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Chinese Company Selling for Less Than Three Times Earnings

American Lorain Corporation (ALN), is a multinational integrated manufacturer of processed chestnut products in China. The company launched its chestnut business in 1995 and currently produces about more than 50 high valued-added processed chestnut products. Chestnut are popular snack foods throughout Asia and the market for chestnut is estimated at $1 billion dollars in Asia. ALN products are sold in convenience stores, supermarket chains, kiosks and large mass market retailers. 

The company produces and sells 234 varieties of food products in three main product lines:

  • Chestnuts.
  • Convenience foods (ready-to-cook foods, ready-to-eat foods and meals ready-to-eat foods).
  • Frozen foods.

The company sells these products in China, Japan, Korea and Europe, with most revenues from sales coming from China, Japan and South Korea. 

On Jan. 25, 2011, the company announced that it signed a french fry distribution agreement with two premier European potato product companies: Pinguin Lutosa of Belgium and Farm Frites International BV of Netherlands. 

ALN has enhanced its cooperation with supermarket and restaurant chains to help boost domestic market share. The company's products are sold at Wal-Mart (WMT), Carrefour (CRRFY), Metro AG (MTTRY) and KFC & Pizza Hut Franchises (YUM).

Valuation 

ALN is selling at $1.04 a share with a P/E ratio below 3. The company has $1.36 a share in cash, with a book value per share of $5.18. If you buy ALN today you will be getting 32 cents per share in cash for free, plus a large discout betweem share price and book value. 

About the author:

Cody Eustice

Visit Cody Eustice's Website


Rating: 4.0/5 (6 votes)

Voters:

Comments

vgm
Vgm - 2 months ago

Thanks! An additional article on ALN was posted yesterday at SA:

http://seekingalpha.com/article/1969071-american-lorain-an-undervalued-opportunity?source=yahoo

AshishGupta
AshishGupta premium member - 2 months ago

Is it one of those reverse merger Chinese companies? There were many in news sometime back for fraud...?

libertadpp
Libertadpp premium member - 2 months ago

I have made 29% with ALN these months, and I voted as a shareholder last month. I like it, but my biggest bet is Nutrastar International (NUIN), with 30 times more money on my portfolio than ALN.

lfev
Lfev - 2 months ago

Thanks Cody!

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