OCBC non-rated note on singapore stock China Kangda :

"We visited China Kangda Food Company Ltd?s (Kangda) plants in Qingdao last week and witnessed the stringent hygiene practices employed in the production process. This is not surprising since Kangda caters not only to the domestic market, but also exports its products to international markets, such as the European Union and Japan, which impose high quality and food safety standards on their imports. Kangda is poised to benefit from the current pork shortage situation in China, as consumers have turned to chicken and rabbit meats as well as processed food as substitutes to pork. Demand pressures have led Kangda to increase the average selling prices of these products. Although Kangda already has stringent food safety practices in place, mounting pressures on the safety of China?s food exports may lead to the introduction of additional regulations, which may pose higher compliance costs to Kangda and erode its overall margins.

Kangda is trading at 9.4x FY06 PER, lower than the average of 17.2x historical PER that its peers are trading at. We do not have a rating on the stock."