China Nutrifruit Group (CNGL) research, news, and more from GeoInvesting

Company description

Mon, 18 Aug 2008 04:00:00 GMT

As a result of a Reverse Merger Transaction on August 15 2008, FHTI is now Longheda.

Longheda is a leading producer of premium specialty fruit based products in China. The company processes high value specialty fruits into various product forms including concentrates, nectar and glazed fruits. Their products are mainly consumed by beverage companies, commercial bakers, cosmetics companies and snack food manufacturers. The company’s products are distributed throughout China through 68 independent distributors. The company’s business model is based on a highly sophisticated raw material sourcing supply chain, unique processing capabilities and a broad product line in the specialty or “superfruit” segment. The company holds Green Food Certification, HACCP certification and ISO 9001:2000 certification.

Reverse Merger Filing

Investor Alert

Wed, 02 May 2012 04:00:00 GMT

Item 2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

On May 1, 2012, the Company disclosed that it has refunded approximately 178 million (or $28.3 million)to 14 customers who purchased the Company’s concentrate juice and glazed fruit products. Payment of the refunds emanated from the facts described below.

In December 2011, the Company was informed by a customer that the Company’s concentrate juice and glazed fruit products contained higher levels of sodium than expected by the customer. This customer requested a refund of amounts paid for the allegedly non-conforming product(s). In response to this matter, the Company hired SGS to investigate and conduct independent laboratory tests to verify the product quality claims of the customer. Based on the results of the independent tests certified by SGS, the Company’s concentrate juice and glazed fruit products produced from July to November 2011 contained a higher level of sodium than the range expected by the Company or its customers. The higher level of sodium was caused by the residue of detergents used to clean the fruit processing machines. As of May 1, 2012, the Company received similar complaints and refund requests from another 13 customers and has refunded to such customers approximately 178 million (or $28.3 million). The Company is conducting ongoing negotiations with the customers regarding further potential damages. Given the timing and amount of the refunds paid to date, the Company expects to report a net loss in the fourth quarter of fiscal 2012 but has not determined the amount of such loss. The Company has been negotiating with local lenders to arrange for credit facilities to pay out any additional refunds and to meet its other ongoing cash requirements. The Company believes that additional funds in an amount not less than RMB 30 million (approximately $4.8 million) refunds could be needed to satisfy other refund claims. The Company has sought government support to confine and mitigate the economic effect of this problem. Insofar as further amounts may be refunded, the Company intends to issue a further public disclosure of this matter.

Comments & Business Outlook

Mon, 13 Feb 2012 05:00:00 GMT

Third Quarter 2012 Results

Net sales decreased 2.4% year-over-year to $21.6 million
Gross profit decreased 55.3% year-over-year to $4.6 million, with gross margin of 21.3%
Operating earnings declined 74.9% year-over-year to $2.1 million, with operating margin of 9.7%
Net income decreased 82.6% year-over-year to $1.1 million, or $0.03 per diluted share vs. $0.15 in prior year third quarter.

"During the third quarter of fiscal 2012, we experienced a decline in revenue, gross margin and net income largely due to significant increases in raw material prices and labor costs that occurred in our production season. However, due to our strong customer relationships, we were able to raise our average selling prices and pass on part of the increase in production costs to our customers," commented Mr. Yu Changjun, Chairman and CEO of China Nutrifruit. "We experienced strong demand for our glazed fruit and nectar products which increased 78.4% and 25.6%, respectively, year-over-year, partly offsetting loss of sales from our concentrate pulp products. Due to the continued pressure from rising production costs, we have not yet resumed cooperation with our OEM factories for the production of concentrate pulp products," added Mr. Yu.

Business Outlook

Due to the recent food safety issues in Taiwan, the PRC government has implemented a stringent application process for granting production permits. The Company has provided the necessary documentation and product samples for approval and expects that it may take approximately nine months to receive the production permits for its new fruit and vegetable powder and concentrate paste product lines.

"Over the next two quarters, we will continue with our sales activities and sell through our current inventory position before the next production season begins. We are taking measures to control other operational costs to partly offset inflationary pressures from increased raw material prices and labor costs," commented Mr. Yu. "The process of applying for production permits for our new fruit and vegetable powder facility and concentrate paste product line is taking longer than anticipated due to stringent procedures enforced by the government to ensure food safety. We are in close communication with the government agency to monitor the progress of our applications," added Mr. Yu.

In December 2011, the Company was informed by a customer that China Nutrifruit's concentrate juice and glazed fruit products contain higher than specified levels of sodium. The Company's customer has requested China Nutrifruit for a full refund for the purchased products valued at approximately RMB50 million ($7.9 million). In response to this matter, the Company is currently performing independent laboratory tests to verify the product quality claims of its customer and it expects to receive preliminary test results by the end of February 2012.

For fiscal year 2012, the Company is reasonably confident it will meet previously issued revenue guidance of approximately $74 million to $78 million. The Company's revenue guidance does not incorporate any potential refund to its customer. Due to the uncertainty surrounding the potential product refund, inflationary pressure on gross profit margins and other expenses, the Company is unable to provide net income guidance at this time.

Corporate Governance

Sat, 07 Jan 2012 05:00:00 GMT

On December 29, 2011, William P. Haus resigned as the director and a member and chairman of the Compensation Committee of the Board of China Nutrifruit Group Limited (the “Company”), effective immediately. The resignation of Mr. Haus is not in connection with any known disagreement with the Company on any matter.

Comments & Business Outlook

Fri, 06 Jan 2012 05:00:00 GMT

DAQING, China, January 6, 2012 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited (NYSE Amex: CNGL) ("China Nutrifruit" or "the Company"), a leading producer of premium specialty fruit based products in China ("PRC"), today announced that the Company is conducting independent laboratory tests on its concentrate juice and glazed fruit products in response to a customer's concern over product quality.

In December 2011, the Company was informed by its customer that China Nutrifruit's concentrate juice and glazed fruit products contain higher than specified levels of sodium. The Company's customer has requested China Nutrifruit for a full refund of the purchased products valued at approximately RMB50 million ($7.9 million). In response to this matter, the Company is currently performing independent laboratory tests to verify the product quality claims of its customer. As a precautionary measure, the Company has also implemented additional testing measures in its manufacturing process to ensure product quality.

Mr. Changjun Yu, Chairman of China Nutrifruit commented "Our business goal is to deliver healthy and nutritional fruit based products to our consumers and we will take every measure to ensure that. This is the only case of quality issue that has come to our attention. We are treating this matter very seriously and will carry out a thorough investigation. We are committed to stringent food quality control and safety standards. We have immediately set up a special investigation team to verify the claims of our customer and are prepared to take corrective measures, if required. We will announce the results of the laboratory tests as soon as the information is available. However, if verified, we are prepared to coordinate a voluntary recall and refund to our customer. This may have a negative impact to our financial and operation this year, nonetheless, our business operation remains normal as of today."

Comments & Business Outlook

Mon, 14 Nov 2011 05:00:00 GMT

Second Quarter 2012 Results

Net sales decreased 14.7% year-over-year to $19.8 million
Gross profit decreased 54.9% year-over-year to $4.9 million, with gross margin of 24.9%
Operating earnings declined 71.0% year-over-year to $2.8 million, with operating margin of 14.2%
Net income decreased 73.8% year-over-year to $1.9 million, or $0.05 per diluted share
In August 2011, the Company commenced production of fruit and vegetable powder and concentrate paste products. Because of a stricter food production permit application process following recent food safety scares in Taiwan, the Company's application for a production permit for the new production line has been delayed. As a result, the Company has temporarily suspended production of these new products.

"Our second fiscal quarter is our peak production season, during which we accumulate inventories and start selling products made from the current year's harvest. Over the past quarter, we have experienced significant increases in our raw material and direct labor costs and as a result, we recorded lower sales in our glazed and concentrate juice products. Despite our efforts to transfer rising raw material costs onto our customers by increasing our product selling prices to mitigate the negative impact, the increase in selling prices was slower compared to the rise in raw material costs which adversely affected our gross margin and profitability for the quarter," commented Mr. Yu Changjun, Chairman and CEO of China Nutrifruit. "During the quarter, in response to rising production input costs, we made a decision to temporarily suspend cooperation with our OEM factories for the production of concentrate pulp products, which also contributed to the top line decline."

"We are closely monitoring changing market conditions and assessing challenges from the market we operate in. We remain agile to respond to changes and overcome difficulties in the quarters ahead," added Mr. Yu.

Business Outlook

"The second half of fiscal year 2012 began in a challenging operating environment. Following high raw material and direct labor costs, our high cost structure this production season has disrupted our production while slashing our margins, as our attempt to increase selling prices have remained inadequate in light of the rapid cost increases. We expect the demanding conditions to remain for the next few quarters, but continue to closely monitor price developments and prepare for our next move," said Mr. Yu. "The more stringent application process for food producers following the outbreak of food safety problems in Taiwan this summer was a significant setback for the ramp up schedule for our fruit and vegetable powder and concentrate pulp products. We expect that it may take approximately six months for us to complete the necessary paperwork and reviews and we do not expect these product segments to contribute to our financial performance in fiscal year 2012."

As a result of the current business conditions and delays to ramp up production capacity, the Company revised its fiscal year 2012 guidance to revenue of approximately $74 million to $78 million and net income of approximately $8 million to $9 million from the previous guidance of revenue between approximately $110 million and $113 million and net income between approximately $29 million and $30 million.

Comments & Business Outlook

Mon, 15 Aug 2011 04:00:00 GMT

First Quarter Fiscal Year 2012 Highlights and Recent Events

Net sales increased 6.9% year-over-year to $10.3 million
Gross profit increased 16.4% year-over-year to $4.8 million, with gross margin of 46.6%
Operating earnings rose 11.9% year-over-year to $2.7 million, with operating margin of 26.4%
Net income increased 0.4% year-over-year to $1.8 million, or $0.04 vs $0.04
In June 2011, the Company filed an application with the SEC to withdraw its registration statement on Form S-1 for the proposed Taiwan Depositary Receipt offering and withdraw its application for listing on the Taiwan Stock Exchange

"Historically, we experience modest growth in net sales and profitability in our first fiscal quarter as we primarily engage in selling remaining inventory from the prior year production season. At the end of the first quarter of fiscal 2012, we sold through most of our inventory position. During the quarter, our newly introduced seabuckthorn and blackcurrant glazed fruit products continued to benefit from strong market demand and as a result, we recorded a 6.9% year-over-year increase in net sales, demonstrating our strong capability in diversifying our product portfolio," commented Mr. Yu Changjun, Chairman and CEO of China Nutrifruit. "On the operational level, due to our continued efforts to implement cost control measures, we recorded 3.8 percentage points year-over-year growth in our gross margin. Due to our solid market position, coupled with our product diversification and capacity expansion initiatives, we expect to achieve strong revenue and net income growth in fiscal year 2012," added Mr. Yu.

Business Outlook

"We are pleased to begin fiscal year 2012 with a strong cash flow position to support our production season and numerous new product development and capacity expansion initiatives. During our production season this year, we expect to introduce several new products, including fruit and vegetable powder products, concentrate paste products, golden berry dried fruits, and cherry tomato glazed fruits products. In addition, with our recent technological upgrades to our glazed fruit production lines in Daqing and installation of additional processing equipment at concentrate juice production lines in Mudanjiang, we have successfully increased our annual concentrate juice production capacity by 50% to reach 9,000 tons. We also expect to benefit from increased operational efficiency following these upgrades," said Mr. Yu. "As we are currently in the process of engaging another OEM factory, a process that may take several months, we expect concentrate pulp products to contribute less to our overall sales for the time being."

"In light of these initiatives and updates, we remain confident in our ability to achieve our financial guidance for fiscal year 2012, with revenue of approximately $110 million to $113 million and net income of approximately $29 million to $30 million," concluded Mr. Yu.

Comments & Business Outlook

Wed, 27 Jul 2011 04:00:00 GMT

DAQING, China, July 27, 2011 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited (NYSE Amex: CNGL) ("China Nutrifruit" or "the Company"), a leading producer of premium specialty fruit based products in China ("PRC"), today announced that the Company commenced its fiscal year 2012 production operations on July 25, 2011.

China Nutrifruit's production season typically spans from mid July to mid November each year. The Company engages in selling, product distribution activities and research and development initiatives throughout the year to monitor market demand and changes in consumer tastes. During the fiscal year 2012 production season, the Company will introduce a series of new products, including fruit and vegetable powder products, concentrate paste products, cherry tomato glazed fruit products and golden berry dried fruit products, through its well-established nation-wide distribution network.

"Our fiscal year 2012 production season marks an important milestone as with the launch of our new fruit and vegetable powder products and new concentrate paste products, we will extend the production period for our powder products beyond our typical harvest season. This is mainly because we can utilize our concentrate paste products as raw materials for production of our fruit and vegetable powder products and therefore extend our production season. We believe this will have a positive impact on our revenue growth, resource efficiency and profitability," commented Mr. Changjun Yu, Chairman and CEO of China Nutrifruit.

"In addition, we have completed technological upgrades to our glazed fruit production lines in Daqing and completed installation of additional processing equipment at our concentrate juice production lines in Mudanjiang, increasing our annual concentrate juice production capacity by 50% to reach 9,000 tons. Such upgrades will result in improved operational efficiency and higher productivity, while expanding our product portfolio as we begin production of our new cherry tomato glazed fruit products and golden berry dried fruit products. We expect the technological upgrades combined with the new product introductions to favorably contribute to our fiscal year 2012 results and are confident in our ability to achieve our projected revenue of approximately $110 million to $113 million and net income of approximately $29 million to $30 million in fiscal year 2012."

Deal Flow

Thu, 23 Jun 2011 04:00:00 GMT

DAQING, China, June 23, 2011 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited (NYSE Amex: CNGL) ("China Nutrifruit" or "the Company"), a leading producer of premium specialty fruit based products inChina ("PRC"), today announced that it has filed an application with the Securities and Exchange Commission to withdraw its registration statement on Form S-1, Registration No. 333-171286, for a proposed offering of 73,000,000 units of Taiwan Depositary Receipt (the "TDRs"), representing 7,300,000 shares of the Company's common stock. The Company also withdrew its application for listing the TDRs on the Taiwan Stock Exchange.

"After careful considerations, we have decided not to pursue the TDR listing due to uncertainties in the global capital markets. We believe it is in our shareholders' best interest to withdraw the application given the current market volatility," said Mr. Changjun Yu, Chairman and CEO of China Nutrifruit.

Comments & Business Outlook

Wed, 22 Jun 2011 04:00:00 GMT

Fourth Quarter Fiscal Year 2011 Highlights

Net sales increased 21.1% year-over-year to $32.0 million
Gross profit increased 34.2% year-over-year to $15.5 million, with gross margin of 48.3%
Operating earnings rose 44.8% year-over-year to $12.9 million, with operating margin of 40.3%
Net income increased 42.1% year-over-year to $9.5 million, or $0.23 per diluted share vs. $0.17

"In fiscal 2011, we achieved record financial performance and reported double digit growth in revenue and net income, which increased 19.3% and 28.5%, respectively. During the year, we successfully introduced our new seabuckthorn and blackcurrant concentrate juice and glazed fruit products, which accounted for over 8% of fiscal 2011 sales. We also expanded our customer base to supply our products internationally through our new distributors, Cargill Shanghai and Doehler Rizhao," commented Mr.Changjun Yu, Chairman and CEO of China Nutrifruit. "Due to delay in beginning operations of our fruit and vegetable powder facility, we reported lower than estimated revenue for fiscal year 2011. However, as a result of enhanced margins, effective cost control measures and operating efficiency, we exceeded our net income guidance for fiscal year 2011. We expect continued strong financial performance in fiscal year 2012 largely driven by anticipated growth in demand for our products combined with launch of our new fruit and vegetable powder products and concentrate paste products."

In fiscal 2012, China Nutrifruit plans to further expand production capacity, diversify its product portfolio and increase market penetration. The Company will launch its new fruit and vegetable powder products, concentrate paste products, cherry tomato glazed fruits and golden berry dried fruits in calendar year 2011.

The Company is currently constructing a new concentrate paste production facility in Zhaoyuan, Heilongjiang Province and plans to begin trial production in July 2011. This new multi-purpose concentrate paste production facility will have an annual production capacity of 9,600 tons and will catering to the raw material requirements of the Company's new fruit and vegetable powder production facility and will also be sold to existing distributors.

China Nutrifruit is currently making technological upgrades to its glazed fruit production line in Daqing and concentrate juice production line in Mudanjiang. The Company expects to complete the upgrade process by July 2011 in advance of its production season. As part of the technological upgrade process, the Company is installing additional processing equipment at its glazed fruit production line in Daqing, which will enable production of its new golden berry dried fruit products. In addition, following technological and maintenance upgrades, the Company's concentrate juice production capacity in Mudanjiang will expand to 9,000 tons annually, up 50% from its current annual capacity of 6,000 tons per year.

For fiscal year 2012, the Company expects to generate revenue of approximately $110 million to $113 million and net income of approximately $29 million to $30 million,

"Looking into fiscal 2012, we continue to see strong demand for our high quality products backed by strong customer loyalty and an increasingly health-conscious environment," said Mr. Yu. "We are on track to commence production of our fruit and vegetable powder products in July 2011. In addition, we are excited about our strong product pipeline, including cherry tomato glazed fruit, dried fruit products and concentrate paste products, which will be supported by our capacity expansion plans. We will be leveraging our existing nationwide sales and distribution network throughout 18 provinces in China to market our new products and hold a positive outlook. With our proven business model, strong execution capability, new product initiatives, and capacity expansion, we believe we are well-positioned to achieve another year of record financial performance in fiscal 2012."

Analyst Reports

Thu, 17 Feb 2011 05:00:00 GMT

Rodman and Renshaw on CNGL 2-17-2011

CNGL: Inline F’3Q11; FY'12 outlook hinges on pending TDR raise; Maintain MO Rating; $5 PT

F’3Q11 earnings complexion. China Nutrifruit Group (NYSE Amex: CNGL) reported F’3Q11 (ended December 31, 2010) EPS of $0.15 (vs. $0.11 LY), after deduction of $205k preferred stock dividends, inline with our $0.15 EPS estimate. Revenues of $22.1MM were a tad softer than expected but rose 24.2% YoY, as a mere 9.3% YoY increase in fruit concentrate juice was aided by double-digit growth in nectars, glazed fruits, fresh fruit, and others (concentrate pulp). Call-outs included newly introduced blackcurrant and seabuckthorn concentrate juice and glazed fruit, which collectively accounted for 8.5% / $1.9MM of total sales. The gross margin expanded 78 bps YoY to 46.4%, as GM expansion for glazed fruits and concentrate pulp was partly offset by contracting margins in concentrate juice and nectars. Similar to the previous quarter, tight expense control was again a highlight, resulting in an above-expectation net income margin of 28.2%, 365 bps higher than LY.

FY2011 guidance maintained. The company reaffirmed its financial guidance of $90-$95MM revenues and $22-$23MM net income. Given that CNGL reaffirmed its guidance mid-way through F’4Q11, we have reasonable confidence in the company meeting its guidance for FY2011. That said, assuming the lower end of the revenue guidance ($90MM) for FY2011, 38.9% of revenues for the fiscal year are expected in F’4Q vs. an average of 36.6% over the past two years. We believe that the expected back-loading of revenues this year is attributable to the need to compensate for the delay in powder sales as CNGL is committed to meeting its topline guidance for FY2011. In addition, due to strong across-the-board price increases for concentrate juices of various fruits (on avg. up 28% YoY fiscal YTD), CNGL likely withheld inventory to be sold for a higher price (i.e., higher GM) during the Chinese New Year. As such, it is possible that actual net income may exceed guidance for FY2011.

FY2012 outlook hinges upon pending TDR raise, but the fruit & vegetable powders alone can account for most of the growth. Visibility on FY2012 outlook is limited given that capacity expansion is predicated upon the size and pricing of the primary portion (5MM shares expected) of the TDR offering. That said, note that the fruit and vegetable powder line has an annual revenue potential of $26MM (10,000 tons x $2,640/ton). Should the powder line successfully commence operations in June 2011, it could contribute up to $19MM in sales to FY2012, barring any further construction delays. That said, additional production lines made possible by the equity raise would diversify CNGL’s revenue stream and provide either topline upside or a viable Plan B for the achievement of FY2012 guidance. Lastly, note the inventory build to $20.1MM by the end of F’3Q11 vs. $13.7MM LY, which bodes well for sales moving into CY2011.

Maintaining Market Outperform Rating and $5PT. We continue to see CNGL as an appealing investment for long-term investors, due to its low valuation (5.7x our FY’11 EPS estimate of $0.57) and positive pricing tailwinds, which we expect to continue near-term. We maintain our $5 PT, which assumes nearly 9x our FY2011 EPS estimate.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Liquidity Requirements

Tue, 15 Feb 2011 05:00:00 GMT

On December 20, 2010, we filed a registration statement on Form S-1 to register 73,000,000 units of Taiwan Depositary Receipts (“TDRs”), representing 7,300,000 shares of our common stock, consisting 5,000,000 shares to be issued by our company and 2,300,000 shares of our common stock owned by a selling stockholder. We plan to apply for listing the TDRs on the Taiwan Stock Exchange upon the consummation of the proposed TDR offering. We intend to use the net proceeds from the proposed TDR offering to construct a new fruit and vegetable production line in Daqing and a new factory facility with a new multi-purpose concentrate juice/pulp production line in Mu Dan Jiang.

We believe that our currently available working capital should be adequate to sustain our operations at our current levels through at least the next twelve months. As stated above, we plan to expand our production capacities through the proposed TDR offering. We cannot assure that the proposed TDR offering will succeed and we may require additional cash resources due to changed business conditions or other investments or acquisitions we may decide to pursue. If the proposed TDR offering does not materialize or result in sufficient fund to support our planned capacity expansion, and our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities, or we may have to abandon our capacity expansion plan.

Comments & Business Outlook

Mon, 14 Feb 2011 05:00:00 GMT

Third Quarter FY 2011 Results:

"During the third fiscal quarter, sales of our fruit based products continued to exhibit strong double-digit year-over-year growth driven by increasing number of health-conscious consumers, the high quality of our products, and our diverse product offering. We reported attractive operating and net income growth of over 34%," commented Mr. Changjun Yu, Chairman and CEO of China Nutrifruit. "Our new blackcurrant and seabuckthorn concentrate juice and glazed fruits products gained increased market share and accounted for approximately 8.5% of the total sales during the third fiscal quarter."

Net sales for the third quarter of fiscal year 2011 increased 24.2% to $22.1 million, from $17.8 million in the same quarter of fiscal 2010. Strong sales growth during the quarter was primarily due to solid market demand driving sales of glazed fruit and concentrate pulp products and an increase in the average sales price of crab apple concentrate juice and pear concentrate pulp.
Net income increased 34.9% to $6.2 million, or $0.15 per diluted share vs. $0.11.
The Company reaffirms its financial guidance for fiscal year 2011 for revenue in the range of $90 million to $95 million and net income of $22 million to $23 million.

"The fourth fiscal quarter is typically our strongest quarter and we anticipate strong growth in sales volume driven by healthy consumer demand in the fourth quarter of fiscal 2011. We have seen a surge in orders from distributors during the Chinese New Year combined with rise in average selling prices and therefore remain confident in our ability to meet our revenue and net income guidance for fiscal 2011," said Mr. Yu. "We recently entered into new supply contracts with Doehler Rizhao and Cargill Shanghai to supply our fruit concentrate juice products. Through Cargill Shanghai, our products will be distributed in Mongolia. We received positive feedback from these customers and remain optimistic that such small orders will lead to large scale supply contracts. Looking forward, we expect to further diversify our domestic customer base and add new international customers. Meanwhile, we are preparing to execute the final equipment installation stage of our fruit and vegetable powder product line and commence trial production in June 2011."

Analyst Reports

Wed, 02 Feb 2011 05:00:00 GMT

Rodman and Renshaw on CNGL 02/02/2011

CNGL – New contracts bring visibility into achievement of the FY’11 guidance

What Happened?

China Nutrifruit Group (NYSE Amex: CNGL) this morning announced that it has begun to supply concentrate fruit juice to Cargill Trading (Shanghai) Ltd. in January 2011, to be resold to Mongolia. This initial contract, although only 120 tons ( $200k), marks the first time in which the company has sold its products beyond China’s borders, and is a step towards the company’s long-term strategic plan to tap into the international markets. The combination of 1) this contract, in addition to the 2) more sizeable $2.1MM/1,500 tons apple concentrate juice contract with Doehler Rizhao announced on January 24^th, 3) the upsized production of seabuckthorns and blackcurrants, and the 4) across-the-board double-digit increases in selling prices are expected to offset the two-quarter delay in fruit & vegetable powder revenues. These offsetting factors result in no change to CNGL’s FY2011 guidance of $90-$95MM revenues and $22-23MM net income. Recall that the powders were originally expected to begin production in earnest in September 2010 and contribute $13.5MM revs. to FY’11 (ending in March 2011).

Update on TDR Listing. CNGL is still looking to sell 5MM primary shares, along with 2.3MM secondary shares (sales by existing shareholders) on the Taiwan Stock Exchange, the proceeds of which will be used to build out production capacity to meet demand. Note that most of CNGL’s production lines are operating near full-capacity. Importantly, the company has engaged Deloitte Touche Tohmatsu as ongoing auditor for its Taiwan listing, which should differentiate China Nutrifruit from many of its U.S.-listed Chinese peers and instill a higher level of confidence into the accuracy of the company’s financials. Marketing of this round of equity raise is expected to begin after Chinese New Year.

Maintain Outperform Rating and 12-month PT of $5. We are pleased with the contingency plan that CNGL has put in place to meet its FY’11 revenue and net income guidance, which shows the company’s commitment in delivering results to shareholders. We are also cautiously optimistic with regards to its pending TDR listing. We note that the Taiwanese have arguably the highest annual fruit consumption per capita of 93.6kgs compared to the world average of 47.8kgs, according to Euromonitor, and should be more receptive to listings of specialty fruit companies. We are maintaining our FY2011 EPS estimate of $0.56, but are adjusting our F’3Q11 (ending in December 2010) and F’4Q11 EPS estimates to $0.15 and $0.19, from $0.13 and $0.22 respectively. Our 12-month price target remains at $5 given that CNGL is currently trading at 5.5x our FY’11 EPS estimate. We believe that CNGL merits a higher multiple of 9x, given peer trading levels and growing visibility into its guidance of 24% topline and 18% net income expansion in FY’11, respectively.

Investment Risks. 1) Potential equity dilution from the TDR offering; 2) Highly seasonal revenues – 64% weighted towards F’2H11 assuming lower end of the guidance range; 3) Distributor reception towards new product introductions; 4) Commodity price and labor cost pressures。

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.

Contract Awards

Tue, 01 Feb 2011 05:00:00 GMT

DAQING, China, Feb. 1, 2011 /PRNewswire-Asia/ -- China Nutrifruit Group Limited today announced that the Company entered into a supply contract (the "Contract") with Cargill Trading (Shanghai) Ltd. ("Cargill Shanghai") to supply its fruit concentrate products.

Cargill Shanghai is an integrated part of Cargill, an international producer and marketer of food, agricultural, financial and industrial products and services. Pursuant to the Contract, China Nutrifruit will supply approximately 120 tons of fruit concentrate products to Cargill Shanghai in January 2011 at the prevailing market price. Cargill Shanghai will export China Nutrifruit's fruit concentrate products to Mongolia.

Comments & Business Outlook

Mon, 24 Jan 2011 05:00:00 GMT

DAQING, China, Jan. 24, 2011 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited today announced that the Company entered into a supply contract with Doehler Food and Beverage Ingredients Co., Ltd. to supply 1,500 tons of its fruit concentrate products.

"Our new supply contract with Doehler Rizhao marks an important milestone for China Nutrifruit as we diversify our customer base with the addition of a global consumer brand," commented Mr. Changjun Yu, Chairman of China Nutrifruit. "Our products passed stringent testing criteria and we are currently performing the contract. We believe this demonstrates the high-quality and market acceptance of our premium specialty fruit products. We are encouraged by our co-operation with Doehler Rizhao and will continue to step up our marketing efforts to further expand our customer base. We anticipate increased sales contribution from international customers in fiscal year 2011 and are confident that our nutritious specialty products will be well received in both the domestic and international markets."

Deal Flow

Tue, 21 Dec 2010 05:00:00 GMT

DAQING, China, Dec. 20, 2010 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited, today announced that it has filed a registration statement with the Securities and Exchange Commission for a proposed offering of 73,000,000 units of Taiwan Depositary Receipt (the "TDRs"), representing 7,300,000 shares of the Company's common stock, of which 5,000,000 shares are expected to be offered by the Company and 2,300,000 shares are expected to be offered by the selling stockholder. The Company plans to apply for listing the TDRs on the Taiwan Stock Exchange.

China Nutrifruit will not receive any proceeds from the sale of the shares expected to be offered by the selling stockholder. China Nutrifruit intends to use the net proceeds from this offering for construction of a second fruit and vegetable production line with an expected annual production capacity of 10,000 tons in Daqing and a new facility with a new multi-purpose concentrate juice/pulp production line in Mu Dan Jiang with an expected annual production capacity of 8,000 tons.

Dual Listing Watch

Tue, 21 Dec 2010 05:00:00 GMT

The Company plans to apply for listing the TDRs on the Taiwan Stock Exchange.

Comments & Business Outlook

Mon, 15 Nov 2010 05:00:00 GMT

Second Quarter Fiscal Year 2011 Highlights

Net sales increased 20.0% year-over-year to $23.2 million
Gross profit increased 13.1% year-over-year to $11.0 million, with gross margin of 47.2%
Operating earnings rose 14.0% year-over-year to $9.7 million, with operating margin of 41.8%
Net income was $7.2 million, or $0.18 per diluted share vs. $0.18
In July 2010, the Company commenced production of four new products: seabuckthorn and blackcurrant glazed fruit and concentrate juice products

"Following strong first quarter performance, we achieved another quarter of double-digit sales and net income growth in the second quarter of fiscal year 2011. Our production season for fiscal 2011 is nearing its end and we are pleased to report an average capacity utilization of over 95% across all our production lines, including our new glazed fruit line added in December 2009," commented Mr. Changjun Yu, Chairman and CEO of China Nutrifruit. "Our new blackcurrant and seabuckthorn concentrate juice and glazed fruits products have received favorable market response contributing about 7.8% of the total sales during the quarter."

Business Outlook

China Nutrifruit recently rescheduled the production start date of its new fruit and vegetable powder production facility due to the impact of adverse weather conditions on the facility's construction schedule. The Company now expects to commence production of its new fruit and vegetable powder products in January 2011.

Management anticipates no material impact from the production delay to the Company's 2011 fiscal year financial results and reaffirms its financial guidance for fiscal year 2011 for revenue in the range of $90-$95 million and net income of $22-$23 million.

"In the second half of fiscal year 2011, we anticipate our new fruit and vegetable powder line to contribute to our sales momentum," said Mr. Yu. "We are actively expanding our research efforts to introduce new fruit and vegetable powder products which will further diversify our product portfolio. Our growth strategy includes capacity expansion and increased market penetration to enhance our revenue growth and gain increased market share in China and in the overseas market."

Liquidity Requirements

Mon, 15 Nov 2010 05:00:00 GMT

We believe that our currently available working capital should be adequate to sustain our operations at our current levels through at least the next twelve months. We may require additional cash resources due to changed business conditions, implementation of our strategy to expand our production capacity or other investments or acquisitions we may decide to pursue.

Comments & Business Outlook

Mon, 25 Oct 2010 04:00:00 GMT

China Nutrifruit Group Limited today announced that the Company has rescheduled the production start date of its new fruit and vegetable powder production facility due to the impact of adverse weather conditions on the facility's construction schedule. The Company now expects to commence production of its fruit and vegetable powder products by January 2011.

China Nutrifruit originally planned to complete construction of its new fruit and vegetable powder facility and commence production in October 2010. However, the Company's construction schedule was negatively impacted by adverse weather conditions in Daqing, which experienced more than average rainfall in comparison to recent years. The Company noted that the impact of the production delay would be immaterial to its 2011 fiscal year financial results.

Management reaffirms its financial guidance for fiscal year 2011 for revenue in the range of $90-$95 million and net income of $22-$23 million.

Analyst Reports

Mon, 25 Oct 2010 04:00:00 GMT

Rodman & Renshaw on China Nutrifruit Group

WHAT’S NEW?

China Nutrifruit Group (NYSE Amex: CNGL) announced a production delay on its fruit & vegetable powder line due to the impact of adverse weather conditions on the facility’s construction schedule. CNGL now expects to delay full-line production to January 2011 (from October 2010).

OUR VIEW

Fruit & Vegetable Powder Line Update. We note that the fruit & vegetable powder line was not expected to become operational until October 2010; therefore we see do not see any impact on F’2Q11 results. However, we are now expecting only $7MM sales (all in F’4Q11) from the powder line in FY’11 vs. the prior guidance of $13.5MM, reflecting the shortened quarter-long production period vs. our expectation of two quarters previously.

Seabuckthorn and Blackcurrant Glazed Fruit Update. The newly-introduced seabuckthorn and blackcurrant glazed fruits, as well as the blueberries, continue to drive sales in this segment. Recall that CNGL noted large repeat orders received for its blueberry glazed fruit in F’2Q11. Momentum in this segment will likely help mitigate the sales shortfall from the powder line.

Fruit Concentrates Line Update. The $4.5MM upgrade of the fruit concentrate lines are yielding a gross margin boost that are a tad better than anticipated (100-200bps vs. 100 bps prior). In addition, CNGL replaced the production of a portion of crab apple concentrates with seabuckthorn and blackcurrant fruit concentrates, which command higher ASPs. This decision was made intra-quarter and will also likely help support the topline.

2010 Guidance Intact. The company affirmed its prior financial guidance of $90MM-$95MM revenues and $22MM-$23MM net income, which we still believe to be achievable.

Adjusting quarterly EPS cadence. As a result of today’s announcement, we are adjusting our F’2Q11, F’3Q11, F’4Q11, and FY’11 EPS estimates to $0.16, $0.13, $0.22, and $0.56, respectively, from $0.16, $0.15, $0.20, and $0.56. Net net, two pennies have been shifted from 3Q to 4Q resulting from the combination of 1) the expected 3Q revenue shortfall (we are expecting $20.2MM vs. $24.4MM previously); 2) the partial recoup in 4Q ($37.1 vs. $34.9MM previously) as CNGL attempts to fill orders for its powders; 3) sales upside from the fruit concentrates and glazed fruit lines due to higher ASPs on new products; and 4) a pinch of gross margin upside from the efficiencies gained on the fruit concentrate line upgrades.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

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Comments & Business Outlook

Thu, 05 Aug 2010 04:00:00 GMT

DAQING, China, Aug. 5 /PRNewswire-Asia-FirstCall/ -- China Nutrifruit Group Limited a leading producer of premium specialty fruit based products in China ("PRC"), today announced that the Company commenced its fiscal year 2011 production cycle on July 23, 2010.

Mr. Changjun Yu, Chairman and CEO of China Nutrifruit commented "We are well prepared for our harvest and production season this year and expect to achieve optimum utilization levels for each of our existing production lines, including the newly upgraded concentrate juice lines. We are experiencing strong market demand for our products and are optimistic about the launch of our fruit and vegetable powder products in September 2010. Our new fruit and vegetable powder products along with our recently introduced blackcurrant and seabuckthorn concentrate juice products will positively contribute to our revenue growth and profitability in fiscal year 2011.

Comments & Business Outlook

Wed, 21 Jul 2010 04:00:00 GMT

The fruit and vegetable powder industry is in its infancy with approximately 400 fruit and vegetable powder manufacturers in China, primarily targeting overseas markets. Based on production output, China is the world's largest producer of fruits and vegetables, with approximate annual production output of 570 million tons. According to Beijing Leadership Management Consulting Co. Ltd., China's fruit and vegetables production is expected to reach 700 million tons in 2010, representing a growth rate of 22.8% year over year. The Company is currently constructing a 40,000 square-meter new fruit and vegetable powder production facility in Daqing with designed annual production capacity of 10,000 tons which will begin operation in September 2010.

"Our R&D team has demonstrated immense dedication in developing a range of products for our new fruit and vegetable powder product line," said Mr. Changjun Yu, Chairman and CEO of China Nutrifruit. "A growing number of consumers are embracing healthy lifestyles and nutritious diets. This favorably influences demand for fruit and vegetable powders used as substitutes for refined sugars and artificial flavors in the production of food and confectionary products, enhancing their nutritional value, color, and taste. Based on Beijing Leadership Management Consulting Co. Ltd, in 2009, annual demand for fruit and vegetable powder recorded approximately 150,000 tons, while supply was merely about 100,000 tons. With demand likely to exceed supply, China Nutrifruit is well positioned to expand its product portfolio, leverage its production expertise and capitalize on market opportunities. We look forward to beginning production of our fruit and vegetable powder products in September 2010 and believe this segment will be a significant driver of our future revenue growth and profitability."

PRNewswire

Comments & Business Outlook

Mon, 28 Jun 2010 04:00:00 GMT

Net income for the fiscal year ended March 31, 2010 was $19.2 million, or $0.51 per diluted share, compared to $4.5 million, or $0.14 per diluted share in fiscal 2009. Excluding the impact of the non-cash compensation expenses, non-GAAP net income for fiscal 2009 was $14.0 million, or $0.42 per diluted share. The calculation of diluted earnings per share for fiscal 2010 is based on 38.0 million weighted average shares outstanding compared to 33.5 million in fiscal 2009.

China Nutrifruit plans to begin trial production by September of 2010 at its new fruit and vegetable powder production facility in Daqing, with an annual capacity of 10,000 tons. The Company expects to ramp up to large-scale production in October 2010 based on a large number of anticipated customer orders.

China Nutrifruit is currently upgrading all of its fruit concentrate production lines at the Company's facilities in Daqing and Mu Dan Jiang, which have a total fruit concentrate annual production capacity of 9,960 tons. The upgrade will include purchase of additional equipment and implementation of advanced production techniques, resulting in more efficient use of raw materials that is expected to have a favorable impact on gross margins. The upgrades are scheduled to be completed before the production season begins in July 2010 and any improvements will be reflected in financial results for fiscal 2011.

The Company affirms previously issued fiscal 2011 guidance. For fiscal year 2011, the Company expects approximately $90-$95 million in revenue and net income of approximately $22-$23 million.

"The Chinese economy, standards of living and disposable income continue to improve, leading to greater health awareness among the population. As a result, we expect strong consumer spending to drive demand for specialty fruit products in the year ahead," said Mr. Yu. "In addition, we are very excited about our entry into the new, high growth segment for fruit and vegetable powders, as these are experiencing rising demand from a variety of downstream processed food companies who are currently largely served by more expensive foreign suppliers. This expansion leverages our installed equipment base, expertise and distribution channels and has the potential to moderate the seasonality of our business over time. Based on the market feedback from distributors and end customers, we are confident that our new fruit and vegetable powder business will make a major contribution to our financial results in the year ahead and provide an attractive return on investment."

Comments & Business Outlook

Fri, 28 Aug 2009 04:00:00 GMT

China Nutrifruit has entered the harvest season and began fruit processing production in mid-July. The Company plans to increase its production capacity to meet the growing demand by increasing utilization of its newly added concentrate juice production line at the Mu Dan Jiang facility and adding new production line, including, a new glazed fruit and concentrate pulp production line and concentrate pulp production line. The Company also plans to produce blueberry glazed fruit to further enhance its products mix. Based on detailed market research, the China Nutrifruit believes there is significant market demand for their glazed blueberry fruit products. The Chinese government’s economic stimulus program has stimulated consumer spending and demand for China Nutrifruit’s products is expected to continue to grow in the next few quarters.

“With the revival of the economy and increase in disposable income, consumption of processed fruit products is expected to increase significantly. China's growing middle class population is increasingly heath conscious and our diverse product offering will continue to attract wide range of consumers,” concluded Mr. Shi. “Our growth strategy for 2010 is focused on achieving rapid revenue growth and net income growth as we implement our aggressive capacity expansion plan and introduce new products to increase our overall market share of the processed fruit market.”

Source: SEC Form 8K (August 14, 2009)

Investor Presentations

Sat, 11 Apr 2009 04:00:00 GMT

On March 23, 2009 CNGL filed investor presentation material.

Source: SEC Form 8k (March 23, 2009)

Comments & Business Outlook

Wed, 18 Feb 2009 05:00:00 GMT

Guidance Report:

''During the quarter, total sales volume increased only slightly as our distributors became more cautious in building up inventory of our nectar and glazed fruit products in light of the global economic contraction. As a result of the relatively slow sales growth in one of our seasonally strongest periods of the year and our larger operating infrastructure, we experienced lower profitability in the third quarter of fiscal 2009. However, we are encouraged by the recent increase in orders in January and February as our distributors increase inventory levels to meet growing consumer demand for premium specialty fruit based products,'' commented Mr. Jinglin Shi, CEO of China Nutrifruit.

We believe the long-term outlook for premium fruit products continues to remain robust and we expect to benefit significantly due to our leading position as China's premium specialty fruit processor,'' concluded Mr. Shi. ''We expect to achieve strong top-line and bottom line growth throughout the rest of fiscal 2009 and into fiscal 2010 as we expand market penetration, increase utilization at our new facility and expand our product portfolio to meet the changing tastes of consumers.''

Source: PR Newswire (February 18, 2009)

Reverse Merger Activity

Mon, 18 Aug 2008 04:00:00 GMT

On August 15, 2008 FHTI announced the closing of a stock exchange transaction with Fezdale Investments Limited and a related private financing transaction. Fezdale will operate through its consolidated indirect Chinese subsidiary to execute the business plan of those subsidiaries. Fezdale’s subsidiary Daqing Longheda is an industry leading processor of specialty fruit products with its operations being located in the Peoples Republic of China.

Financial Target Agreements

Mon, 18 Aug 2008 04:00:00 GMT

Key financial targets with regards to the reverse merger transaction:

In connection with the Share Exchange Agreement, management entered into a 'make good agreement' and has placed 1,800,261 shares in escrow to secure its obligations to meet specific 'Earnings per Share' targets for 2009 and 2010. If the targets are not achieved, a number of shares derived from a formula will be transferred pro-rata to the investors in the private placement.

Earnings targets: (January Year End)

1. $13.9 million in net income for 2009. (This would imply Earnings Per Share of $. 40)

2. $18.5 million in net income for 2010. (This would imply Earnings Per Share of $0.54)

GeoTeam® Note: We are assuming that these targets use the 2007 tax rate of 12% and 34 million diluted shares outstanding.

Source SEC form 8-K (August 14, 2008)

Earnings targets adjusted for a fully taxed situation:

1. $11.4 millionin net income for 2009. (This would imply Earnings Per Share of $0.33 )

2. $15.2 million in net income for 2010. (This would imply Earnings Per Share of$0.43for 2010)