Opportunity in Canadian Canola oil companies if seed ban occurs in China?

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BVal77
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Opportunity in Canadian Canola oil companies if seed ban occurs in China?

Post by BVal77 »

Hello Everyone,

Quick question. If China decides to ban Canadian Canola seed(as per the news recently), do you think there's some good opportunity in Canola based companies in Canada. I heard of this company that was mentioned in the recent CBC news article called Sunora Foods(SNF.V) and the CEO said this could be an opportunity for them. I did some research last night on them and the company has been around since 1990 and established itself in many countries, USA and China being the main ones. Their cash balance is $2.5 million, Assets to liability ratio is 5.4 to 1, 42.5 million common shares with 71% insider ownership and profitable over the last several quarters. I don't know, I thought it looked pretty cheap given what they have and how this could help them.

Any thoughts out there?

Article here: http://www.cbc.ca/news/canada/calgary/c ... -1.3740468

One group that could benefit from those lower prices are domestic crushers, who turn the seeds into oil.
"If there's less seed in China for processors, and there may be somewhat less, it opens up an opportunity for those of us who are exporting canola oil itself," said Steven Bank, the CEO of Sunora Oil, whose second largest market after the U.S. is China.
BVal77
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Re: Opportunity in Canadian Canola oil companies if seed ban occurs in China?

Post by BVal77 »

Looks like we got the extension. Thanks for posting that.

But I think for the price and earnings over the last 7 quarters, SNF is worth buying anyway. It's a 25 year old company that just went public in 2014, so it's established. I emailed their IR person Dean and asked if they would be doing a dividend and share buyback with the excess cash. Apparently after some current expansion operations are completed, they will be discussing that. Better than buying an actual Canola seed buyer like INP.V that trades at 20 times the price and just showed a $10.8 million dollar loss.
OhGreatGuru
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Re: Opportunity in Canadian Canola oil companies if seed ban occurs in China?

Post by OhGreatGuru »

There is something ironic about complaints of product quality coming from the country that is (still) the leading supplier of lead and cadmium children's jewelry; and which exported millions of litres of milk products adulterated with melamine.

Pardon me if I suspect this is just ploy to bargain down the price they pay for canola.
BVal77
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Re: Opportunity in Canadian Canola oil companies if seed ban occurs in China?

Post by BVal77 »

Hello everyone,

Been a while since I last posted on here. Just a follow up to this thread from before and what's been going on recently. So that whole Canola scare was for nothing, and that was based on the raw good, not oil as per Sunora's news release last year. But has anyone kept up with the stock price and earnings? Looks like the co-packer SNF worked with was the reason for the drop in sales and lower profitable quarters. But as per their last quarterly, things are back to normal and the expansion in China is going good. Now with this CETA deal, Sunora can even look to expanding into Europe, so pretty positive outlook. Plus having over $3 million cash, no debt, and 71% of their shares held by the CEO and a Chinese investment group, no reason why we can't see this thing run with a few more positive quarters. Year end is out in a month and they already had preliminary numbers based on their last news release. SNF should be able to earn between $150,000 to $200,000 net income going forward, I give the stock a target price of around $0.40 by Q3 2017, which is end of November, 2017 for them.

It's good to know that there's only one dedicated edible oils based company on any of the three Canadian exchanges. I mean INP is canola too, but it's the raw good and based on futures rather than holding/selling the good itself. I'm surprised they haven't taken out SNF for shares and diversified their investments.
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Re: Opportunity in Canadian Canola oil companies if seed ban occurs in China?

Post by OhGreatGuru »

BVal77 wrote: 31 Aug 2016 10:38 ...
One group that could benefit from those lower prices are domestic crushers, who turn the seeds into oil.
"If there's less seed in China for processors, and there may be somewhat less, it opens up an opportunity for those of us who are exporting canola oil itself," said Steven Bank, the CEO of Sunora Oil, whose second largest market after the U.S. is China.
It is self-interest on the part of Sunora Oil. But in fact, unless one is a canola farmer, we should all hope China does ban the raw import. It is much better for the Canadian economy to export finished product such as canola oil than raw materials.
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