Company targets a profit in growing vegetables

By Ariel Tung (China Daily)
Updated: 2010-11-02 10:37
Large Medium Small

NEW YORK - Le Gaga Holdings Ltd, the latest among a slew of Chinese companies to be listed on a stock exchange in the United States, wants to set a trend of agricultural business.

The company, a leading greenhouse vegetable grower in China, listed on Nasdaq on Friday with its shares closing at $11.26, a 19 percent gain on its initial public offering.

The company sold a total of 10.9 million American Depositary Shares at the high end of its $7.50 to $9.50 price range.

"We have been doing vegetable farming in a different way," said Ma Shing Yung, founder and chief executive officer at Le Gaga.

"We want to show people what the future of agricultural business in China should look like."

Using greenhouses to grow vegetables, the company operates 16 farms in Fujian, Guangdong and Hebei provinces and sells its produce to supermarkets on the mainland and in Hong Kong.

Its key customers are Walmart stores and Hong Kong supermarket chains such as Wellcome, Park 'n Shop and Vanguard.

Winston Jin, director at Le Gaga, said the Hong Kong-based company is the largest greenhouse vegetable producer in China by measure of greenhouse coverage.

"We are the first vegetable producer to get listed on Nasdaq. We expect the demand for greenhouse produce on the mainland and in Hong Kong to grow," said Jin.

Data compiled by Bloomberg said that companies in Asia have posted six of the 10 largest gains among IPOs in the US this year.

ChinaCache International Holdings Ltd, a leading Beijing-based Internet service provider company, last month had the biggest first-day rally for a New York listing in three years.

Le Gaga has no plans to go overseas as the Chinese market is large enough, said Ma.

Also, China is diversified in terms of the type of vegetables people in different regions eat. At present, the company markets more than 100 varieties of vegetables.

"We have been concentrating on the southern parts of China. As we become bigger, we will gradually expand our operations to northern regions," Ma said.

"We want to focus on what we are good at. We are cautious about the regions or markets we are not familiar with."

Le Gaga, which began as a small agricultural business in March 2004, has been attracting overseas investors such as Sequoia Capital, Susquehanna Group and Walden International since 2007. It has experienced rapid growth in the past few years.

Jin said the company's compound annual growth rate is almost 30 percent a year. It reported a revenue of 281 million yuan ($42.8 million) in its fiscal year ending March 31.

Jin said that for Le Gaga, one of the fastest growing major vegetable producers in China, getting listed was the inevitable step.

Ma said part of the proceeds raised would go toward building more greenhouses in the next two years to "provide more high-quality vegetables to society".

China Daily