China produces a third of the world's paddy rice.
AGRICULTURAL STOCKS are still drawing strong investor interest, judging from the response to an investor road show on agricultural plays to be held next Monday.
Organised by Financial PR, the event is part of a series of industry-themed events. About 50 fund managers, analysts and traders from 30 brokerages and asset management companies have signed up for the Agricultural Roadshow.
Despite the run-up in commodity stock prices in the past 2-3 years, the macro-economic outlook still presents a compelling sector story.
Food reserves continue to dwindle at an alarming rate due to declining arable land, low crop yields, pollution, a changing climate and scarcity of water supply.
Add to this the uptrend in food consumption due to increasing affluence in China and India, growing populations, livestock, and food for fuel (biofuels).
This scenario presents significant growth opportunities to companies in the food value chain that are able to raise productivity and increase resources.
Beside the plantation owners that we are familiar with, companies that ride the boom range from fertilizer suppliers to farming infrastructure companies, processors and retailers.
Companies featured at the road show are an animal drugs maker, a maker of farm equipment, a rubber plantation owner and an aquaculture farmer of seafood.
Animal Drugs
There is China Animal Healthcare, a drug producer in China’s veterinary industry.
China produced Rmb 20 billion worth of animal drugs in 2006, according to Frost and Sullivan. The market research company forecasts annual growth of 10% for this industry.
The company was listed on 31 Dec 2007 and now has a market cap of S$216 million.
The government is pushing for productiviity increases, but as much as 70% of China's farms are yet to be mechanized.
Farm Equipment
China Farm Equipment is a major Chinese manufacturer of harvesters, plough and planting machines and peripheral diesel engines.
China produces about a third of the world’s paddy rice, and Hunan, where the farm equipment maker is based, is its top-producing province.
This hot favorite with fund managers has a market cap of S$106 million.
Rubber Plantation
Two thirds of rubber produced these days is used to make automobile tires.
GMG Global has rubber plantations in Central and West Africa.
Africa is a wildcard. But in a global agricultural economy of decreasing arable land, the under-developed nation with over a fifth of the world’s land area is certainly worth exploring.
GMG has a market cap of S$404 million.
A much savored delicacy, demand for abalone is expected to remain strong in China, where income is rising rapidly.
Aquaculture farm
Abalone is a mouth-watering delicacy for many, especially in China.
However, over-fishing and regulations on environmental protection has led to a rapid decline in wild abalone.
Oceanus, China's largest land-based breeder of premium Japanese abalones, believes prices will remain firm with the rising affluence of Chinese consumers.
The aquaculture farm was listed on 7 May 2008 and now has a market cap of S$591 million.
Will Financial PR’s “Bountiful Harvest Agricultural Roadshow 2008” lead to bountiful stock market returns as these companies play their role in creating bountiful harvests for farmers?
Look out for our report on the roadshow on NextInsight next week.
Recent story: AGRICULTURAL commodities on the upswing
 Gabriel's portrait by Sim Kih | The two hunks who contributed this article are investor relations consultants at Financial PR. |  Adrian's portrait by Sim Kih |
