China Green Agriculture (CGA) shares gained 15% in trading Monday after the fertilizer producer in China reported a 42% jump in fiscal Q2 earnings as sales climbed 33% and forecast Q3 results above its Q2 figures. Recently shares of China Green Agriculture were trading up 15% or $0.29 to $2.21 on very heavy volume of 1.4 shares. Average daily volume is 143,610 shares.
In addition, the company on late Friday said its 900LH.com Food affiliate has entered into an agreement to jointly build an “Agricultural Comprehensive Development Base Project” with the Shiquan County Government in China. The total investment on the project is expected to be 3 billion renminbi (about $480 million), with the initial investment of RMB50 million (about $8 million) to be made this spring.
For the quarter ended Dec. 31, the company posted net income of $5.2 million, or $0.16 per diluted share, up from $3.7 million, or $0.12 per diluted share, a year earlier. The per-share figures were skewed by a 4.6% increase in the number of diluted shares outstanding.
Net sales rose to $54.1 million from $40.6 million in the prior-year period. No analyst estimates were available for comparison. Gross profit margin slipped to 42.4% from 46.4%, hurt by an increase in the cost of raw materials. For its fiscal Q3 ending March 31, the company said it expects net sales of $75 million to $80 million, net income of $8 million to $10 million, and EPS of $0.23 and $0.28.
The scope of the project with with the Shiquan County Government includes the development of Panlong Valley farm of 900LH.com, where the company showcases its products, China Green Agriculture said. During the first phase, 900LH.com will focus on building an ecological farm base, with the total investment of the first phase expected to RMB1 billion including the cost of relocating local residents. In the second phase, the ecological farm will develop into a modern agriculture farm for an expected investment of RMB2 billion.