Dongfang Modern Agriculture Holding Group Provides a Market Update

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Consumer

The company expects another year of record revenue with continued strong demand for the company’s navel oranges, camelia, pomelo, and tangerines. Up by 20% on 9,900 tonnes in 2017, Dongfang expects a record camellia seed harvest of approximately 11,900 tonnes. This reflects additional production acquired in July 2018 from the 526-hectare camellia plantation which increased the group’s camellia portfolio by 10% as well as the benefits of yield improvement. Prices are expected to be in line with 2017 prices and demand for camellia oil continues to increase. 

Camellia seeds in Asia are processed mainly into cooking oil, which is valued for its ‘heart healthy’ qualities and high ‘smoke’ point. Strongly supported by the Chinese government the camellia oil industry is a growth industry. Up by 27% on 33,000 tonnes in 2017, the navel orange harvest is expected to be a record 42,000 tonnes. In July 2018, higher production was due to the acquisition of a 354-hectare navel orange plantation and improved productivity and yield. In line with 2017 prices following renegotiation of distribution agreements are the prices. Located in the Special Citrus Zone in the Ganzhou City district, the company produces premium quality sweet oranges from orchards.

With a record crop slightly above 147,000 tonnes in 2017 due to continued improved productivity and yield, Tangerine production is expected to be 149,000 tonnes. Prices are expected to be in line with the previous year. Dongfang’s primary product by volume are Tangerines and are sourced mainly from Xunwu county in Ganzhou City district. Slightly below production of 47,000 tonnes in 2017 due to less favorable weather, the group’s pomelo harvest is expected to be 46,000 tonnes. Unit prices are expected to be like 2017 prices. Dongfang’s premium quality sweet pomelos are sourced from plantations covering 1,433 hectares in the Nankang district located south-west of Ganzhou, China.

With more than double Bio Heath’s existing capacity relocation of Bio Health’s manufacturing to a new plant in western Sydney is expected to be completed in 2019. Growth strategies of Bio Health also include expansion into the manufacture of pharmaceutical grade products. Acquired during the year, the camellia and navel orange plantations have integrated well, and application of modern farming techniques has enabled efficiencies and yield improvement. These acquisitions enable the company to maintain market leadership and to achieve continued revenue and profit growth.

Relocation of Bio Health to a much expanded and more technologically advanced manufacturing facility will open the door to potential manufacture of pharmaceutical grade products as well as pave the way for the expansion of Bio Health’s current health supplements business. Dongfang is one of the largest agricultural harvesters in China the Jiangxi province controlling plantations that extend more than 11,580 hectares in China’s premier fruit growing region. The company also owns a 70% interest in Australian Bio Health Pharmaceuticals Pty Ltd a health supplements business. Dongfang Modern Agriculture Holding Group Limited (ASX: DFM) current market price is $1.010.


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