Tim, re CNOA - Makes sense to me that the company would have higher margins on rice sales from what it grows on the 6000+ acres it owns/controls compared to that which it simply buys and resells. Sales from its own crops occur mainly in Q3 and Q4 so margins will increase substantially then. Most of CNOA's sales in Q1 came from distribution and those margins were probably also held down as it expands into new areas.
In their own words, "Our increase in sales is primarily attributable to the expansion of our operations into the distribution of rice. During the first quarter, we had taken initial steps to purchase both green and organic rice from other rice producers and then resell this rice through our established distribution channels. We had decided to expand our current business model of distributing the rice we’ve cultivated to one where we can best utilize our distribution network by offering products from other organic producers.”
Company will be providing guidance for '08 once they finish their diligence on the acquisition of the Dalian Baoshui District Huiming Trading Ltd which will expand the company into soybeans, corn, and grain distribution. It does appear that CNOA will have to pay income taxes this year but I expect that higher rice prices will more than make up for that.
I'm looking for the SP to start moving back up with the start of summer, and possibly peak (again) late next fall.
AI
