Bojun Agriculture Holdings Chairman, the Honourable Andrew Stoner, discusses the company’s upcoming IPO, products and growth plans.
Clive Tompkins: Hello. Clive Tompkins for the Finance News Network. Joining me from soon to be listed Bojun Agricultural Holdings is Chairman, the Honorable Andrew Stoner. Andrew, welcome to FNN.
Andrew Stoner: Thanks Clive.
Clive Tompkins: First up, can you start with an introduction to the company?
Andrew Stoner: Bojun Agriculture Holdings Limited is the Australian registered entity of a company called Jiangxi Bojun Agriculture, which is obviously based in China in Jiangxi Province. This company has a fairly unique range of products for the Chinese market, in particular fruit cider vinegar and fruit confections. All of these products are very much on trend in the Chinese market for their health properties and just the Chinese tastes. Bojun in China has been accelerating at quite a rapid rate. As a result, got fantastic financials, highly profitable business, worldwide patents in its technology. It wants to now list in Australia through this Australian entity for a number of reasons, strategic. One, to source Australian fruit for the products, but secondly, to also help fund market expansion, production expansion, and more research and development.
Clive Tompkins: Thanks Andrew. So, where are its products sold and in what volumes?
Andrew Stoner: Well, currently Bojun through its regional agents in China are selling into nine of China's largest, most populated and prosperous provinces, but there are more than 30 provinces in China. So, there's a huge upside potential for expansion into that market. In the year ending September 2016, the sales turnover was about 62 million Australian dollars, net profit after tax was around eight and a half million dollars. This positions the company pretty well. The price to earnings ratio for this IPO is a very low 3.4, so at that price for investors, it's a real bargain.
Clive Tompkins: Thanks Andrew. To the IPO now, how much are you looking to raise, and where will the funds go?
Andrew Stoner: Well, for this IPO at 30 cents a share, we're looking to raise between 7.2 and 12 million Australian dollars. These funds will go into further research and development for new products into the Chinese market. It will also go into production expansion as well as market development. As I mentioned, 89 out of those 30 Chinese provinces are currently actively selling the product, so there's big potential to grow this market and grow those revenues.
Clive Tompkins: Andrew, where can investors find out more information about the IPO?
Andrew Stoner: Well, investors can go directly to the Bojun Agriculture website. In the "Investor Relations" section, they can access the prospectus and the application form to actually buy the shares. Then there's the lead manager, Beer & Co, or you can just go to your stock broker.
Clive Tompkins: Andrew, turning to financials, you touched on briefly the revenue and NPAT numbers for the previous financial year. Can you tell us more?
Andrew Stoner: Well, for the year ended September 2016, revenues were around 62 million Australian dollars and NPAT was about eight and a half million dollars. So, very healthy margins in this business. In terms of cash position, depending on whether the minimum subscription or the maximum is raised, that cash position would be more than 14.1 million or 18.2 million Australian dollars.
Clive Tompkins: Andrew, a more general question. What is Chinese demand for low sugar nutritional products, and how fast is the market growing?
Andrew Stoner: Well, this is an incredibly big market in China. From 2011 to 2015, the market for fruit cider vinegar products had more than doubled, and it's currently worth more than three quarters of a billion Australian dollars. In terms of the fruit confectionary that Bojun also produces, that market in 2015 was worth 50 billion Australian dollars and it's growing at the rate of more than 12% year on year. So, the upside potential for Bojun's products in China, especially as it's the only one that makes these products out of these nanfeng or Emperor's Mandarins. It's huge.
Clive Tompkins: Last question, Andrew. What's the focus for the next 12 months and longer term?
Andrew Stoner: Well, as people will see in the prospectus, Bojun has got a really strong plan for continued growth. The plan involves expanding production, which goes hand in hand with expanding the market beyond those nine provinces in China that I mentioned earlier. It also involves Australia. It involves joint R&D with government and scientific organisations, and hopefully also some JVs in terms of sourcing the raw materials and possible sale of the Bojun product into Australia.
Clive Tompkins: The Honorable Andrew Stoner, thanks for the update and good luck with the IPO.
Andrew Stoner: Thanks very much Clive.