. Basic and diluted earnings per ADS4 was RMB146.0 cents (23.20 US cents) and RMB145.5 cents (23.12 US cents), respectively, for Q3 FY2012.

Mr. Shing Yung Ma, the Chairman and CEO of Le Gaga, commented, "We are pleased with our performance in the third fiscal quarter. The third quarter demonstrates the competitive advantage of our greenhouse business model as we achieved a significant increase in average selling prices. Our greenhouses lead to improved quality of our products and allow us to upgrade our product mix as we are able to grow more solanaceous vegetables, including more specialty varieties. Average selling prices further benefitted from enhanced cultivation know-how leading to better quality and market inflation. Our greenhouses allowed us to capture the high prices at the end of the quarter, which were a result of the cold weather in South China, as our crops are better protected compared to open field farming. Another factor contributing to higher selling prices is our focus on packaging for developing a brand name in the wholesale markets and among our institutional customers. Going forward, we will continue to focus on high quality off-season products and further upgrade our product mix, in particular in the solanaceous product category, in which we plan to further expand production of high-end and specialty tomato and pepper varieties."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "In the third quarter we see that more greenhouses resulted in strong improvement in key performance indicators, i.e. revenue per mu and adjusted profit. Although our increased seasonality resulted in lower margins in the second quarter, which is our low season, we achieved much higher margins in the third quarter. We have generated continued strong operating cash flow, particularly in light of a significant volume of sales in December for which collection of cash were not fully reflected in the third quarter operating cashflow. We have added additional farmland during the third quarter and have started land improvement and greenhouse construction on these farmlands. Our new farm in Putian, Fujian Province, is fully in production and is already showing a productivity level comparable to our other farms, which is a testimony to our effective training and development of farm managers and workers."

Business Outlook for the fiscal quarter ending March 31, 2012

The Company estimates that its revenue for the fourth fiscal quarter ending March 31, 2012 will be between RMB140 million and RMB150 million (representing a full year revenue of RMB 517 million to RMB 527 million for fiscal year ending March 31, 2012), representing a year over year growth rate of approximately 15% to 24% (representing a full year growth rate of approximately 27 to 30% for the fiscal year ending March 31, 2012). This forecast reflects the Company's current and preliminary view, which is subject to change.


Tuesday, November 22, 2011
Comments & Business Outlook

Second Quarter 2012 Results

  • Revenue increased by RMB7.8 million, or 8.2%, from RMB95.3 million for Q2 FY2011 to RMB103.1 million (US$16.2 million) for Q2 FY2012.
  • Basic and diluted earnings per share was RMB3.81 cents (0.60 US cents) and RMB3.71 cents (0.58 US cents), respectively, for Q2 FY2012. Basic and diluted earnings per ADS was RMB190.5 cents (29.87 US cents) and RMB185.5 cents (29.08 US cents), respectively, for Q2 FY2012.

Mr. Shing Yung Ma, the Chairman and CEO of Le Gaga, commented, "We are pleased with our performance in the second fiscal quarter, which was characterized by nice weather.  Normally, the second fiscal quarter is the typhoon season in Southern China. However, we have not experienced any typhoons in Fujian and Guangdong provinces this year during the months of July through September. The weather has, therefore, been particularly favorable for greenhouse construction and we have thus made good progress of completing construction of additional greenhouses. At the same time however, our pricing has remained relatively flat compared to the second quarter last year. Despite improvements in our product quality and product mix, the good weather resulted in larger supply to the market, thus lacking the driver for higher overall market prices."

Mr. Auke Cnossen, the CFO of Le Gaga, added, "In the second quarter we have again seen strong operating cash flow. Over the first six months of financial year 2012 we have generated RMB135 million in operating cash flow. Strong operating cash flow directly resulted from our investment in greenhouses. We are seeing increased seasonality due to a higher proportion of greenhouses, resulting in more off-season production of solanaceous vegetables in the winter months. In the summer months, greenhouses provide less yield advantage and prices are lower and as such, we concentrate the necessary land resting and sanitation during the low season (July through September). The large land area dedicated to solanaceous products, which are planted mostly during the month of September, further reduces the revenue in the second fiscal quarter. As a result, our operating margin is lower during the second fiscal quarter due to less competitive advantage from greenhouses, given that the depreciation and amortization charged does not fully reflect the economic benefit of farmland infrastructure on it."

Business Outlook for the fiscal quarter ending December 31, 2011

The Company estimates that its revenue for the third fiscal quarter ending December 31, 2011 will be between RMB140 million and RMB150 million, representing a year over year growth rate of approximately 31% to 40%.  This forecast reflects the Company's current and preliminary view, which is subject to change.


Tuesday, September 27, 2011
Notable Share Transactions
HONG KONG, Sept. 27, 2011 (GLOBE NEWSWIRE) -- Le Gaga Holdings Limited ("Le Gaga" or the "Company") (Nasdaq:GAGA), one of the largest greenhouse vegetable producers in China as measured by the area of greenhouse coverage and one of the fastest growing major vegetable producers in China, today announces that its Board of Directors has authorized a program to repurchase Le Gaga American Depositary Shares, each representing 50 ordinary shares. The Board approved the repurchase of up to US$10 million of Le Gaga ADSs over a period of six months or such other date, whichever is earlier, when the repurchase program is revoked or varied by the Board of Directors.

Tuesday, August 23, 2011
Comments & Business Outlook

First Quarter 2012 Results

  • Revenue increased by RMB40.0 million, or 48.0%, from RMB83.3 million for the three months ended June 30, 2010 to RMB123.3 million (US$19.1 million) for the three months ended June 30, 2011.
  • Basic and diluted earnings per share was RMB0.55 cents (0.09 US cents) and RMB0.53 cents (0.08 US cents), respectively, for the three months ended June 30, 2011. Basic and diluted earnings per ADS4 was RMB27.5 cents (4.25 US cents) and RMB26.5 cents (4.10 US cents), respectively, for the three months ended June 30, 2011 vs (10.0 US cents) in First quarter 2011.

Mr. Shing Yung Ma, the Chairman and Chief Executive Officer of Le Gaga, commented, "We are very pleased with our performance in the first fiscal quarter. Our farm base development is on track with various construction projects at different farm bases. Most of the construction activity in our new Xianyou and Putian farm bases is approaching completion and the farm bases will be ready for solanaceous production during the off-season winter months. We are also working on a number of initiatives to further improve our greenhouse vegetable production model. Training and development of our farm managers remain priorities for us. Furthermore, we have recently added a new independent director to our board of directors and established a corporate governance and nominating committee."

Mr. Auke Cnossen, the Chief Financial Officer of Le Gaga, added, "As a result of our increasing greenhouse coverage, solanaceous products accounted for a larger percentage of total production in the first fiscal quarter and revenue per mu has increased further.  Solanaceous vegetables typically have higher ASP compared to lower value leafy vegetables and are particularly well suited for greenhouse production. More solanaceous production increases the seasonality of our revenues but also increases our annual productivity, with higher production during the winter months.  More land preparation for solanaceous planting activities during August and September may result in the second fiscal quarter accounting for a lower percentage of annual sales compared to other quarters.  Furthermore, we continue to see land rental rates for new land increase at a rapid pace. This trend further validates our focus on increasing productivity, as measured in revenue per mu, through our greenhouse business model."

Business Outlook for the fiscal quarter ending September 30, 2011

The Company estimates that its revenue for the second fiscal quarter ending September 30, 2011 will be between RMB100 million and RMB110 million, representing a year over year growth rate of approximately 5% to 15%.  


Thursday, July 21, 2011
Liquidity Requirements
We had capital expenditures of RMB137.9 million, RMB169.9 million and RMB285.8 million ($43.7 million) for the years ended March 31, 2009, 2010 and 2011, respectively. Our capital expenditures were made primarily for the construction of our production facilities, obtaining land use rights and the purchases of property, plant and equipment. Our capital expenditures have been primarily funded by net cash generated from our operating activities and cash provided by financing activities. In fiscal year 2012, we expect to incur capital expenditures of approximately RMB320 million ($48.9 million). We expect our capital expenditures in fiscal year 2012 to primarily consist of the purchases of property, plant and equipment. We expect to fund these capital expenditures from cash on hand as well as operating cash inflow.

Thursday, June 9, 2011
Comments & Business Outlook

Fourth Quarter Results:

  • Revenue increased by RMB33.8 million, or 38.7%, from RMB87.4 million for the three months ended March 31, 2010 to RMB121.2 million (US$18.5 million) for the three months ended March 31, 2011. Revenue increased by RMB126.3 million, or 45.0%, from RMB280.5 million in FY2010 to RMB406.8 million (US$62.1 million) in FY2011. 
  • Results from operating activities increased by RMB19.5 million, from RMB1.5 million for the three months ended March 31, 2010 to RMB21.0 million (US$3.2 million) for the three months ended March 31, 2011. Results from operating activities increased by RMB23.5 million, or 21.1%, from RMB111.7 million in FY2010 to RMB135.2 million (US$20.7 million) in FY2011. 
  • Profit for the period increased by RMB17.6 million, from RMB0.7 million for the three months ended March 31, 2010 to RMB18.3 million (US$2.8 million) for the three months ended March 31, 2011. Profit for the year increased by RMB23.2 million, or 21.0%, from RMB110.2 million in FY2010 to RMB133.4 million (US$20.4 million) in FY2011. 
  • Adjusted profit for the period (Non-IFRS measure, defined as profit for the period before the net impact of biological assets fair value adjustments and excluding the effects of non-cash share-based compensation and the initial public offering expenses charged to the income statement) increased by RMB14.1 million, or 50.9%, from RMB27.7 million for the three months ended March 31, 2010 to RMB41.8 million (US$6.4 million) for the three months ended March 31, 2011. Adjusted profit for the year increased by RMB52.9 million, or 53.4%, from RMB98.9 million in FY2010 to RMB151.8 million (US$23.2 million) in FY2011. A reconciliation of the adjusted profit for the period/year to profit for the period/year determined in accordance with IFRS was set forth in Appendix V. 
  • Adjusted EBITDA (Non-IFRS measure, defined as EBITDA (earnings before net finance income (costs), income tax expense, depreciation and amortization), as further adjusted to exclude the effects of non-cash share-based compensation, the net impact of biological assets fair value adjustment and the initial public offering expenses charged to the income statement) increased by RMB19.2 million, or 49.8%, from RMB38.6 million for the three months ended March 31, 2010 to RMB57.8 million (US$8.8 million) for the three months ended March 31, 2011. Adjusted EBITDA increased by RMB65.6 million, or 48.4%, from RMB135.6 million in FY2010 to RMB201.2 million (US$30.7 million) in FY2011.  A reconciliation of the adjusted EBITDA to profit for the period/year determined in accordance with IFRS was set forth in Appendix VI. 
  • Basic and diluted earnings per share was RMB0.80 cents (0.12 US cents) and RMB0.77 cents (0.12 US cents), respectively, for the three months ended March 31, 2011. Basic and diluted earnings per ADS2 was RMB40.0 cents (6.11 US cents) and RMB38.5 cents (5.88 US cents), respectively, for the three months ended March 31, 2011.  
  • Basic and diluted earnings per share was RMB6.68 cents (1.02 US cents) and RMB6.46 cents (0.99 US cents) in FY2011, respectively, representing an increase of 2.5% and 0.5%, respectively, from those in FY2010. Basic and diluted earnings per ADS was RMB334.0 cents (51.01 US cents) and RMB323.0 cents (49.33 US cents) in FY2011, respectively, representing an increase of 2.5% and 0.5%, respectively, from those in FY2010.

Mr. Shing Yung Ma, the Chairman and Chief Executive Officer of Le Gaga, commented, "We are very pleased with our performance in the fourth fiscal quarter as well as the full fiscal year 2011.  Our high quality produce continues to be well accepted by our customers. At the same time, we are achieving better selling prices due to higher quality vegetables and better product mix as a result of more greenhouses. Our further improved know-how allows us to capture more attractive market opportunities.  Our strategy will continue to focus on increasing greenhouse coverage and arable land area, expanding our sales, marketing and distribution network, strengthening our brand awareness across channels, and devoting R&D efforts to enhance our horticultural know-how. Furthermore, building our organization including training and development of our farm managers remains a priority for us."

The Company estimates that its revenue for the first fiscal quarter ending June 30, 2011 will be between RMB118 million and RMB128 million, representing a year over year growth rate of approximately 42% to 54%.  


Saturday, May 7, 2011
Liquidity Requirements

We believe that our current levels of cash and cash flows from operations and bank borrowings, combined with the net proceeds from this offering, will be sufficient to meet our anticipated cash needs for at least the next 24 months.

We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions


Tuesday, February 22, 2011
Comments & Business Outlook

Third Quarter Results:

  • Revenue increased by RMB 33.5 million, or 45.6%, from RMB 73.4 million for the three months ended December 31, 2009 to RMB 106.9 million (US $16.2 million) for the three months ended December 31, 2010.
  • Profit for the period increased by RMB 26.1 million, or 138.1%, from RMB 18.9 million for the three months ended December 31, 2009 to RMB 45.0 million (US $6.8 million) for the three months ended December 31, 2010.
  • Basic and diluted earnings per ADSwas RMB 104.5 ($15.83 US ) and 100.5 cents ($15.23 US ), respectively, for the three months ended December 31, 2010, representing an increase of 85.0% and 81.1%, respectively, from those in the three months ended December 31, 2009.

Mr. Shing Yung Ma, chairman and chief executive officer of Le Gaga, commented, "We are very pleased with our performance in the third fiscal quarter as we achieved record total revenue, adjusted profit and revenue-per-mu. Our greenhouse vegetable cultivation business model and cultivation know-how continue to deliver strong results. Since our IPO, we have continued to focus on our greenhouse and arable land expansion. We will continue to invest in research and development to enhance our cultivation know-how as well as in the development of our sales, marketing and distribution network. Furthermore, training and development of our farm managers remains an investment priority for us."

  • The Company estimates that its revenue for the fourth fiscal quarter ending March 31, 2011 will be between RMB 105 million and RMB 115 million (representing a full year revenue of RMB 390 million to RMB 400 million for fiscal year ending March 31, 2011), representing a year over year growth rate of approximately 20.1% to 31.5% (representing a full year growth rate of approximately 39.2% to 42.8% for fiscal year ending March 31, 2011).  

Monday, November 29, 2010
Comments & Business Outlook

Highlights of the Quarter Ended September 30, 2010

  • Revenue increased by RMB 29.5 million, or 44.8%, from RMB 65.8 million for the three months ended September 30, 2009 to RMB 95.3 million (US$14.2 million) for the three months ended September 30, 2010.
  • Results from operating activities decreased by RMB 17.0 million, or 27.1%, from RMB 62.7 million for the three months ended September 30, 2009 to RMB 45.7 million (US$6.8 million) for the three months ended September 30, 2010.
  • Profit for the period decreased by RMB 15.8 million, or 25.3%, from RMB 62.4 million for the three months ended September 30, 2009 to RMB 46.6 million (US$7.0 million) for the three months ended September 30, 2010. 
  • Adjusted profit for the period (Non-IFRS measure, defined as profit for the period before the net impact of biological assets fair value adjustments and excluding the effects of non-cash share-based compensation and the initial public offering expenses charged to the income statement) increased by RMB 12.1 million, or 45.3%, from RMB 26.7 million for the three months ended September 30, 2009 to RMB 38.8 million (US$5.8 million) for the three months ended September 30, 2010. A reconciliation of the adjusted profit for the period to profit for the period determined in accordance with IFRS was set forth in Appendix V.
  • Adjusted EBITDA (Non-IFRS measure, defined as EBITDA (earnings before net finance income (expense), income tax expense (benefit), depreciation and amortization), as further adjusted to exclude the effects of non-cash share-based compensation, the net impact of biological assets fair value adjustments and the initial public offering expenses charged to the income statement) increased by RMB 14.0 million, or 39.8%, from RMB 35.0 million for the three months ended September 30, 2009 to RMB 49.0 million (US$7.3 million) for the three months ended September 30, 2010. A reconciliation of the adjusted EBITDA to profit for the period determined in accordance with IFRS was set forth in Appendix VI.
  • Basic and diluted earnings per share was RMB 2.59 and 2.56 cents, respectively, for the three months ended September 30, 2010, representing a decrease of 30.4%, in each case, from the three months ended September 30, 2009.
  • Basic and diluted earnings per ADS[2] was RMB 129.5 and 128.0 cents, respectively, for the three months ended September 30, 2010, representing a decrease of 30.4%, in each case, from the three months ended September 30, 2009.
  • Cash generated from operating activities increased by RMB 2.9 million, or 7.9%, from RMB 37.5 million for the three months ended September 30, 2009 to RMB 40.4 million (US$6.0 million) for the three months ended September 30, 2010.

Mr. Shing Yung Ma, chairman and chief executive officer of Le Gaga, commented, "We are very pleased with our performance in the second fiscal quarter as we achieved record total revenue, adjusted profit, revenue per mu and adjusted profit per mu. Our strong revenue growth and operational performance in the second fiscal quarter demonstrates the strength of our greenhouse vegetable cultivation business model and strong cultivation know-how."

Mr. Ma further commented, "Our revenue growth was a direct result of our expanding greenhouse area, improving cultivation know-how, and ability to leverage our comprehensive information database. Following our successful IPO on the NASDAQ, we have continued to strengthen our brand and recognition among our customers and provide more high quality and safe vegetables to an increasing number of consumers. Going forward, we will continue to focus on expanding our greenhouse coverage and arable land area, invest in research and development to enhance our cultivation know-how, expand our sales, marketing and distribution network, strengthen our brand awareness across all of our sales channels and invest in the development of our farm managers."

Mr. Auke Cnossen, chief financial officer of Le Gaga, added, "As demonstrated by our solid financial performance this quarter, we are excited about the large growth opportunities ahead of us. With our solid cash on hand and strong operating cash flows, we are confident that we have enough capital to execute our expansion plans. We will continue to expand our greenhouse area in Fujian and Guangdong Provinces while expanding our sales and distribution into the Yang Tze River Delta. We are on track to add the required greenhouse area and arable land to achieve our revenue and profit growth targets.

Business Outlook for the fiscal quarter ended December 31, 2010

The Company estimates that its revenue for the third fiscal quarter will be between RMB 98 million and RMB 108 million, representing a year over year growth rate of approximately 33.5% to 47.1%.


Tuesday, October 26, 2010
IPO Activity

Le Gaga Holdings Limited plans for Initial Public Offering

Company Snapshot:

One of the largest greenhouse vegetable producers in China

Industry Snapshot:

  • Agriculture is a very important industry in China, contributing 18.1% of China’s GDP in 2009. According to Frost & Sullivan, farming is the largest component of the agriculture industry, contributing 47.7% of the sector outpu
  • The farming industry in China includes the farming of vegetables, grain, fruit, tea, cotton and other crops. The following graph sets forth the total output of farming compared to the total output of other agriculture industry sectors for the periods indicated.
 
(GRAPHIC)
 
Source: Historical data from National Bureau of Statistics, China; projected data from Frost & Sullivan
 
  • China is the largest producer of vegetables by volume globally. In 2009, China vegetable production reached RMB875.8 billion and this amount is expected to increase to RMB1,286.5 billion in 2014. The chart below sets forth the total vegetable production volume in China for the periods indicated:

Use Of proceeds:

We estimate that the net proceeds to us from the sale of 9,200,000 ADSs we are offering will be approximately $68.8 million. We intend to use the net proceeds we receive from this offering for the following purposes:

  • approximately $62.0 million to fund the construction and improvement of our greenhouses and other agricultural facilities
  • the balance to fund the enhancement of our research and development capability, including the development of our information system.

Underwriter(s):

  • BofA Merrill Lynch
  • UBS Investment Bank
  • Piper Jaffray
  • Oppenheimer & Co.

Proposed offering price: $7.50 to $9.50

Post IPO Share Calculation: (Using a 50 to 1 Ordinary to ADS conversion ratio).

  •  35,598,484: Pre IPO fully diluted share count used in EPS calculation.  
  •    9,200,000: Newly issued ADS shares (Plus 1,671,599 from selling shareholders)

GeoTeam® best effort calculation of total post IPO ADS count to be used in EPS calculations, assuming full conversions and a Ordinary to ADS conversion ratio of 50 to 1: 48,798,484

Financial Snapshot:

  • Our revenue increased from RMB153.6 million in the fiscal year ended March 31, 2008 to RMB199.0 million in the fiscal year ended March 31, 2009 and to RMB280.5 million ($41.4 million) in the fiscal year ended March 31, 2010.
  • Our revenue increased from RMB53.8 million in the three months ended June 30, 2009 to RMB83.3 million ($12.3 million) for the same period in 2010.
  • Adjuststed net income for fiscal year ended March 31, 2010 increased to RMB93.1 million ($13.7 million) from RMB61.7 million. 
  • Adjuststed net income for three months ended June 30,, 2010 increased to RMB25.4 million ($3.8 million) from RMB15.8 million.

Financials
                                                         
    Year Ended March 31,   Three Months Ended June 30,
    2008   2009   2010   2009   2010
    RMB   RMB   RMB   $   RMB   RMB   $
    (In thousands)
 
Profit for the year/period
    38,445       60,413       110,202       16,250       28,297       23,495       3,465  
Adjustments for net impact of biological assets fair value adjustment:
                                                       
Add: biological assets fair value adjustment included in cost of inventories sold
    65,626       98,627       135,712       20,012       23,115       49,457       7,293  
Less: changes in fair value less costs to sell of biological assets
    (70,247 )     (97,343 )     (152,743 )     (22,523 )     (35,647 )     (47,570 )     (7,015 )
                                                         
Net impact of biological assets fair value adjustment
    (4,621 )     1,284       (17,031 )     (2,511 )     (12,532 )     1,887       278  
                                                         
Adjusted profit for the year/period
    33,824       61,697       93,171       13,739       15,765       25,382       3,743