Singapore’s Big Winner for the Week

Zhongxin Fruit and Juice Ltd (SGX: 5EG) has surged by 40% since last Friday to close at S$0.028 on Thursday. With the Straits Times Index (SGX: ^STI) only gaining 0.2% during the same time, Zhongxin has certainly been a big winner in Singapore for the week.

The firm is involved in the production and sale of apple juice concentrate which is used mainly for the production of various food and beverage products. The apple juice concentrate is exported to areas like the United States, the European Union, South Africa, Canada, and Japan.

Zhongxin is also involved in the production of animal feed using apple pomace generated in the process of making apple juice concentrate. The animal feed is either sold to dairy farms (for use as a food supplement for livestock) or to animal feed manufacturers.

For the financial year ended 30 June 2014, Zhongxin saw its revenue rise 13% year-on-year to RMB157.8 million but its net profit had slumped by 32% to RMB10.8 million. The higher revenue was mainly due to an increase in sales volume of its apple juice concentrate; volume had increased from 13,601 metric tonnes (MT) a year ago to 19,416 MT. The lower net profit was attributed to higher distribution expenses and finance costs.

As of 30 June 2014, Zhongxin had total borrowings of RMB30 million and a cash balance of RMB3.9 million. The firm generated RMB11.7 million in operating cash flow; this compares with a negative RMB33.3 million in the previous year.

Going forward, Zhongxin is looking to expand beyond producing apple juice concentrates by offering vegetable juice and its related products in order to enhance its growth prospects. The company is trading at 13 times its historical earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.