China Green's share price shed 13%

China Green's share price shed 13% over the last two weeks after it reported a set of disappointing 1HFY09 results that were dragged by slower Japanese sales and a higher tax rate. However sales to Japan have picked up as customers regained confidence in its products, generating some 20% yoy growth in the 2HFY09. This is encouraging as it vouches for the group's high product quality. Although corn milk sales have yet to recover, the group has already developed a new vegetable juice product to be launched in the upcoming weeks, reflecting the flexibility it enjoys given its well developed upstream business. Upgrade to OUTPERFORM with an unchanged SOP derived target price of HK$6.12, which works out to 7.7x CY10 P/E.

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