GREY:MIGGF - Post by User
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Lousytimingon Jun 17, 2009 2:03pm
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Keystocks June 2009
Keystocks June 2009Growth Becoming Routine for Migao
Posted on June 5th, 2009
While Toronto’s main index ended up this past week, gains were marginal overall, as it appeared some profit taking took hold in a mid-week sell-off that looked like it had the potential to start what we expect to be a summer correction from the recent strong rally.
But, a funny thing happened on the way to that expected correction - oil rallied to a seven-month high above $70 a barrel before retreating slightly and helped the shares of energy related companies do much of the heavy lifting to put a smiley face back on the TSX by week’s end.
While energy companies have helped Toronto’s main index move forward over the past week, one of our themes heading into 2009 (the “relative” strength of the Chinese domestic market) continued to help power one of our favourite Canadian-listed, but China-based stocks to new heights and has made the company one of the best performing stocks on the TSX over the past eight months.
The company, Migao Corporation (MGO:TSX), a leading specialty potash fertilizer producer, reported very strong results for the three-months ended March 31, 2009. Migao reported that sales jumped 143 per cent to $85 million from $35 million for the comparable period last year. EBITDA for the March 31st quarter of fiscal 2009 was $15 million, or 18 per cent, of revenue as compared to $6 million, or 17 per cent, of revenue for the same period last year. Net income jumped 160 per cent to $13 million, or $0.29 per basic share, for the final quarter of fiscal 2009 compared to $5 million, or $0.12 per basic share, for the same period in 2008.
As at March 31, 2009, Migao reported cash of $42 million and working capital of $146 million; including $66 million of potash in inventory and in transit.
Perhaps most importantly, in an economic environment when many companies have experienced shrinking profit margins, Migao maintained gross profit margins within its desired and historically consistent range of 22-24 per cent at 22.5 per cent.