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ACCORD CAPITAL EQUITIES CORPORATION

COMPANY REPORT: AGRI-NURTURE, INC. [pse: ANI]

LISTING DATE 25. May. 2009 OFFER PRICE 23.50 PAR VALUE 1.00
LISTED SHARES 195,303,871 OUTSTANDING SHARES 217,993,119 FREE FLOAT % 38.00

Recent/Upcoming Developments:
With exports contributing nearly all of its revenue in the last two years (2009 and interim 9
month period 2010), the Company will aggressively pursue the expansion of its market for banana
in China. Fresh mango has been its leading export product from 2007 to 2009, contributing 86% to
export revenue. Banana volume is expected to have surpassed mango last year. A World Bank
Commodity Price Data show banana prices have consistently risen since 2003 from around $300/mt to
more than $850-900 last year. The Philippines is the world's second top banana producer with 9.0
million metric tons, trailing India's estimated 26.2 million metric tons. (2009)

ANI is likewise contemplating the acquisition of a US distribution company as it seeks to


penetrate yet another profitable market for its produce after China. Currently, about 50% of the
Company's exports are consigned to the Greater China Region, 30% to the rest of Asia and the
Pacific and 20% to North America and Europe. In this light, a US company has shown interest in
investing in the Company.

For another produce, pineapple, ANI is exploring a possible joint venture. It is also
considering acquiring a master franchise of Tully's Coffee, touted as the last independent
Seattle-”pedigreed” coffee company in the world.
250.00
M

FINANCIAL PERFORMANCE: 2007 to 2010


ilo
n
s

200.00
Over the last three years, 2007 to 2009, the
Company's sales have grown at a compound pace 150.00

of 27.72%. With 2009's total passing the 100.00

php1.0 billion mark at php1.017 billion, full


50.00
year 2010 result is projected to reach php1.3
billion. As of the first nine-months, this -
2007 2008 2009 2010 (9MOS)
number is already exceeded with an annualized
EXPORT LOCAL
total of php1.379 billion. The Company's
revenue is sourced mainly from its exporting activity, with domestic sales accounting for just
2.0% in 2009 and 2010. As mentioned earlier the bulk of shipments are headed towards the Greater
China Region.
25.00% Margins have been steadily rising, except for
20.00%
gross margins as compound annual growth in the
cost of sales outpaces revenue growth. GPM
15.00%
fell in the 2007-2009 period but has recovered
10.00%
strongly in the three quarters to September of
5.00% 2010. The narrowing can be attributed to the
0.00% inflationary regime during those years, which
2007 2008 2009 2010 the Company nevertheless managed to mitigate
GPM OPM NPM PRE-TAX by effective controls on the GAE side.

ROE Despite a consistent decline in the Company's


7.00% Asset Turn-over Ratio from 1.86x in 2007 to
6.00% just 1.20x in the annualized interim period,
5.00% and likewise a sustained deleveraging over the
4.00% same time frame, ROE continued to rise, pushed
3.00% by the steady widening of net margins.
2.00%

1.00%
The Company's balance sheet remains healthy
0.00%
2007 2008 2009 2010 and is well positioned to take advantage of an

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
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ACCORD CAPITAL EQUITIES CORPORATION
COMPANY REPORT: AGRI-NURTURE, INC. [pse: ANI]

anticipated demand as global economic recovery gains more traction.


Debt ratio (Total Liabilities/ Total Assets)
3.00
have declined to 0.32 in the January-to-
September period, marginally higher than 2009 2.50
but substantially below the over 0.60 in the
two prior years. This resulted from assets 2.00
expanding by an average of almost 50% in the
CURRENT RATIO
last three years compared to liabilities 1.50
QUICK RATIO
growing 20 percent, compounded annually.
Quick and current ratio are both above 1.0, 1.00 DEBT RATIO
lending stability to the company's short-term
0.50
prospects. Net working capital has increased
to php245M in the interim period from 2007's
-
php63M. Nevertheless, this is lower than
2007 2008 2009 2010
2009's php381M as the Company made investments
in expansion and development of farms, plants
and cold storage facilities.

PROSPECTS:
PHILIPPINE exports expanded 33.71% in 2010 to
AGRO BASED EXPORTS US$51.392 billion. Agro-based products
accounted for 5.67% or US$2.917 bilion, a 36%
improvement over 2009's total. Over half of
others, 24.32%
the country's agro exports are coconut and
related products, which account for more than
half, followed by fruits and vegetables'
coconut 22.19% or US$647 billion, -7.37% less than the
products,
51.70% previous year. ANI's exports fall under these
categories. It's leading product, mango, saw
FRUITS &
VEGETABLES,
total FOB value of US$15.187 billion, an
22.19% improvement of 4.68% over 2009. Banana
sugar & sugar exports, on the other hand, totaled US$319
products, 1.79% billion, although posting an -11% contraction.

And even as global economies contracted in the 2008-2009 period, sales of its principal products
continued to rise. We can only surmise the impact of a growing demand as world economies
stabilize. Note that based on average figures, ANI's mango exports over the last three years
account for roughly a quarter of the FOB export value for the product. That is a significant
market share that makes the Company well positioned to reap the benefits of global demand
recovery. It's investments in farms to expand production sources, plants and cold storage
equipments to preserve the quality and consistency of its products should augur well as consumer
sensitivity to quality increases.

2007 2008 2009 2010E 2011F


SALES 623,874,393.00 777,964,691.00 1,017,682,209.00 1,299,779,530.68 1,680,059,244.76
NET INCOME 4,302,533.00 8,737,119.00 35,689,967.00 51,681,976.29 75,163,042.40
EPS 0.43 0.06 0.19 0.24 0.34
PE - - 133.06 43.61 88.33
MARKET PRICE 24.75 10.34 30.46
Notes to table: 2011F EPS is based on the average from 2009-2010 actual. Estimate and forecast for sales and
net income based on moving CAGR(2 years.) Industrial sector average PE for 2010 @ 17.60, with subsector Food
, Beverage & Tobacco @ 24.72x. This will lower price estimates to a low of php5.98 and a high of php8.40,
ceteris paribus. These estimates are conservative and based only on the averages without discounting the
potential impact of its pursuits for this year.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
page 2 of 3
ACCORD CAPITAL EQUITIES CORPORATION
COMPANY REPORT: AGRI-NURTURE, INC. [pse: ANI]

TECHNICAL CONSIDERATIONS:

Although the stock price has continued


to fall through the first month-and-a-
half of trades this year, we notice
that the slope of the decline has eased
from -0.18 when it fell from php18.04
(October 8, 2010) to php9.80 (December
15, 2010.) to just -0.08 off the
current year's highest close at
php10.30 (January 7, 2011.) This is
one proof that the selling pressure
that has sent the stock price
spiralling down has eased.

Daily STO (10,6,6) is under the


oversold 20-line @ 13.03, with
prospects drawn of a possible oncoming
upside penetration of the trigger line
which currently reads 14.76. Such
upside break should posit at least a
near-term BUY on increased momentum.

A similar suggestion is drawn by the daily MACD line which, although still negative, is showing
up with a probable bullish crossover of the signal line. The negative spread has been kept
narrow and continues to do so, albeit gradually.

Finally, still on a daily basis, the AccDist Line indicates a growing stability with positive and
negative volume/value practically neutralizing each other, keeping price level. This is
suggestive of a slighlty growing bias for accumulation even as the price bias have yet to give a
convincing signal of such turn.

Similar suggestions are seen from both the weekly and monthly charts.

We draw support at the php7.50 line while immediate resistance is at the php8.90 mark.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
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