POINT ROBERTS, WA -- (Marketwire) -- 11/27/12 -- Investorideas.com, an investor research portal specializing in sector research for independent investors, issues CFA commentary on stevia stocks/agriculture stocks including Sunwin Stevia (OTCQB: SUWN). Patrick J. Murphy of Murphy Analytics LLC discusses the 'Global Stevia Market Opportunity.'
The Global Stevia Market Opportunity
Patrick J. Murphy
Sunwin Stevia International, Inc. is engaged in the production and sale of zero calorie, all natural sweeteners (Sunwin Stevia™ Extracts). With operations based in China, Sunwin has built an integrated global firm with the sourcing and production capabilities to meet the needs of consumers throughout the world. The Company's operations are organized into two segments -- Stevioside, sold globally, and Chinese Medicine products, sold within the PRC. Recognizing a global opportunity for all natural sweeteners, Sunwin is working with major international distributors in the U.S., EU and Asia Pacific including WILD Flavors(i) and Domino Foods(ii) to develop and distribute stevia related products.
Select Stock Trading Data Recent Stock Price: $0.23 Shares Outstanding: 167 million Float 128 million Recent Market Cap: $38.4 million 52 Week Range: $0.13 - $0.40 Exchange: OTCQB Ticker: SUWN URL: http://www.sunwininternational.com/ Data sourced from Yahoo! Finance; otcbb.com; Company filings
SUWN's distribution agreement with WILD Flavors Gmbh partners the company with one of the world's leading producers of natural ingredients for the food and beverage industry. WILD's products are developed for use in a wide range of product applications, including bakery, beverage, confectionery, culinary, dairy, savory, snack and sweet. WILD's Sunwin Stevia™ can be integrated into multiple applications including foods, near waters, tea, carbonated soft drinks, fruit juice, hard candies, chewing gum and chocolate products. WILD manufactures product in facilities around the globe, with a 190,000 sq. ft. state of the art facility in Cincinnati, Ohio. Commenting on the agreement with WILD, SUWN CEO Dongdong Lin stated: "We believe that with WILD's expertise in flavor enhancement and their dominance in this space, both our companies are uniquely positioned to capitalize on the growing market trends towards healthier and natural food and beverage products."
The opportunity in the stevia market is driven by multiple trends including not only changing food preferences, but also medical needs, particularly for weight loss.
- The Organic Movement: According to the Organic Trade Association (OTA)(iii), the US organic food and beverage market reached $29 billion, a 168% compound annual growth rate since 2000, but still representing only 4% of $673 million total food sales in the U.S. in 2010. This trend is illustrated in the data captured in the OTA's annual survey on the attitudes(iv) of U.S. consumers in which 78% of families reported purchasing organic food, 40% of families reported buying more organic food than the year before, and 72% reported being familiar with the USDA's Organic seal.
- The Rise in Obesity and Prevalence of Diabetes: According the American Diabetes Association(v), approximately 26 million people in the U.S. have diabetes, representing 8.3% of the population, with 1.9 million new cases in 2010. The high prevalence of diabetes is not surprising in light of the data from the Centers for Disease Control (CDC)(vi), which reports that during the past 20 years, there has been a dramatic increase in obesity in the United States and rates remain high at nearly 36% of U.S. adults and approximately 17% of children and adolescents aged 2-19.
- Metabolic Syndrome Affects nearly 50 Million(vii) in U.S. Alone(viii): As addressed by the National Institute of Health - "Metabolic syndrome is a name for a group of risk factors that occur together and increase the risk for coronary artery disease, stroke, and type 2 diabetes. Metabolic syndrome is becoming more and more common in the United States. Researchers are not sure whether the syndrome is due to one single cause, but all of the risks for the syndrome are related to obesity."
While this compelling market opportunity has attracted competitive products from some food industry titans such as Cargill, ADM, McNeill Laboratories, Ingredion Incorporated, PureCircle Limited, etc., the scale of their operations implies that the upside contribution from stevia related products is masked at least in part, by the other segments. Following are comments on some of the smaller stocks with stevia and related products or services as part of their operations:
- GLG Life Tech Corporation: On 11/14/12, GLG, whose business is the agricultural and commercial development of high quality stevia and all natural and zero calorie food and beverage products, reported $5.8 million in quarterly sales, a substantial increase over the prior year's quarter although revenue for the 9 month period was down 45% relative to 2011.
- Global Stevia Corp.: GSTV is a development stage company focused on maximizing the efficient production of stevia leaf. GSTV plans to expand operations by investing in the development of larger test plantations and the acquisition of large parcels of land to have a commercially grown, fully mechanized stevia plantation. Concurrently, GSTV plans to build out propagation labs to propagate and develop stevia varieties and cuttings. Through the period ended 8/31/12, GSTV had not reported revenue and the Company does not expect revenue in the upcoming year.
- Stevia Corp: STEV is a development stage company with plans to generate revenues by providing farm management services, the sale of inputs to stevia growers, the sale of stevia on its own farmed property, and the sale of stevia related products. STEV has reported(ix) that the Company expects significant revenue in 2013 subject to obtaining capital.
- Stevia First Corporation: STVF is engaged in the cultivation and harvest of stevia leaf and the development of stevia products. Through 9/30/12, the Company had not reported revenue.
- Stevia Nutra Corp.: STNT, focused on stevia agronomics including plant breeding, proprietary agricultural practices and post-harvest techniques. Through its fiscal year end, 7/31/12, STNT had not reported revenue.
- Sunwin Stevia International (OTCQB: SUWN): For the quarter ended 7/31/12, SUNW reported revenue of $3.2 million, approximately 77% of which was from the sale of stevia related products with the balance coming from the sale of Chinese medicines. Stevia revenue increased approximately 19% over the preceding year. For the 12 months ended 7/31/12, SUWN quarterly revenue ranged from $2.9 million to $3.6 million.
A recent report(x) by Global Industry Analysts, Inc. (GIA) projects that the global artificial sweetener market will reach $1.7 billion by 2018 due in part to attention on weight loss and diet, development of foods for diabetics, increasing concern about dental care and volatility of sugar prices. With a history of stevia related revenue and a leading distribution partner in WILD Flavors, SUWN may be of interest to those looking for a medium through which to take a view on the prospects for the global stevia market.
Patrick Murphy Bio:
Patrick J. Murphy is the owner of Murphy Analytics LLC, a provider of sponsored research coverage on smallcap stocks. Mr. Murphy has nearly 20 years of capital markets experience providing institutional investment and transaction analysis across a range of asset classes including microcap equities, commercial real estate debt and equity, municipal derivatives and public finance, venture capital, fixed income, CMBS and mortgage REITs. In addition to his work with Murphy Analytics, Mr. Murphy also serves as a consultant to a municipal derivatives advisory firm. Mr. Murphy is an alumnus of the University of Notre Dame (1991), with an undergraduate degree in Economics, and earned a Masters Degree in Finance from St. Louis University in 1997. Mr. Murphy is a CFA Charterholder and a member of the CFA Society of St. Louis.
Patrick Murphy Disclaimer:
Readers are advised that the above article is solely for information purposes and should not to be construed as an offer to sell or the solicitation of an offer to buy any security. The views expressed herein are based upon the author's analysis of the issuer's public disclosures, and assumes both their accuracy and completeness. The opinions and statements included herein are based on sources (including the companies discussed and public sources) believed to be reliable and in good faith, but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. The author has not independently verified the information contained herein. This information is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. You should review a complete information package on all companies, which should include, but not be limited to, the Company's annual report, quarterly reports, press releases and all regulatory filings. The foregoing discussion contains statements which are based on current expectations, estimates and projections, and differences from such expectations, estimates and projections can be expected. The author, Patrick Murphy, was compensated $500 by InvestorIdeas.com for writing this article. Murphy does not own shares of any of the companies mentioned in this article. Mr. Murphy's research firm, Murphy Analytics, may be engaged for the provision of a research report on the Company in the future.
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Sources:
(i) http://www.wildflavors.com/
(ii) www.dominosugar.com
(iii) http://www.ota.com/pics/documents/2011OrganicIndustrySurvey.pdf
(iv) http://www.organicnewsroom.com/2011/11/seventyeight_percent_of_us_fam.html
(v) http://www.diabetes.org/diabetes-basics/diabetes-statistics/?loc=DropDownDB-stats
(vi) http://www.cdc.gov/obesity/data/facts.html
(vii) http://www.ncbi.nlm.nih.gov/pubmed/17893688
(viii) http://www.ncbi.nlm.nih.gov/pubmedhealth/PMH0004546/
(ix) http://finance.yahoo.com/news/stevia-corp-provides-revenue-guidance-130000754.html
(x) http://www.prweb.com/releases/artificial_sweeteners/sucralose_aspartame/prweb10121807.htm
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