GRO Opens Strong, #1 Most Bullish Chart, Ready to Explode...
Major wealthy investors began accumulating Agria (GRO) on Friday and it looks ready to explode this week! The Chinese government on Sunday announced that modernizing agriculture and maintaining it as the base of its economy, is their #1 top policy priority of 2014! Shuanghui, the Chinese pork producer that owns Smithfield Foods of the U.S., is expected to file for a $5 billion IPO on the Hong Kong Exchange any day now! It will be China's largest IPO in 2 years and largest ag IPO in history! Its IPO filing will cause undervalued U.S.traded China ag stocks like GRO to skyrocket!
With GRO below $1.98 per share, its rapidly growing China seeds business is not yet receiving any value. GRO's 80.81% owned Agria Asia owns 379.1mm PGG Wrightson (NZX: PGW) shares or 50.22% of the company, which trades overseas on the NZX for $0.43 per share. Agria Asia's shares are currently worth NZD$163mm or USD$135.4mm, valuing GRO's 80.81% stake at USD$109.42mm. With 55.38mm shares outstanding, GRO's stake is already worth $1.98 per share.
Exactly two weeks ago, GRO hit a new 52-week high of $1.77 and PGW at the time was $0.40 valuing GRO's stake at $1.83. GRO came within $0.06 of the value of its PGW stake, therefore, look for GRO to explode to a new 52-week high of $1.92 early this week. With PGW's fiscal 2014 first half earnings due to be released February 25th and their EPS this year likely to rise 100%, GRO could break $2 by the end of this week.
In China, GRO's closest publicly traded seeds competitor is Origin Agritech (SEED), which gained 19% on Friday to $2.40 and currently has an enterprise value of 1.04X sales - despite their seed revs down 8%. If GRO's China seeds biz with 98% rev growth was worth a mere 1.04X sales to match SEED, GRO deserves to trade $0.32 per share above $1.98, for a total share price of $2.30! We have so far purchased 550,000 GRO shares and don't intend to sell until GRO rises significantly from its current levels and reaches a fair valuation!