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Yongye International, AŞ Message Board

  • plarger plarger Mar 11, 2010 10:35 AM Flag

    Let's Discuss...

    I have to get the staples from surgery taken out of my back this AM so I may not reply immediately, but I'm wondering what others think about the news regarding inflation in China. I think we've discussed this a little in the past, but it appears China has no choice but to try to slow the pace a little. I think it will suck if this rains on YONGs parade (earnings), but I'm wondering if this ends up being a good or bad thing for YONG?

    I can make the argument either way. Both ways, farmers need to try to bring crops to market as cheap as possible. YONG increases yield with healthier plants and cattle. The flip side is that there are cheaper fertilizers for the farmers to use in trying to get increase yield as cheap as possible.

    Or, is this even the argument we should be having? What are the real effects of an interest rate hike or other means of slowing inflation on YONG's business?

    P

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    • Edmundo, Yes I've noticed the old place is filling up quite a bit lately..Some of these people are heavily armed..Be careful..Could you have my name engraved on my seat? That's right, the one next to Cool and TJ..Some schmuck was sitting there the other night.. Thanks much. You got a Corona back there? And a shot of Makers to go with it?..please

      I was refering to a man by the name of Justis von Liebig (The Father of NPK) Google him. His erroneous studies shaped the use of fertilizers since the 1840s worldwide, unfortunately becoming a cause of topsoil destruction for over 100 years.Here's a start

      http://ecands.net/pdf/resources/oscsynopsis.pdf
      Best of luck to all yong longs..pbwy

    • Yep, I have similar memories.

      Hey, my pleasure.

    • Okay, one more.
      If you turn the view here to east...

      234 Dyckman Street, N.Y.C

      Watering hole I mentioned elsewhere is smack middle of YONG man's dream stretch. A liquer store, a Pub, breakfast restaurant, deli, Chinese takeout, corner bodega. What a life that was.

      Thanks, NYPD. Made my day.

    • lol......

      Just checked it out. Didn't that blow your mind?

    • NYPD, Correction.

      Not Red, grey. And the camera looks directly into my old buddy Simon's apartment. Funny, but I don't see any ladies climbing in thru window.

    • Good opening. Here are some of my thoughts.

      I agree that China is going to do something to slow growth down. But...

      How it is going to be directed? There is some discussion in China that
      more investment should be redirected to rural areas to improve living standards
      and nutrition there. Good for YONG? Good for YONG stock price? In the long run: YES.
      But the question is How Long Run? Keynes once said that markets have the ability to stay irrational
      longer than you can stay solvent. For instance, majority of investors may reward CAGC
      with the permanent first runner status and keep ignoring YONG.

      About lower priced fertilizers vs. YONG. There is increasing amount of evidence that Chinese agricultural soil is
      becoming more acidic due the use of traditional nitrogen based fertilizers. Eventually bad for the plants, good for YONG.
      But Keynes principle applies here, also.

      My opinion is that the real world future looks good for YONG unless...

      possible commercial real estate bubble in China takes us all down.

      • 1 Reply to kari.juntunen
      • Holy cow that's a lot of macro economics! It's really difficult to take that apart, but here is what I know/understand/speculate:

        First of all, regarding the Chinese government "might" want to slow down the economy. They are already doing it. They are more pragmatic than you think. They know that much of the current growth is coming from asset inflation and stimulus project like infrastructure build out - lots of sparsely travelled highways - that really do not represent true increase in national products. That is why they want banks to slow down lending to real estates. At the same time they want the banks to lend more to the agricultural sector because that's where the true increase will be and where it is truly needed, so as to balance income inequality between the cities and the rural areas. The government, represented by Premier Wen at the most senior level is putting the highest emphasis on the agri sector. My conclusion: like the doctors say, this won't hurt a bit.

        As for inflation and how it impacts YONG, do remember that YONG belongs in the basic material / chemical sector. As such, it is on the front end of the value chain and inflation is beneficial to the bottom line. Of course you may argue that YONG also requires raw material input and that can go up and hurt YONG. Hmmm... maybe that is why YONG is buying its own lignite mine?

        The only thing I can think of that inflation could hurt YONG and any other Chinese company reporting in US$ is that inflation slowly devalues the YUEN (especially when the USA is still in a deflationary cycle - but that may change soon), so that the numbers are lower when translated into US$. But as we all know the predominant pressure is on China to let the Yuen float up, not down. Recently there were soundbytes coming from the financial regulators that they just may let the Yuen go up a little, eventually. So I don't see China's inflation hurting YONG this way either.

        Lastly, I want to say again that Shengmingsu is marketed as a "plant nutrition" product but not as a fertilizer. I know that sounds like just marketing, like calling an electric toothbrush a "plague remover" and selling it for twice the price. However, Shengmingsu helps the plant to be more effective in absorbing and retaining nutrients in the soil. If you check their website you will see that they recommend following up Shengmingsu application with soil fertilizer later. Like Kari said, the soil is often overfertilized in China and everywhere else, and the key is not putting more fertilizer in, but to help the plant absorb them.What it means is that cheaper fertilizers may not be a problem for YONG.

        BTW I have personally travelled on a few of those intercounty and interprovince highways. They may be full of cars and trucks in the future but when I was there the roads kept passing farmlands after farmlands with nothing in sight. It often took a couple of minutes before we saw another car. Oh if only I could take my Carrera there!