No. of Recommendations: 15
The link below is to an article that seems balanced and intelligent.

Look, I agree with the idea that at $17 the valuation on China Green Agriculture is a bit rich. But I'm not sure I'd take this article seriously.

Even if we don't mind the fact that it's sloppily edited ("However, nine month earnigs for CAGC have been outstanding") and sloppily researched ("Granular and powdered forms of humic acid fertilizers, although popular to farmers, are lower margin products." -- China Green's new highly-concentrated powder fertilizes actually carry higher 65% gross margins; and "to construct 88 more intelligent greenhouses over the next 2 years" -- it's actually 12 greenhouses on 88 acres), I don't see the author take a single respectable stab at valuing either China Agritech or China Green.

I mean, this is laughable: "Unfortunately, the SEC filings do not indicate any significant growth strategy for either of these companies." China Green just quintupled its manufacturing capacity. Quintupled! It's guiding to greater than 40% revenue growth. This is all clearly stated in the SEC filings. Now, if you don't believe they can do it, that's one thing, but provide some evidence.

Further, comparing China Green to Sinochem as he does here makes no sense: "CGA's expected 55,000 tons and CAGC's planned 200,000 tons of annual fertilizer production pale in comparison to the 10.6 million tons produced by SINOCHEM." Sinochem, as you might guess from the name, specializes in chemical fertilizers. It's also a large SOE (http://www.sinochem.com/tabid/649/Default.aspx). China Green, on the other hand and again you might guess from the name, is a small player in the niche, but growing, green fertilizer space.

I could go on, but I'll stop and say that as long as analysts like Ken Tudor are on the other sides of our trades, we should do ok.

Tim
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