I still do not think that Yamada's management is as reliable or ambitious as that of its counterparts listed in Singapore, China Minzhong and Sino Grandness.
Failing to get any sort of assurance of getting a logging license before spending hundreds of millions (rmb) on the eucalyptus plantations seemed very reckless to me.
Thankfully for them, the license has been temporarily granted so far. Still, there doesn't seem to be any concrete plan for medium to long term growth and projected growth is to me, an important component in measuring value.
The best thing that Yamada has going for it is that Sam Gooi is supposedly a good friend of Xi Jinping, and his connections with the upper echelons of the Chinese government could potentially reap some benefits for Yamada.
Sam Gooi is the primary reason why Yamada Green's stock price has recovered very well this year and the nature of his future involvement will play a big role in Yamada's stock price.
So you got to balance the pros and cons but for me I'm looking for better opportunities out there. For instance, China Minzhong looks to in the midst of undergoing a correction and I will be happy to accumulate more if it falls below $1 (of course I have a big cushion with my average price at about 60 cents). I'm also watching Yanlord and may be quite interested in going in if this correction brings it to fall another 5-10% or so.
"In a few months the Lessee would be able to harvest the produce from the Plantations. The harvest will include bamboo trees, winter shoots and spring shoots. Spring shoots which are not harvested grow into trees. The bamboo trees can be used in a variety of applications such as building and renovation materials and in textile, paper and pulp industries."
What is not clear is if this is a new business, or is there some synergy with its core mushroom business.
Or is the new produce -- bamboo shoots, etc -- for its processed food segment?
Yamada's processed food products are manufactured from fresh vegetables (such as bamboo shoot) and semi-processed food products purchased from suppliers.
A large portion of the processed products is exported to Japan.
The new bamboo plantations should add value if the purchase price of RMB 60m is reasonable and Yamada can organise farmers to manage the plantations well.
The announcement provides no clue on the financial benefits of investment.
Back-of-envelope calculations suggest that the eucalyptus plantations, which were acquired earlier, will yield significant financial benefits in the absence of untoward happenings.
If in evaluating the payoff of bamboo plantations, the management has exercised similar stringency and prudence, shareholders' value will be enhanced.
Yamada should be in a position to run the bamboo plantations well, with the experience gained in managing mushroom cultivation plots and eucalyptus plantations.
There have been suggestions that Yamada was reckless in acquiring eucalyptus plantations without first securing a logging permit; and that permits may not be granted in future years even though Yamada has been fortunate in getting one for this year.
Forestry departments may not issue logging permits in advance as they want to keep tabs on the rate of felling to ensure adequate green cover.
The risk of Yamada not getting future logging permits may be overstated as eucalyptus plantations exist to provide sustainable supply of wood required for growing high-value mushroom.
Food production as well as the incomes to farmers for maintaining the plantations and harvesting matured trees are desirable measures. The local government is unlikely to jeopardise them.
Ethan999 said: "Sam Gooi is the primary reason why Yamada Green's stock price has recovered very well this year and the nature of his future involvement will play a big role in Yamada's stock price."
Hi Ethan999, You are right. Can you guess (or find out) what SamGoi's contribution to Yamada's business would be? My broker said the share price has been strongly supported at 24-26 cents. Perhaps there could be synergies from Sam Goi's food business & Yamada's upstream agri supplies.
