ChinaSecurities

China Nutrifruit Group Limited produces specialty fruit based products in the People’s Republic of China. It engages in developing, processing, marketing, and distributing various food products processed primarily from specialty fruits. The company’s product offering includes fruit concentrate, nectar, glazed fruits, beverages, and fresh fruits. China Nutrifruit Group offers its processed fruit products to food producers for further processing into fruit juice and other fruit related foods, and fresh fruits to fruit supermarkets. The company was founded in 2004 and is based in Daqing, the People’s Republic of China.

Q209 revenue increased 60.5% yoy to $22.3MM. EPS were $0.59, down from $1.18 a year ago mainly due to a larger share count. Gross margin expanded to 49.4% from 45.8% last year. The company completed a private placement raising approximately $6.9MM in net proceeds on October 10, 2008. The Company's make good provision requires net income of $13.9MM and $18.4MM in FY09 and FY10 respectively.

According to a report on China’s fruit processing industry issued by Beijing Business & Intelligence Consulting Co. Ltd., an independent market research firm, or the BBIC report, China’s fruit processing industry has grown significantly in the past several years. The total output of fruit processed products in China grew from $16.8 billion in 2005 to $27.5 billion in 2007, representing a compound annual growth rate, or CAGR, of 27.9%. Sales value of fruit processed products in China grew from $17.0 billion in 2005 to $26.1 billion in 2007, representing a CAGR of 27.7%. BBIC projected that the total sales value and net income of fruit processed products in China will reach $37.2 billion and $2.5 billion in 2010, or a CAGR of 42.5% and 66.7%, respectively, during the four-year period from 2007 to 2010.

With approximately a quarter of the world’s population, China represents a key growth driver for the global fruit food market. However, according to Euromonitor, the per capita fruit juice consumption in China is currently well below that of major developed countries, indicating that there is a great potential market for the marketing of fruit based products, like our products, in China. We believe the growth of China’s fruit based products has been, and is expected to continue to be, driven by growing acceptance and increasing affordability of fruit based products in China, enhanced health consciousness, and growing global demand. In China, the fast-growing economy, and thus increasing per capita income, enables more consumers to buy more expensive healthy food and drinks, as evidenced by high demand for our products. Due to increased consumer health consciousness, we believe health-oriented foods and drinks will continue to experience strong growth in China, especially premium specialty fruit based products. We believe that given the projected growth opportunities of China’s fruit processing industry, we are well-positioned to achieve market leadership in China.