Pine Agritech

Hi readers, I would like to present my analysis on Pine Agritech. And if there is still time left (Mothers' Day you know?), I will do Tiong Woon too. Before i start, let recap on the 8 Criteria:
1)History of consistently increasing sales and earnings
2)Sustainable competitive advantage
3)Future Growth Drivers
4)Conservative Debt
5)ROE > 15%
6)Low capital expenditure required to maintain current operations (in account sector: CAPEX)7)Good Management & Competent at capital allocation
8)Buy only when the stock is undervalued, i.e. Share price < Intrinsic Value

I got OCBC investment Research report on Pine Agritech yesterday, dated 11 may 2007. A brief run through for the report (Extract):
1) Revenue grew 81% YoY to RMB405.4m and net profit surged 115% YoY to RMB146.5m, ... primarily attributed to acontinued increase in contribution from its high margined SOS product which made up 48.5% of revenue and 69.8% of gross profit as compared to 30.5% and 46.4% respectively in 1Q06. SOS's gross profit grew 223% YoY to RMB135m
2) ...concerns about Shenji stumbling on its RMB700m commitment for FY07 is somewhat allayed as management showed prompt payment in its financial statements from Shenji.
3) Fair Value @ 0.76
4) Profit after tax increase at 115.2%
5) EPS forecast at 0.202
6) EPS growth forecast at 12.9%
7) ROE forecast at 33.5%
8) PE growth at 1.3x

Pine Agritech, from the past reports have managed to sustain growth and profits:
Year to Turnover Gross Profit Net Profit EPS EPS Growth PER Net Div Yield
31 Dec (RMB m) (RMB m) (RMB m) (RMB cents) (%) (x) (%)
FY 05 797.0 270.8 234.6 7.8 28.6 42.0 1.2
FY 06 1,577.7 699.4 538.0 17.9 129.3 18.3 1.6
FY 07F 1,874.5 815.6 607.2 20.2 12.9 16.2 1.8
FY 08F 2,101.0 902.5 670.6 22.4 10.4 14.7 2.0

Their sale of soybean-based products such as Soy Protein Isolates (“SPI”), Soybean Oil, Soy Oligosaccharide Syrup (“SOS”) and Soybean Peptide are their key competitive advantage. I don't see that they will lose this advantage in the near future. SPI and SOS have been their growth driver, especially SOS, "SOS's gross profit grew 223% YoY to RMB135m". SOS and SPI will continue to be their growth driver. But one thing to note is that, i hope there will be more drivers to let Pine Agritech be a leading Soy company.

Since i can't post the pictures of my excel spreadsheet, thus i just type my findings here regarding Pine Agritech's instrinsic value:
Using EPS method, the ten years forecast is $3.03, whereas using the discounted cash flow method, the forecast for ten years is $4.00.
In conclusion, Pine Agritech is quite a good long term investment for ten years to come as if you bought this share at the current price of 0.69, 1 lot, ten years later, it will become $2260 (using the $3.03), including the calculation of commissions and clearing fees. Good investment right?