Dongfang Modern ASX IPO
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Dongfang Modern ASX IPO Dongfang Modern is a leading citrus harvester operating in the world's largest market.
  • IPO on the ASX

    type of offer

  • Undisclosed

    equitise allocation

  • NZ$2,200.00 - NZ$440,000.00

    size of offer

  • NZ$2,200.00

    minimum bid

  • NZ$0

    maximum bid

  • NZ$1.10

    price per share

OFFER IS CLOSED
Did we get an SRN with the ASX IPO

Hi, would you know which registry our crowdfunding shares went under? Did we get an SRN with the ASX IPO? how do I get it? thanks in advance.

David D posted on 15.08.2017
asx listing

what progress on listing and issue of shares...is there a final nz$ value on share allocation

gordon davis posted on 13.10.2015

Gordon, allotment occurred today. Holding statements will be mailed tomorrow. Listing should occur within a week of mailing.

Greg Starr posted on 13.10.2015

Replied to gordon davis

30 June 2015 Interim financial report released

The DFM 30 June 2015 Interim financial report has now been released. The can be reviewed and downloaded from the below link.

http://www.dongfangmodernagriculture.com.au/PROSPECTUS/DFM300615ReviewedFinancialStatementsFINALrelease.pdf

Greg Starr posted on 19.09.2015
INTERVIEW WITH THE LEAD MANAGER OF THE DFM IPO

The link below is to an interview with the Lead Manager of the DFM IPO Barry Dawes of Paradigm Securities who discusses the DFM business and the investment opportunity.

https://soundcloud.com/wholesale-investor/dongfang-modern-agriculture-holding-group-ltd-ceo-interview

Greg Starr posted on 14.09.2015
expected date of listing

When is the expected date of listing and under what ticker......will it be listed on ASX , NZX or both

gordon davis posted on 21.08.2015

Gordon, the current expected date of listing is October 7 2015. It will be only on the ASX under the ticker DFM.

Greg Starr posted on 21.08.2015

Replied to gordon davis

LISTING

Why is this listing on the ASX instead of Hong Kong or China Stock exchanges ?

James Docking posted on 18.08.2015

Thanks for your questions James. Please see Section 1.2 ASX Listing of the Prospectus for more detail.

The key advantages of listing on the ASX over other stock markets that the Directors have assessed as are:
• simpler listing process;
• high transparent government regulation;
• low cost of maintaining the listing; and
• good agricultural business investment exposure.

Greg Starr posted on 19.08.2015

Replied to James Docking

Extension of IPO Application closure date

The Dongfang IPO offer has extended. This is primarily due to an important large investor requiring more time to complete the application process.

The new Application close date is expected to be 21 September with the Settlement date 24 September and Allotment date 25 September. These dates assume the expected formal granting of relief enabling an extension within the next 48 hours. If the formal approval takes longer than 48 hours these revised dates may alter reflecting any later date.

Greg Starr posted on 17.08.2015
Liquidity

With greater than 75% of shares owned by 1 person (even after it is ASX listed), there seems to be poor liquidity. Thoughts?

Amarnath Premnath posted on 10.08.2015

While the market cap of the company will be in the order of A$380-400M the current IPO raise of between A$39M – A$50M represents the potential free float – ie while in market cap % terms the liquidity will be low, there is 100% potential liquidity in the IPO issued shares.

The company has a strong earnings track record and the Prospectus forecast is A$75m making it very attractive from a PE Ratio perspective and the company would expect earnings to continue to grow. Consequently, over time the market acceptance of the company should be increased and potentially further improving liquidity.

Greg Starr posted on 10.08.2015

Replied to Amarnath Premnath

  • > Offer Type: Australian IPO on the ASX This offer is open to all investors in Australia and New Zealand.
  • > Company: Dongfang Modern Agriculture Holding Group Limited Securities purchased are for direct equity in Dongfang Modern Agriculture Holding Group Limited.
  • > Security Type: Ordinary Shares
  • > Fees Paid by Issuer: Undisclosed The fees paid to Equitise by the issuer upon successfully completing the funding round is undisclosed.
  • > Cooling-Off Rights: None This offer does not provide cooling off rights to any investors.
  • > Related Parties: None
Note!

Donfang Modern Agriculture Holding Group Limited (Dongfang Modern) is undertaking an initial public offering (IPO) in Australia, and is scheduled to list on the ASX at the end of this month. Investors should download and read the prospectus below before investing in the offer. The Australian Corporations Act prohibits any person from passing on to another person the Application Form unless it is accompanied by or attached to a complete copy of this Prospectus. The shares will list and trade on the ASX in Australian Dollars. The IPO offer is at AU$1.00 and investment is being accepted through the Equitise Platform at the price of NZ$1.10. This equity crowdfunding offer is made pursuant to the New Zealand equity crowdfunding regime as governed by the Financial Markets Conduct Act 2013.

More detailed information about this offer is contained in this Prospectus

Prospectus
Offer overview

NZ investors have the unique opportunity to participate in an ASX IPO with exposure to Chinese Agriculture. 

Equitise has been engaged to provide the opportunity to enable its NZ investors 400,000 shares and participate in an ASX IPO which is heavily supported through the broker network. 

Please see Section 1.2 of the Prospectus for more detail

On 29 May 2015, the Company made application to the ASX for the Company to be admitted to the Official List and for the Shares offered by this Prospectus to be granted Quotation – see section 4.10 of the prospectus for further information. 

In recent years, Australian Commonwealth and State Governments, together with the ASX have been promoting ASX as one of best destinations for IPOs in a global market. As a result, a number of Chinese enterprises have submitted applications and have listed on the ASX.

 

For more information around the offer and the directors’ determination see Section 2: Investment Overview

 

  

 Indicative Timeline

 

*These dates are indicative only and subject to change. The Board at its own discretion and subject to its statutory obligations reserves the right to alter this timetable at any time and may extend the period of the Offer or bring forward the Close of the Offer.

Executive summary

Trans-Tasman crowdfunding firm Equitise is extending its reach into the Asia Pacific region with a ground-breaking offering. New Zealanders have the chance to participate in a partially crowd-funded initial public offering (IPO) on the Australian Stock Exchange (ASX).

Equitise is offering New Zealanders the opportunity to invest in the IPO of Dongfang Modern Agricultural Holding Group Limited (Dongfang Modern), the leading Chinese grower and harvester of citrus and camellia tree products in the Ganzhou City District.  

Shares will be offered through Equitise’s platform in parallel with the IPO campaign.  

Shares will be tradable on the ASX, following their listing which is scheduled for 31st August 2015. Equitise has been advised by the broker that the minimum subscription investors have been sourced and the IPO is heavily supported. 

Donfang Modern is now looking to extend the IPO to a large number of investors who will be passionate about the business and its growth opportunities. Donfang Modern’s business is agriculture, something New Zealanders excel at. The company recognises this and welcomes the opportunity to extend its shareholder base to innovative Kiwis.

Dongfang Modern, along with its broker, Paradigm Securities, have approached Equitise to partially crowdfund their IPO. This is a first for New Zealand crowdfunding investors. The New Zealand investors who participate will join the founding shareholders (see prospectus for capital structure) and other investors in the ASX IPO. 

Donfang Modern and Equitise are innovatively using equity crowdfunding as a tool to seek investment from the New Zealanders, giving them an opportunity that would not otherwise be available. 

Dongfang Modern is a consumer staples company. It grows and harvests citrus and camellia fruit produce.

For the full financials, please see Section 9: Financial Information of the Prospectus for more detail. 

The prospectus details Dongfang Modern’s offer for up to 50m shares at A$1 each (accepting NZ$1.10 via Equitise), raising a maximum of A$50m (NZ$55m). The offer is subject to a minimum subscription of A$39m (NZ$42.9m). Equitise is bringing you the opportunity to participate in an IPO round of investment, with access to immediately tradable securities. 

Dongfang Modern is a mature, high growth company. The funds raised will be used to continue the growth of the business and acquisition of assets. The minimum investment amount is 2,000 shares, which is being accepted at an AUD/NZD Exchange Rate of $1.10. This being NZ$2,200 and multiples of 200 shares (NZ$220) thereafter.

Key statistics

Full Financial Information is set out in the Prospectus in Section 9

 

 

Investor rewards
Business model

See Section 6 of the Prospectus for more detail

The following table represents the details of Ganzhou Chinese’s (wholly owned subsidiary) business operational model:         

 

 

Corporate Structure of Dongfang Modern Agriculture Holding Group Limited

 

 

Milestones & history

See Section 6.2 of the Prospectus for more detail

Ganzhou Chinese (the company wholly owned by Dongfang Modern) was established in 2005 as a trading company and in In December, 2008, the scope of the business was modified cover the cultivation of navel oranges, pomelos, tea plant and camellia products and also the breeding of pigs and poultry, including processing of these products.                        

In 2011, Ganzhou Chinese commenced cultivation and sale of camellia seeds and related products and took on leases of plantations of 2,187 hectares of camellia orchards of which about 60% (1,334 hectares) were generating revenue.

In 2012, Ganzhou Chinese acquired a further 60 hectares for production of camellia seeds and expanded through leases over 1,367 hectares of plantations for production of tangerine and of 840 hectares of plantations for pomelo.    

In 2013, Ganzhou Chinese acquired 45 hectares of navel orange plantations and took on leases of 593 hectares of plantations for pomelo and another 2,380 hectares of tangerine plantations. In mid-2013, the scope of business of Ganzhou Chinese was changed to focus on the cultivation of navel orange, pomelo, tangerine, tea tree, oil-seed camellia, seedlings and flowers and further processing and sale of these products to better reflect the evolving businesses of Ganzhou Chinese.

In 2014, Ganzhou Chinese acquired 497 hectares of plantations for production of orange.

In 2015, Ganzhou Chinese acquired 400 hectares of plantations for production of tangerine and took on leases of 267 hectares of tangerine plantations.

 

Strategy & vision

See Section 6.4 of the Prospectus for more detail 

  • Increase production and growth through strategic acquisition

Ganzhou Chinese (the company wholly owned by Dongfang Modern) will look to purchase additional rural land contracted operation rights to increase production. The acquisition of these additional rural land contracted operation rights will also give Ganzhou Chinese more control over future plantation products and soil quality and also the infrastructure on sites including irrigation, power and access roads.

  • Continuously focusing on improving quality

Ganzhou Chinese is continuously endeavouring to improve the characteristics of its produce through tree maintenance, breeding varieties of its fruit trees, improving soil properties and the implementation of camellia organic cultivation.

  • More efficient production practices

Ganzhou Chinese is committed to improving operating efficiencies, driven by the goal of delivering higher margins and lower costs. Economies of scale effects should gradually become apparent by the increase in the area of plantation land and the continuous improvement of management.

Use of funds

See Section 1.3 of the Prospectus for more detail

 

Financial summary

See Section 1.6 of the Prospectus for more detail

 The following is key financial information about the Company’s financial performance, financial position and prospects. Investors should have regard to the more detailed information set out at section 9 of this Prospectus. These figures are based on the functional currency of RMB and do not take into account changes in the exchange rate from year to year (see section 9.2(c) in relation to currency conversion rate).

 

Executive summary
Market overview

See Section 5.1 of the Prospectus for more detail

The main undertaking of Dongfang Modern comprises of the wholly-owned People’s Republic of China company Ganzhou Chinese. This subsidiary (wholly-owned company) is in the business of cultivating and selling citrus products like tangerines, navel oranges, pomelos, and camellia tree products. 

The Company’s operations are based in the Ganzhou City district in Jiangxi Province in China.

 

MARKET DEMAND 

 

SALES

Target market

See Section 6.8 of the Prospectus, for more detail 

Ganzhou Chinese has developed long-term relationships with a range of wholesale customers through its consistent focus on quality, reliable supply and dedicated customer service. Through this, Ganzhou Chinese enjoys a relatively even spread of revenue reliance from its customer base, with the largest customer accounting for approximately 13% of revenue in 2014.

 

  

Ganzhou Chinese’s major sales contract terms are as follows and are expected to continue in the future:

  • Company pays packaging costs;
  • Customers collect the products at site and pays transportation;
  • Payment must be made in cash or by bank transfer within 30 days from the actual delivery date.
Competitive landscape

See Section 5.2 of the Prospectus for more detail

The agricultural product farming and sales industry in China is characterized by being highly fragmented. Within the PRC the top five companies in the agricultural citrus product farming and sales industry only had a combined market share of about 3.5% in 2014. Within Ganzhou, the agricultural product farming and sales industry in Ganzhou is also highly fragmented. Ganzhou Chinese has 7.2% market share in Ganzhou with the next top four farming companies in Ganzhou being Asian Citrus Holding Limited, Jiangxi Yang’s Trade Co., Ltd. Anyuan County and Shengda Fruit Industry Co., Ltd., and Ruijin Pinguan Agricultural Development Co., Ltd which hold a combined 16.1% market share in Ganzhou.

 

See Section 6.3 of the Prospectus for more detail 

Ganzhou Chinese is an important market leader in the citrus industry in the PRC. The Company’s competitive strength in the PRC citrus industry is due to the following:

  • Ideal location for fruit cultivation

Ganzhou Chinese’s plantations are all located in the areas of Jiangxi province that enjoy a significant amount of sunshine, good levels of rainfall and long frost-free periods each year.

  • Established first mover advantage in scale and size

As with many industries in China, the supply of citrus fruits and camellia fruits and seeds is highly fragmented across several regions and many farming communities. Ganzhou Chinese has invested significant capital to aggregate plantations through leases and acquisition of farming rights and has spent several years developing these plantations to the current scale and size of over 200,000 tones of fruit per year. Any new entrant hoping to reach the scale and size of company’s operations to compete on the same volume level, would require substantial capital over many years to spend on plantation land acquisition, local supplier network building and marketing.

  • PRC Government Incentives Ganzhou

Chinese has benefited from various financial incentives which include reduced tax rates and other financial measures. Effective from 1 January 2008 Article 27 of the New Tax Law and Article 86(1) of the New Tax Law Implementation Rules stipulates that enterprises engaging in certain agricultural activities, including growing of fruits and selection and cultivation of new agricultural species, are exempt from China Enterprise Income Tax (EIT) and business tax. The Company has been able to benefit significantly from this opportunity by being able to reinvest almost all its operating cashflows into acquiring additional plantations and capital upgrading of existing operations.

  • Well-established and stable network input suppliers

Ganzhou Chinese has made a substantial commitment to identifying key reliable suppliers of quality harvesting inputs such as pesticides, fertilizers and paper box as packaging materials. The consistent supply of high quality inputs is crucial to the business to maintain product value and quality. Ganzhou Chinese has maintained good and stable relationships with key suppliers and all of the major inputs have been sourced from five top suppliers which are all located in Jiangxi province. Long term relationships with these top five suppliers help Ganzhou Chinese to have a better bargaining power and a reliable supply of raw materials. Based on reasonable grounds, the Directors are of the opinion that the ability to obtain a steady supply of raw materials has helped Ganzhou Chinese to increase its production output and to maintain its quality standard.

  • Experienced management teams with proven track record of delivering sustainable growth and profitability

Ganzhou Chinese’s management has proven knowledge and expertise in the agricultural industry. The management team has gained valuable experience over the last several years’ successful operation and has continually contributed to the Company’s expertise. Based on reasonable grounds, the Directors are of the view that the favorable external conditions, together with the established reputation among customers, will help Ganzhou Chinese to enhance its market position.

Potential returns

See Section 4.7 of the Prospectus for more detail

The payment of dividends by the Company is at the complete discretion of Directors.

Depending on available profits and the financial position of the Company, it is the current intention of the Board to pay final dividends in respect of full years ending 31 December each year. The payment of a dividend by the Company is at the discretion of Directors and will be a function of a number of factors including the general business environment, the operating results and financial condition of the Company, future funding requirements, capital management initiatives, taxation considerations, any contractual, legal or regulatory restrictions on the payment of dividends by the Company, and any other factors the Directors may consider relevant.

A final dividend is anticipated to be paid in respect of the period from 1 January 2015 to 31 December 2015. Based on a target payout ratio of 20% of pro forma NPAT, the CY2015 final pro forma dividend would be RMB 74.6 million (before PRC dividend withholding tax of 10% first applied at the Ganzhou Chinese company level) or between A$0.034 per share (Maximum Subscription) and A$0.035 per share (Minimum Subscription) (after PRC dividend withholding tax of 10%), assuming an exchange rate of RMB 1.00 = A$4.9353.

Subject to the above considerations, beyond FY2015, the Directors intend to target a payout ratio of 20% of NPAT. The level of payout ratio is expected to vary between periods depending on the factors above and, in particular, should value accretive strategic growth, acquisition or investment opportunities arise it may result in a payout ratio in the future that is less than the above target.

Hongwei Cai

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Ming Sing Barton Tso

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Chiu So

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Prospectus

Prospectus 16th July 2015

Download

IPO Presentation

IPO Presentation

Download

Term Sheet

Term Sheet

Download

Second Supplementary Prospectus

Second Supplementary Prospectus

Download

The investors below have committed capital to the business in this funding round.

Daniel Alexander

2015-08-31 14:00:23

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John Andrew Bruce Morton

2015-08-26 00:54:17

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gordon davis

2015-08-23 12:16:50

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Andrew Mc ewing

2015-08-17 20:15:08

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kiwiinvestor

2015-08-17 15:29:53

Lachlan Sloan

2015-08-17 09:52:46

Investor at Terra Firma

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Laurence Dee

2015-08-17 09:34:33

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Kenneth Leong

2015-08-17 09:20:13

Investor

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Joshua Chang

2015-08-17 00:50:25

Analyst at Equitise

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Chris

2015-08-16 18:25:27

Jonathon Lintott

2015-08-16 08:45:41

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dlhdang

2015-08-16 00:48:57

Mrs B

2015-08-14 13:38:41

Dennis Spice

2015-08-14 11:46:05

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Bernard Healy

2015-08-14 11:04:00

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Garry Bryant

2015-08-12 15:06:50

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David D

2015-08-12 14:22:41

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Angus Middleton

2015-08-10 18:59:58

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Jonny Wilkinson

2015-08-10 12:48:22

Managing Director at Equitise

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