Asian Citrus

Happy New Year!

I have yet to buy an AIM listed stock but that may be about to change.

A relatively new listing on AIM is Asian Citrus Holdings Limited (ACHL) which grows oranges in China for the Chinese domestic market.

ACHL are on a historic PE of about 7 with a market cap. of about £120M. They have just started paying dividends with a yield of 2%.

ACHL are a nice, simple growth story. Recently planted trees are maturing and starting to bear fruit while new trees are being planted. At the same time ACHL is seeking to increase the proportion of its sales which is direct to supermarkets which carries much higher selling prices. In the future ACHL may also start making orange juice itself which obviously sell at much higher margins.

ACHL already has a plantation of 1.2 million trees which accounts for its £27 M of revenue. However it is currently planting a second plantation which will soon contain 1.6 million trees. Production from this plantation will start next winter.

With orange production set to more than double over the next 5 years and selling prices set to increase by more direct selling there is a lot of scope for growth here.

The risks are obvious - Chinese politics, Chinese currency and citrus diseases.

Chairman Tony Tong says "We have a clear strategy and leading market position and look forward to continuing our strong growth and delivering further value for our shareholders."

ACHL looks like one to buy and hide away for five years. For the patient investor the rewards should be considerable.