DMG has started China Minzhong Food (K2N.SG) at Buy with $1.68 target price, pegged at 9x forward P/E, according to Dow Jones.

DMG says vegetable processor has benefited from strong overseas demand with earnings up by average of 80% in last two years. Forecasts 38% net profit CAGR over 2009-2012, driven by increased cultivation area, higher-value product mix, general food inflation.

Says access to new farmland important for company’s business model, with revenue increase largely driven by expansion of cultivation area, yield improvement: “Annual addition of 30,000 mu in cultivation area and new contribution from organic farming by FY12 will help to sustain revenue growth over the next three years.”

Shares +0.8% at $1.21.