Kim Eng initiates China Minzhong Food (K2N.SG) at Buy with a target price of $1.80, pegged at an undemanding 9xFY12F P/E.

It says, “with China emerging as an increasingly important vegetables supplier to the world, the group looks set to enjoy continued growth in its export sales for processed vegetables.” the house adds, domestically, Minzhong is also benefiting from the rise in demand for fresh quality vegetables on the back of increasing urbanisation, rising affluence and steady population growth.

The house also cites Minzhong’s ability to ensure strict product quality and tight cost control due to its integrated demand‐driven operations, its stable recurring earnings from repeat orders and its shift towards higher‐value product portfolio as positives.

Minzhong achieved “a remarkable 34.5% on year increase in revenue to RMB1.422 billion ($277 million)” in FY10 vs RMB1.057 billion a year earlier. Shares are +2.9% at $1.43.