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One of the most important aspects of my job is keeping our shareholders and potential investors up to speed on China Organic’s latest news and events, and as always, I appreciate this moment of your time and interest in our Company. In order to facilitate a contextual understanding of the Company’s past performance and future potential, today we have made available an in-depth, paid research report recently issued by Murphy Analytics. The report analyzes our record guidance for 4Q and Full Year 2008, as well as several substantive news events. Analyst Patrick Murphy, CFA, has issued an “Outperform” for China Organic, with a 12-month price target of $1.45 to $2.90 per share.
The complete report is available here, free of charge. In his report, Mr. Murphy states: While the capital markets are experiencing relentless volatility and uncertainty, the long-term growth story for China’s real economy endures, as does the opportunity before CNOA. With a strategic shift to focus on product distribution, CNOA has positioned itself to leverage not only the growth in domestic demand for organic and green rice, but also for a range of other premium food and wine products. China Organic Agriculture is in the process of transforming itself from an agricultural supply company into a leader in the trading and distribution of high quality luxury goods and premium foods throughout China and Asia. This will soon include the importation of California wines directly to Chinese consumers by the fall of 2009. If you haven’t had a chance to read last week’s guidance press release, here’s a brief summary: Projected Guidance for Q4 and Full Year 2008: - Q4 2008 revenue $54 million versus $15.7 million Q4 2007
- Full year 2008 revenue $113 million versus $44.5 million FY 2007
- Q4 2008 net income $11 million versus $3.9 million Q4 2007
- Full year 2008 net income $20 million versus $13.5 million FY 2007
- Q4 2008 EPS $0.15. Full year 2008 EPS $0.29
The above figures include our recent $8.7 million sale of our ErMaPao division as well as the October 2008 acquisition of Dalian Huiming, a major agricultural trading company with fiscal 2007 revenues and earnings of $40.2 million and $2.7 million respectively. While these figures are exceptional, we are confident that the Company is extremely well positioned to experience solid growth in 2009 and beyond. The consumer demographics of China are very much in CNOA’s favor with urban population projections forecasting 1 billion urban Chinese by 2020; up 66 percent from the 600 million today. Incomes are rising rapidly and with GDP forecast average of between 5-7 percent annually for those years, we see a continued and consistent increase in the demand for exactly the types of high-quality products we produce and distribute. I look forward to bringing you more and substantive news soon about the aggressive corporate initiatives CNOA plans to undertake in the very near future. Speaking as a fellow shareholder, I can assure you that we’re working diligently to further accelerate both our revenue and earnings growth while delivering exceptional value for our investors. Until then, please visit our website for the latest news, company information and corporate developments. Sincerely, Jinsong Li, Chief Executive Officer
China Organic Agriculture, Inc.
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