Man Shing Agricultural Holdings, Inc. (MSAH) announces FY 2011 Q2 results

Q2 results

Man Shing Agricultural Holdings, Inc. (MSAH) is one of the largest Chinese exporters of fresh ginger to Japan, the United Kingdom, and the Netherlands, today announced financial results for the three and six months ended December 31, 2010.

Financial Highlights for the Three Months Ended December 31, 2010

Revenue increased 58% year-over-year to $8.2 million

Gross profit increased 91% to $3.3 million; gross margin increased to 41% from 34%

Net income increased 94% to $2.3 million; basic EPS of $0.06

Mr. Shili Liu, Chairman and Chief Executive Officer of Man Shing, stated, "Our record financial results during the second quarter of fiscal 2011 were highlighted by an increase in revenue of 58% and an increase in gross profit of 91%, each as a result of an increase in the price of ginger and cost controls. In addition, gross margins improved by 7% to 41% from 34% and net income increased by 94%. The climate of the Shandong Province has enabled us to consistently increase our production capacity, and the lack of high-quality ginger from China in the international market allowed us to increase our prices by up to 35% as compared to same period in prior year."

Mr. Shili Liu continued, "Our factories' quality control standards have driven customer demand and loyalty for Man Shing's high quality ginger. By improving operating efficiencies at our thermostatic storing warehouse, where the freezing and packaging takes place after the harvesting of our ginger, we have been able to increase our operating margins. We believe that economies of scale will continue to improve our cost structure, which will benefit our profit margins going forward."

Financial Highlights for the Six Months Ended December 31, 2010

Revenue increased 58% year-over-year to $15.5 million

Gross profit increased 114% to $6.5 million; gross margin increased to 42% from 31%

Net income increased 92% to $4.5 million; basic EPS of $0.12

A very interesting stock that can capitalize on higher food prices. With a forward PE below 3 there is enough upside potential.


POSITION: LONG