Friday, June 22, 2007

Hanfeng Evergreen (HF-T)

Let me introduce you to one of the main holdings in my portfolio: Hanfeng Evergreen (HF-T).

Hanfeng is a provider of value-added fertilizer in China’s fertilizer market for the urban greening and agricultural markets. Headquartered in Toronto and with operations in Shanghai, Jiangsu, and Heilongjiang China, Hanfeng has its own value-added fertilizer production facilities in China and also imports products sourced from leading North American and European suppliers of fertilizers and horticultural products.

There are a number of reasons why I invested in Hanfeng including:

> China is the world’s largest consumer and producer of conventional fertilizers.

> The 2008 Summer Olympics in China will require a special focus on urban landscaping.

> The Chinese government has increasingly stressed the importance of value-added fertilizers as a key component for improving crop yields, farm incomes, water pollution and raw material efficiency.

> The company intends to expand production capacity to meet product demand.

> Hanfeng entered into an agreement with Heilongjiang Agriculture Company Limited, the largest state-owned agricultural company in China, for the sale and distribution of its fertilizers.

> Hanfeng entered into separate agreements with Agrium and PetroChina Ningxia Petrochemical Company to further expand its slow and controlled release fertilizer business in the domestic market in China and into international markets, including North America.

I find the last point particularly full of potential going forward.
Agrium is the largest agricultural retailer in the U.S. and a leading global supplier of agricultural nutrients, industrial products and specialty products. Hanfeng now has a solid relationship with an industry leader with the marketing expertise to widen their distribution network. Meanwhile, the joint venture with PetroChina is also interesting as they can assist in providing the necessary materials, government relationships and access to additional customers to grow the company further.

1 comment:

Investoid said...

Interesting, I looked at this company back in 2005 - it's really come a long way since then. Nice holding!