Home > Investment Idea > On my wish list, Hanfeng Evergreen

On my wish list, Hanfeng Evergreen

October 25, 2010 Leave a comment Go to comments

One of the top companies on my wish list is a Chinese play.

Hanfeng Evergreen: Of all the Chinese listed companies, this one is one of my favorite. The company sells slow release fertilizers in China and South Asia. The management team is great, company has a long history, big 4 auditors, good governance. The company is the leader in its industry and has a huge first mover advantage. They have a strong brand name, relationship with government, strong margins, clean balance sheet, strong balance sheet growth, and huge growth potential.

Reading the 10K and letter to shareholders, you get a sense the management has done a fabulous job building a bit moat, its brand name and product quality, and taking the right decisions to position the company for a solid long run.

One of the major problems with slow release fertilizers (SRL) is its costs. SRLs have proven that they are great for corp yield and for the environment, especially water. The biggest concern and reason for slow adoption has been the cost of SRL has been prohibitive. Hanfeng has been a leader in the industry.

I would be a buyer if i could get the shares cheaper, although I doubt that chance will come.

More reading:
Controlled Release Fertilizers: Everything you would need to know about this group of products.

Advertisements
Categories: Investment Idea
  1. deanr83
    October 26, 2010 at 8:38 am

    What are your thoughts on Migao?

    • parasd
      October 26, 2010 at 10:27 am

      I ran across this one while looking at Hanfeng. I haven’t researched it in detail but was on my list of companies to look at. Will let you know once I’ve looked at it.

  2. Anonymous
    October 26, 2010 at 9:03 am

    I would be a buyer if i could get the shares cheaper, although I doubt that chance will come.

    Then shouldn’t you buy it now? 🙂

    • parasd
      October 26, 2010 at 10:26 am

      You got to be patient and disciplined. Missing opportunities is something you can live with. Getting in at wrong price could be painful. You have to give yourself enough margin of safety to protect your capital.

  3. deanr83
    October 26, 2010 at 10:34 am

    parasd,
    I have done some research on MGO.to
    They seem to have the “cheaper” fertilizer compared to HLF, but have managed to keep pricing favorable. It also helps that they are using potash (major input) at lower rates than today. It may push up gross margins for awhile.
    The big question is can the market absorb all the incoming capacity expansions, and MGO keep prices steady/higher.

    http://pettycash.wordpress.com/2010/08/04/migao/

    • parasd
      October 26, 2010 at 10:42 am

      Thanks for the link. I will look at it soon.

      Paras

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: