Good old friend: Asian Bamboo reports 2011 earnings

One of our “good old friends”, the former short position Asian Bamboo announced preliminary results.

I find the report especially intersting, not because of “I told you so and I am so clever” but because of this:

As domestic and international markets were weak, revenue per hectare fell, while plantation costs, such as cultivation costs and amortisation, increased due to a larger plantation size.

Asian Bamboo is basically producing sprouts which is sold as food and bamboo trees which are mostly used for construction. The food part in theory should be stable, so there must have been significant negative developements in the construction sector.

Maybe it is just a lame excuse but it could also be that China domestic market is not so resilient as everybody wants to believe.

Back to Asian Bamboo: 2011 earnings are ~1.20 EUR per share. So the “ridiculous” PE has now normalized to something like 12-13.

As one could expect, return on assets for a plantation are rather low and without significant investments, the returns are stable at best. Even for a plantation with fast growing bamboo trees.

One comment

  • Hello mmi,

    Another Chinese fraud

    Joyou AG: Insolvency application will be filed/Revocation of audit opinions for the fiscal year 2014/ Change to management board/ Examination of legal actions against JiansheCaiand Jilin Cai
    2015.05.21
    http://www.joyou.com/ipo/?id=53&act=show&aid=403

    Grohe owns the majority of Joyou AG since June 2011. Japanese Lixil Group and Development Bank of Japan (DBJ) bought 87,5 Prozent of Grohe in January 2014.
    Joyou AG actually produces faucets and other sanitary ware products.

    How do multinationals avoid fraud in their Chinese businesses?

    Regards
    milud

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