When it comes to exporting food products to China most investors will immediately think of Bellamy's Australia Ltd (ASX: BAL) or a2 Milk Company Ltd (Australia) (ASX: A2M).
But another company that has its eyes firmly fixed on the China market is leading honey producer Capilano Honey Ltd (ASX: CZZ). In its recently released preliminary final results the company delivered a 20.9% jump in net profit after tax to $9.5 million.
A key driver in the strong result was a stunning 56.9% increase in sales to greater China. Sales in the country helped lift overall exports into the Asia market by 32%. Elsewhere exports into the South Pacific grew 59% and exports into Africa increased an impressive 80%.
One thing I like in particular about Capilano Honey is that its 100% pure Australian honey fits well into the growing health and wellness market.
To further bolster honey's presence in this market the company has been investing heavily in scientific research to uncover and validate the health and wellness attributes of the product. It expects to commercialise the findings and bring new functional products to market in due course.
Overall the future looks to be quite positive for Capilano Honey. Management believes it is well positioned to continue improving its inventory and maintaining growth in key markets that it expects will deliver a sustainable value chain.
Year-to-date Capilano Honey's share price is down 13%. I believe this could make the current share price a reasonable entry point for investors willing to buy and hold its shares for the long-term.
At 17x full year earnings its shares are trading in line with the market average and at a discount to the consumer staples sector average of 20x earnings. I believe this provides investors with an appealing risk-reward proposition.
