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    Stock Alert for Agria Corp. (GRO)

    Agria Corp. (GRO) is a China-based agriculture company with operations in China and internationally.   In China, the Company engages in research and development, production and sale of seed products, including field corn seeds, edible corn seeds and vegetable seeds.  GRO owns through Agria Asia a 50.01% equity interest in PGW, New Zealand’s largest agricultural services company.  PGG Wrightson reported turnover of NZ$1.2 billion ($1.0 billion) for the twelve months ended June 30, 2011.

    Share Statistics (06-Sept-11)

      FY

    2009

    FY

    2010

    %

    Chg

    Q4

    2007

    Q4

    2008

    %

    Chg

    Symbol GRO Revenue, $CNY 3.01 29.02 864.1% 318.05 122.61 -61.4%
    Current price $1.73 Gross marg. -75.4% 40.2% -153.3% 50.5% 40.6% -19.6%
    52wk Range: $0.63-$2.12 Oper. margin -300.1% -22.0%
    Avg Vol (3m): 254,495 Net margin -4494.4% -203.9% -95.5% -13.3% -8.3% -37.6%
    Market Cap. 95.81M              
    Shares Outstanding 55.38M EPS, $ -0.88 -0.49 -44.3% -0.37 0.01 -102.7%

    Source: Reuters.com, SEC Filings.

     

    Investment Highlights

    Shares of GRO have gained 54.3% in the last five days; 135.5% in the last month; and 10.5% year-to-date.

    Shares of the Beijing-based agriculture firm soared as much as 25% on Tuesday after it announced the launch of Zhong Dan 909, a new variety of field corn seed developed by the China National Academy of Agricultural Sciences.  According to the Company, the said field corn variety has been ranked number one for the past two years in national certification tests hosted by the Ministry of Agriculture.

    Developed by CNAAS, Zhong Dan 909’s attributes make it ideal for sale in the central part of China, one of the largest corn seed markets in China, representing approximately 40% of China’s acreage for field corn.   Under a license granted by CNAAS, GRO has commercialization rights covering the marketing, production and sales of Zhong Dan 909.

    “Achieving top ranking the past two years in the national certification tests underscores the significant commercial potential of Zhong Dan 909,” stated Zhou Chuanli, head of GRO’s seed division.  “This is clearly another milestone event for Agria, marking our further expansion into the higher margin business segments of research commercialization, marketing and sales in the field corn market. This also represents the first seed we will bring to market as part of our extensive relationship with CNAAS.

    Established in 1957, CNAAS is the largest agricultural research organization in China.  In October 2009, GROentered into a strategic cooperation framework agreement with CNAAS, providing for future cooperation across the spectrum of agricultural research.  GRO has also signed an investment agreement with CNAAS and its affiliates to invest RMB35.0 million ($5.3 million) in Zhongnong, a company wholly owned by CNAAS and its affiliates.   The strategic cooperation framework grants Zhongnong preferential rights to the commercialization of research undertaken by CNAAS.

    Prior to obtaining license rights to Zhong Dan 909, Chuanli said the majority of the Company’s field corn business was through its 49% owned investment in Ganxin, which is primarily engaged in corn seed production.

    PGG Wrightson’s Fiscal Year Results

    Late last month, GRO announced that its New Zealand-listed subsidiary, PGG Wrightson, has released its annual financial results for the fiscal year ended June 30, 2011.

    As stated in the report, PGG Wrightson’s financial results were broadly in line with expectations for the said period.  Earnings before interest, tax, depreciation and amortization (EBITDA) were NZ$49.4 million from operating revenue of NZ$1.24 billion for the fiscal year ending June 30, 2011.  PGG Wrightson Finance, which PGG Wrightson sold to Heartland New Zealand, has been excluded from the Group results for 2011.  Factoring in the revaluation of PGG Wrightson’s wool interests, supply contract provisions and other one-off and fair value adjustments totaling NZ$47 million, resulted in a net loss after tax of NZ$30.7 million.

    GRO said it intends to file an amendment to its annual report on Form 20-F for the year ended December 31, 2010 to include PGW’s financial results for the fiscal year ended June 30, 2011.

    Source: http://ir.agriacorp.com/phoenix.zhtml?c=216437&p=irol-news

    Financial Strength (06-Sept-2011)

    Company

    Industry

    Sector

    S&P 500

    Quick Ratio (MRQ) 25.72 0.41 0.62 0.76
    Current Ratio (MRQ) 26.64 0.61 0.87 1.11
    LT Debt to Equity (MRQ) 0.00 10.78 20.54 111.66
    Total Debt to Equity (MRQ) 0.48 32.27 29.98 150.61
    Interest Coverage (TTM) 0.02 0.57 23.15

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    No analyst recommendations and revisions data available.

    Technical Analysis

    Source: http://stockcharts.com

    GRO is trading above its 20-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

    GRO’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility.

    The MACD for GRO currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Sept06-2011 symbol Share, $ $ Mn 2011 2012 2011 2012
    Origin Agritech Ltd. SEED 2.69 62.83M 7.08 6.11 0.67 0.61
    Shandong Zhou Yuan Seed and Nursery Co. Ltd. SZSN 0.0030 342.00K n/a n/a n/a n/a
    Monsanto Co. MON 64.17 34.31B 22.36 18.87 2.97 2.75
    Fresh Del Monte Produce Inc. FDP            
    Farm Products Median       11.13 n/a 0.66 n/a
    Agria Corp. GRO 1.80 99.69M n/a n/a 1.23 1.28

    Source: Thomson Financial

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