We’ve all heard about how important it is to be invested in the BRIC countries, but how many of your BRIC investments are direct-ownership? You probably own through some middle-man that collects fees along the way, like the mutual funds and ETFs do. Besides, not all the BRIC countries are equal when it comes to potential ROI. Brazil has been the next great emerging-market for decades now, while China is actually outperforming, and at a quick pace.
The strategy I’m following right now is just to invest in China as directly as possible. Normally that would mean stocks in China-based, China-owned companies. And there are a few good ones (more on that in another post). But you can also invest in North American companies that do business in China or provide essential services specifically to China’s growing economy. One of these is Hanfeng Evergreen Inc (TSX: HF), a fertilizer-production company headquartered in Toronto that operates slow-release fertilizer plants throughout China.
Great Reasons To Invest in Hanfeng Evergreen
(1) HF is listed and traded on a domestic (i.e., North American) exchange – the Toronto Stock Exchange. This means you don’t have to worry about all the hassles and barriers involved with trying to break into the Chinese stock exchanges. Moreover, experts like Robert Hsu actively advise against doing that anyway, for various reasons.
(2) Capitalize on China’s boom. This one is obvious. China is growing at a phenomenal pace. HF provides an indispensable, patent-protected service. HF will grow too.
(3) Capitalize on the agriculture boom. China is the world’s largest producer and consumer of fertilizer, but they don’t yet have enough of the fertilizer that HF produces. HF owns a patent on the technology for their proprietary resin-coated slow-release fertilizer. HF owns and operates five fertilizer plants in the main rice-growing regions of China.
(4) Hanfeng has a solid history of growth. They began as Dalian Hanfeng in April 1996, starting out as importers of high-end grass seeds into China. In 2001, they established nurseries in Dalian, Beijing and Shanghai, beginning to produce rather than just import. In 2004, they moved from the TSX.V (Venture exchange) up to the TSX and began construction on their first SCU fertilizer plant in Jiangyan. Since then they’ve been breaking into new markets like gangbusters.
Check them out here. You might agree with me that this decision is a no-brainer. They recently traded around $12.07 CAD. Less than a year ago they were trading at just $9.66. They don’t pay a dividend, but their nearest industry peers by market capitalization? Potash Corp. and Agrium.
As always I welcome any comments, disagreement, suggestions, corrections, updates.
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