Table of Contents
Investment Thesis..................................................................................3
Snapshot ................................................................................................4
Hanfeng Evergreen Inc. ..........................................................................5
Company Profile .....................................................................................8
Company History – Transition From Landscaping To Specialty Fertilizer ......... 8
Strategy, Growth, And Opportunities......................................................... 9
China’s Push Towards Environmentally Friendly Fertilizer ........................ 10
Chinese Specialty Fertilizer Still In Infancy ............................................ 10
Growth Through Key Partnerships (i.e., SCU Expertise
Partnering With Urea Producers) ....................................................... 11
Proprietary Technology Will Provide the Next Level Of Growth ................. 12
The Golfers Choice ............................................................................. 13
Intellectual Property Rights – Getting Better But Risk Still Exists.............. 13
Kingenta – The Other Chinese Specialty Fertilizer Company .................... 14
Good Relations With Chinese Government............................................. 14
Valuation ..............................................................................................15
Price Target Calculation ...................................................................... 15
Key Risks To Price Target.................................................................... 16
Operations............................................................................................18
Hanfeng’s Facilities............................................................................. 18
Financial Statements ............................................................................21
Appendix 1: Controlled-release Fertilizer Technology...........................28
Appendix 2: Competitive Landscape .....................................................32
Appendix 3: Directors & Senior Management........................................34
Migao Corporation ................................................................................35
Company Description............................................................................38
Company History .................................................................................. 39
The Importance Of Potassium Nitrate And Potassium Sulfate
As A Specialty Fertilizer.................................................................... 39
Strategy, Growth, And Opportunities....................................................... 40
Barriers To Entry – Location, Location, Location .................................... 40
Import License And Supplier/Customer Relationship
Provide Early-stage Advantage.......................................................... 41
Impressive Growth Profile ................................................................... 41
Tobacco Market Not Expected To Change For The Foreseeable Future....... 42
Catalysts To Share Price ........................................................................ 43
Take-Out Candidate?.......................................................................... 43
Luobopo – Distant Threat? .................................................................. 43
Relationship With Tobacco Manufacturers.............................................. 43
Valuation ..............................................................................................45
Operations............................................................................................48
Main Customers.................................................................................... 54
Financial Statements ............................................................................55
Appendix 1: Chemical Formulation .......................................................61
Appendix 2: Directors & Management...................................................65
Overview Of China’s Agriculture Industry ............................................67
Arable Land – Regional Differences ...................................................... 69
Declining Water Quality And Supply ..................................................... 72
Transportation Limitations................................................................... 74
China’s Fertilizer Usage ........................................................................77
Nitrogen Fertilizer: China Is A Net Exporter ........................................... 77
Phosphate Fertilizer: Lots Of Rock........................................................ 79
Potash Fertilizer: New Capacity Should Outpace Demand,
But Still Net Importer ...................................................................... 82
Global Potash Market.......................................................................... 85
NPK – Ease Of Use Makes It A Popular Choice In China........................... 86