Hong Kong, April 27, 2010 (ABN Newswire) - Fufeng Group Limited (HKG:0546) (PINK:FFNGY) announces that Joint Lead Managers have exercised the Option in full for RMB205Mn (equivalent to approximately US$30Mn) in principal amount of Option Bonds, bringing the total issue size of convertible bonds to RMB1025Mn (equivalent to approximately US$150.1Mn) in aggregate principal amount of Bonds. The company's stock has gained 31.17% since our recommendation on Feb.12, 2010.
The company completed an issuance of 4.5% convertible bonds of RMB 820Mn on April 1, 2010 and granted to the Joint Lead Managers an option to subscribe for all or any of the Option Bonds up to a further aggregate principal amount of RMB205Mn (equivalent to approximately US$30Mn).The exercise of this option indicates that investors are holding very positive outlook for the company.
We still believe the company has its own competitive advantages in terms of production capacity and cost control. The company's strategy to transform itself from an industrial product manufacturer (glutamate acid) to a consumer product manufacturer (MSG) is raising the company's valuation. The stock's past two-month performance has indicated that the market has gradually recognized the true value of the company. We still believe in the company's strategy and execution. We believe the company should enjoy a higher valuation to reflect its transformation to a consumer product manufacturer, therefore we decided to give Fufeng a 12X 2010 PE, resulting in a TP of HKD 9.03 vs previous HKD 7.52, representing a 39.35% upside potential from current price HKD 6.48.We maintained our buy rating.
Fufeng Group (HKG:0546), the world's largest MSG and xanthan gum producer and supplier, uses fermentation technology to produce biochemical products. Its major products include MSG and xanthan gum products. Fufeng also produces fertilisers, corn refined products, starch sweeteners and amino acid products. For further information, please visit the Company website: www.fufeng-group.com .
Contact
Fufeng Group Limited Carine Wong Tel: +852-3185-0300 carinewong@fufeng-group.com.hk
HKG:0546) (
Fufeng Group Limited
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