China Organic Agriculture Reaps Good Harvest In Q2 – Penny Stock To Watch

Food products company China Organic Agriculture, Inc. (CNOA.OB) turned to a profit in the second quarter, as sales surged over 800%.

The company's flagship products include organic and green rice. Other products include soybeans, kidney beans and mushrooms.

Net income for the quarter was $2.48 million, or $0.03 per share, a reversal from year-ago loss of $0.12 million or breakeven earnings per share.

Revenues surged 818% to $30.02 million from $3.27 million last year, thanks to the sales volume of Dalian Huiming, in which the company acquired a 60% stake in October, 2008, paying $10.6 million. Dalian Huiming is an agricultural trading company with distribution and product lines, focusing on soybeans, corn, and cereal crops.
Increasingly, health-conscious customers in China and other emerging economies of Asia look for safety and quality in food, fueling the growth for organic food products. The company says estimated organic retail sales In Asia now exceeds $1 billion.

Branching out from its core business, the company owns Bellisimo Vineyard in California and plans to market wines in China under its own label, and to distribute other California-based wine brands, as it sees huge potential in selling imported wines.

According to the China Alcohol Industry Association, China is already the largest wine consumer in Asia and wine consumption in China is estimated to increase 70% from 2008 and reach 1.1 billion bottles by 2011. The company believes it is well-positioned to benefit from increasing wine consumption in the country.