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  • Who is China Agritech?  1 comment
    Mar 16, 2010 12:33 AM | about stocks: CAGC, CGA, YONG

    China Agritech's website does not have the Chinese version link. If you google it, you will find the Chinese website http://www.chinaagritech.com. After a little more research, I found out that the original name of the company was Harbin Tailong Liquid Fertilizer Company. It brought in Canadian technology in 1990's. The current lv baoling products seem to be based on a patent "RL-1" from Shengyang Institute of Technology. It is humic acid based liquid fertilizer. Now the company has abandoned the old Tailong website and also changed the brand name to "Green Vitality". Not quite sure why? Isn't it takes a lot of effort to establish a brand name? 

    Complete organic fertilizer is not popular in China because the effect is slow,  required quantity is much larger, output is much lower. Chinese fertilizer manufacturers receive subsidies from the government in the form of reimbursement, lower utility price and lower transportation cost. Organic or organic/inorganic mixed fertilizer are not considered fertlizer, therefore the manufacturer cannot receive subsidy. This adds to the cost of this type of fertilizer. The government gives small subsidy to farmers who use organic fertilizer in soil improvement pilot projects. Because the soil in China mostly have been applied fertilizer, it must wait for three years to release the residual before it can produce real organic plant. Currently, the organic plant in the market technically are not real "ogranic". They are mostly sepcially treated before harvesting in order to pass the quality test.

    Another problem with organic fertilizer is the quality. There are close to 1000 organic fertilizer manufacturers in China. Many of them make copycat prodcuts. Farmers cannot tell the difference. When they've had one bad experience, they would completely give up using even the real name products. There was a report that 110 ton organic fertlilizer were sent to water melon farm. But farmers couldn't use them because the quality didn't pass the test. 

    Chinese company China Green Agriculture(NYSE:CGA), Chinese name (Ding Tian Ji Nong), also makes humic acid based fertilizer, while Yong Ye International(NASDAQ:YONG) markets its humic acid based products as plant nutrient instead of liquid fertilizer. The liquid fertilizer has much higher margin comparing with the granular fertilizer. All of these companies have strong growth and nice margin. Looks like humic acid based fertilizer is exploding in China.  




     



    Disclosure: No position in CAGC, CGA. Position in YONG
    Stocks: CAGC, CGA, YONG
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  • Tonald Drump
    , contributor
    Comments (18) | Send Message
     
    In Feb China Agritech, Inc. Announced that Preliminary Unaudited Results Exceeded 2009 Guidance. 2010 guidance is for $114 million in revenue approximately. CAGC is set to report earning on March 25th, 2010. Strong earning number can really help this company break the 52 week high mark.
    18 Mar 2010, 01:22 AM Reply Like
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