1. IPO purchase proposal:
In terms of retail value and volume, the global market demand for western jelly is increasing day by day, and the expected compound annual growth rate from 2008 to 2016 is 35.9% and 5.9%, respectively. In terms of retail value, the global demand for American ginseng increased from about US $378900000 in 2008 to about US $2048200000 in 2013, with a complex annual growth rate of about 40.1%. On the other hand, in terms of retail sales, the growth rate of global demand for American ginseng is very slow, from about 3314000 kg in 2008 to about 4483400 kg in 2013, with a complex annual growth rate of about 6.2%. The large increase in demand in terms of retail value was due to the rapid growth in demand and supply of American ginseng, which led to an increase in selling prices.
Due to the increasing affluence and health care of countries such as China, and the increasing popularity of alternative medical methods such as traditional Chinese medicine, the global demand for American ginseng is expected to continue to rise. In terms of retail sales, global demand is expected to grow by 70.8% from 2014 to 2016, with a compound annual growth rate of about 30.7%, reaching about $4395100000 in 2016. In terms of retail sales, global demand is expected to grow by 9.8% from 2014 to 2016, a compound annual growth rate of about 4.8%, and a high of about 5241600 kg in 2016. In terms of sales earnings and sales volume, the company is the largest Western first-class wholesale developer in Hong Kong in 2011, 2012 and 2013. The company has been engaged in the American ginseng wholesale business for more than 20 years and has established close relations with growers, bulk exporters and other suppliers, enabling us to purchase American ginseng at competitive prices. According to the Ipsos report, the average purchase price of wild ginseng from Hong Kong wholesalers in 2013 was about US $2149.5 per kg (equivalent to about HK $16658.6 per kg), and the average cost of wild ginseng was about HK $16116.0 per kg higher than about 13.7%.
Taking into account the future demand growth of the company's industry, as well as the company's position in the industry, the 13-year static price-to-earnings ratio of the IPO stock price is 11.5-15 times, which is in the middle level of industry valuation, so we recommend to apply.
