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Dongfang share price higher on record harvest

The Dongfang Modern Agriculture Holding Group Limited (ASX: DFM) share price is up 2.5% to $1.02 today. This comes after the company released a market update this morning, announcing a record harvest for 2018 as well as continued strong demand for the company’s products.

Dongfang is a leading provider of citrus and camellia products in China, the world’s largest agribusiness market. The company advertises its supply chain and logistics network to top Chinese cities, exposure to favourable government incentives and strong economies of scale.

The company touted an expected 20% larger camellia seed harvest on the previous year and 27% higher navel orange production. These numbers were boosted by yield improvements as well as the added production from newly-acquired navel orange and camellia plantations.

The company’s tangerine and pomelo businesses were less impressive. Tangerine production is expected to be up 1.4% due to productivity and yield improvements, while pomelo production is anticipated to be down 2.1% because of less favourable weather conditions.

2018 prices for all of Dongfang’s products are expected to be in line with 2017 prices. The company expects 2018 to be “another year of record revenue”.

Dongfang Chairman, Hongwei Cai said, “The camellia and navel orange plantations acquired during the year have integrated well and application of modern husbandry techniques has enabled efficiencies and yield improvement. These acquisitions enable us to maintain market leadership and to achieve continued revenue and profit growth.”

The company also stated that its venture into the Australian health supplements market is “progressing well”. Dongfang’s acquisition of Bio Health Pharmaceuticals for $18 million was announced in April last year. The relocation of Bio Health operations to a larger manufacturing plant is expected to be completed this year.

Closer to home, the Costa Group Holdings Ltd (ASX: CGC) share price has rebounded today, up 5.17% to $4.88, after last week’s shock profit downgrade saw its shares plummet 40% in one day.

Motley Fool contributor Cale Kalinowski holds no positions in the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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