These stocks have lost 22%, 23% and 21%, respectively, during the last two months or so. In comparison, the
has declined 12% during the same period. Moreover, these stocks are trading at forward price-to-earnings ratios of 6.48, 4.18 and 6.88, respectively.
We reckon that the selloff has been overdone, thereby presenting an attractive buying opportunity based on fundamentals.
Zhongpin is one of the leading meat processors in China, focused primarily on the processing and distribution of pork products. The pork market in China is the largest in the world, accounting for half of global production and consumption. It is projected to grow at a compound annual growth rate of 15% until 2012, making Zhongpin one of the major beneficiaries of this growth.
The company in May said first-quarter net income increased 37% year over year to $13.3 million on revenue growth of 33% to $204.3 million.
Looking forward to 2010, the company estimates its total production capacity to reach about 740,000 metric tonnes, representing an increase of 20% over 2009 levels. Moreover, revenue is forecasted in the range of $900 million to 940 million, a year-over-year increase of 24% to 30%.
Last month, Piper Jaffray rated the stock overweight with a price target of $20, implying an upside of almost 100% over current levels.
American Lorain develops, manufactures and sells over 230 different products, which include chestnut products, convenience foods and ready-to-cook and ready-to-eat foods in China.
The company reported revenue of $24.6 million for the quarter ended in March, up 16% year over year. Net income increased 6% to $1.86 million from $1.75 million in the same period a year ago.
Furthermore, the company began promoting sales of open-bottom frozen chestnut at Lorain-branded retail food counters in 40 locations, which it plans to expand to 70 in Beijing and Chongqing. The company expects to generate total revenue of $3.6 million from these counters.
The company expects revenue of $182 million to $190 million during 2010, representing year-over-year growth of 24% to 29%. Net income growth is forecasted to be 23% to 32% to $17.8 million to $19 million for the year.
On June 1, Global Hunter Securities rated the stock a buy with price target of $6, implying a 130% upside over current levels.
China Marine Food Group
China Marine Food is engaged in the business of processing, distribution and sale of processed seafood-based snack foods, as well as the sale of fresh and frozen marine catch.
Seafood consumption in China has been rapidly growing as consumers are shifting to a faster-paced lifestyle and seeking convenient food alternatives that are nutritious, tasty and hygienic. According to the Food and Agriculture Organization, China consumes more seafood than the world average and the trend is likely to continue in the future as well, reaching 35.9 kilograms per capita by 2020. Currently, per capita consumption stands at about 10 kilograms.
For the first quarter ended in March, the company reported revenue of $19.6 million, representing 8.8% growth over the same period a year earlier. Net income increased 21.9% to $3.9 million from $3.2 million. The company also secured product placements for a selection of its seafood snack foods at more than 500 convenience chain stores located across the Guangdong province in China.
China Marine Food also revealed that it is on track to achieve revenue of $100 million and net income of $21.5 million, representing year-over-year increases of 43.7% and 47.3%, respectively. Last month, Global Hunter Securities rated the stock a buy with price target of $10, implying a 95% upside over current levels.