Fufeng Group Limited

We (PiperJaffray - (NYSE:PJC)) reiterate our Overweight rating on Fufeng Group (HKG:0546) (PINK:FFNGY) after its release of 1Q10 operation updates. Thanks to healthy Average Selling Price (ASP) trends and capacity expansion, Fufeng's profit margin and revenue growth are on track to deliver our earnings estimates (+11%/30% in FY10E/11E). Fufeng further raised its ASP on April 10 to pass on the continuously rising corn cost. Our PT of HK$6.70 (9.4x FY10E) is still below the initial conversion price of the CB issued recently (HK$7.03).

Fufeng Group (HKG:0546) (PINK:FFNGY) has announced it will issue Rmb-dominated convertible bonds (CBs) to raise Rmb 820mil-1bil. As the initial conversion price (HK$7.03) is below both of the current share price and our current PT of HK$6.7, there is no dilution impact on our modeled numbers at present. Our initial take on the CB issue is that it is slightly positive to the company's financials as it can lock the company's interest costs in face of a potential interest rate hike. We leave our model, rating and PT unchanged.

Fufeng Group (HKG:0546) is the largest MSG producer in China. The company MSG products accounting for 25% of Chinese market share and 20% of world market share. The company's customers mainly are food processing enterprises, catering enterprises and the company will expand its sells channel to the end customers in the future. We forecast that net profit can grow by a CAGR of 26% from 2010-2012. Our TP is HK$9.7, based on 13X10PE. We initiate the company stock with a buy rating.

Fufeng Group Limited (HKG:0546) (PINK:FFNGY) announces that Joint Lead Managers have exercised the Option in full for RMB205Mn (equivalent to approximately US$30Mn) in principal amount of Option Bonds, bringing the total issue size of convertible bonds to RMB1025Mn (equivalent to approximately US$150.1Mn) in aggregate principal amount of Bonds. The company's stock has gained 31.17% since our recommendation on Feb.12, 2010.

Fufeng Group (HKG:0546) (PINK:FFNGY) released its 2009 result yesterday. The company's 2009 result was in line with our expectation. The revenue, net profit and EPS were RMB 4632.88Mn, 928.29Mn and 0.56, while our forecast were RMB 4682.98Mn, 927.99Mn and 0.56.

Fufeng Group Limited (HKG:0546) (PINK:FFNGY), a leading vertically integrated manufacturer of corn-based biochemical products in China, has today announced the Joint Lead Managers have exercised the Option in full for RMB 205 million (equivalent to approximately US$30 million) in principal amount of Option Bond, bringing the total issue size to RMB 1,025 million (equivalent to approximately US$150 million) in aggregate principal amount of Bonds when the Option Bonds are issued.

Fufeng Group (HKG:0546) released its 2009 result. The company's 2009 result was in line with our expectation. The revenue, net profit and EPS were RMB 4632.88Mn, 928.29Mn and 0.56,while our forecast were RMB 4682.98Mn,927.99Mn and 0.56.

SBI E2-Capital provide a research report for Fufeng Group (HKG:0546) (OTC:FFNGY).

Fufeng Group Limited (HKG:0546), a leading vertically integrated manufacturer of corn-based biochemical products in China, has today announced the issue of convertible bonds with an aggregate principal amount of RMB 820.0 million (the "Bonds") to international investors ("Purchasers"). Citigroup Global Markets Limited and ABN AMRO Bank N.V., Hong Kong Branch (to be renamed The Royal Bank of Scotland N.V., Hong Kong Branch in due course) acted as joint lead managers in the transaction.

ABN Newswire stocks to watch today include: Brickworks Limited (ASX:BKW), Bandanna Energy Limited (ASX:BND) and Fufeng Group Limited (HKG:0546).