All That Investors Need To Know About Jiajiafu Modern Agriculture

  • May 31, 2019 AEST
  • Team Kalkine
All That Investors Need To Know About Jiajiafu Modern Agriculture

Jiajiafu Modern Agriculture Limited (ASX: JJF), based in Victoria, Australia, was established in 2015 as the holding company of the Group, while Qingzhou Jiajiafu Modern Agricultural Development Co., Ltd. (JJF China), a wholly owned subsidiary operates the main business.

The Group is led by a team of experienced Board of Directors including Mr Qingkai Li, Mr Zhiguo Li and Mr Haizhu Cai, as per the 2019 Hal-Yearly Report released in February 2019. Also, as announced on 16 May 2019, Mr Bill Lam has been recently appointed as an Australia-based non-executive director of the Company, effectively immediately.

A glance at the business model

JJF Group operates a leading agribusiness in the Qingzhou City of Shandong Province in China, known for its innovations in agricultural technology.

Since its inception, Jiajiafu has built a mature and stable, yet competitive business model, including development of a comprehensive internal quality process and quality control systems. Its agricultural activity is compliant with European Union and Chinese national standards for organic vegetable production processes.

Jiajiafu’s planting base comprises more than 400 sunlight greenhouses (covering ~206.4 hectares). It is focussed on diversification of vegetable varieties, with a single product’s proportion being no more than 20%. This approach reduces the impact of fluctuating product prices. Moreover, all differentiated products undergo several turns of planting and picking, which reduces the influence of season fluctuation, ensuring that sustainable and steady cash revenues can be obtained from many procedures around the year.

Products offered

Business and Financial performance

Jiajiafu Modern Agriculture recorded a sales revenue of $ 51,900,433 for the fiscal year ended 30 June 2018 (FY18), reflecting a 31% increases relative to $ 39,663,392 in the prior fiscal year 2017 (FY17). This was supported by fresh vegetable market conditions causing a rise in sales prices. As a result, the Group achieved a net profit of $ 5,979,861, up $ 4.2 million on $ 1,760,052 in FY17.

In August 2018, The Group’s Eco Park in Qingzhou China suffered from Typhoon “Rumbia” torrential rainfall, adversely affecting the vegetables and crops in the greenhouses while damaging the structures. The impacts were observed in the succeeding months.

As per the Group’s Half-Year results for the six months to 31 December 2019 (FY19), the Group reported a net operating loss of $ 41,449 and a 2.49% fall in revenues to $ 19,646,242. The Group had to pay off maintenance costs for the repair of damaged property.

Outlook

To achieve a better yield rate and prevent the farmland from natural disturbances, Jiajiafu Modern Agriculture has further expanded its investment in production facilitates and spent around $ 6.20 million on 33 new vegetable greenhouses and a new irrigation system.

With these initiatives in place, Jiajiafu expects to witness a steady increase in the vegetable yield volume and improved sales revenue in the remaining FY19.  The Group intends to expand marketing, branding, sales and distribution channels via online platforms such as Alibaba, Taobao and Tianmao for fresh produce as well as processed food products, looking beyond the traditional wholesale and supermarket distribution networks. It further plans to establish alliances with government bodies and institutions to expand the R&D capabilities.

JJF last traded at AU$ 0.049 on 30 May 2019, climbing up 36.11% on the previous day’s close.


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