Grand Farm plans for Initial Public Offering.
Company Snapshot:
A leading integrated rice producer in China
Industry Snapshot: (From the company)
Based on internal research, we believe that most Chinese consumers currently buy rice in bulk, and we estimate that approximately 40 million mt of rice were sold pre-packaged (generally 25 kilograms per bag or less) in 2008, less than 30% of the total national rice consumption. Pre-packaged rice is generally less prone to mold and insect infestation, and easier to maintain freshness, according to a study by the Institute of Qiaoxing Light Industry of Fuzhou University. Coupled with the convenience of smaller packaging, we believe that Chinese consumers should generally prefer pre-packaged rice, despite its higher price point, over rice sold in bulk. If China’s urbanization and disposable income levels continue to rise as they have in recent history, we expect pre-packaged rice to eventually overtake bulk rice in consumer preference, especially in the more developed coastal regions of China, including Fujian Province where we are based and our pre-packaged rice is sold.
Despite China being one of the largest rice consuming nations, if not the largest, we believe production of and demand for refined rice bran oil has lagged behind in China due the complexity of and the capital requirements for its production. However, we have seen large Chinese grain and edible oil companies entering this market since 2009, which we believe is driven by growing health awareness and disposable income levels in China’s recent history. Base on internal research, we estimate that Chinese domestic refined rice bran oil production rose from 4,000 mt in 2006 to 33,000 mt in 2010, while demand grew from 190,000 mt to 238,000 mt over the same period. By 2012, we project domestic production of and demand for rice bran oil to reach 63,000 mt and 276,000 mt, respectively. With our production of refined rice bran oil to formally commence immediately after we obtain a Production License anticipated by the end of May 2011, we believe that we are well-positioned to be one of the leading rice bran oil market players.
Use Of proceeds:
We plan to use net proceeds we receive from this offering to increase our sales and marketing efforts, to expand production capacity and for other general corporate purposes.
Underwriter: Newbridge Securities Corporation
Proposed offering price: TBA
Post IPO Share Calculation: TBA
Financial Snapshot: December Year End
2009 vs. 2008
- Revenues: $12.1 million vs $4.9 million
- Adjusted Net Income: $ million vs. $ million
Twelve Months 2010 vs 2009
- Revenues: $14.1 million vs. $12.1 million
- Adjusted Net Income: $14.1 million vs. $12.1 million
Pro Forma Valuation: using price and new share count
- Trailing EPS (ADS): TBA
- Trailing P/E: TBA
