AMERICAN LORAIN CORPORATION (NYSE Amex: ALN)

American Lorain Corporation
(NYSE Amex: ALN)
Consumer Goods

$5.25

ALN reported 4Q09 and FY09 results which met Company guidance even as international sales slowed and margins came under pressure. The Company reported revenue of $62.9 million for 4Q09 which represented 11% growth year-over-year. The convenience food segment reported strong sales growth for 4Q09 while chestnut sales were roughly flat year-over-year and frozen, canned and bulk food (FCB) sales were down significantly in the quarter. For FY09, the company reported revenue of $146.8 million which was 11% higher than FY08. Based on the Company’s guidance for FY10 revenue in the range of $182-$190 million and net income of $17.8-$19 million, ALN trades at an estimated forward P/E of 5.8x versus the average forward P/E of its peers of 8.9x. We are reviewing our estimate model, but even the lower end of guidance represents a very healthy growth of 24% year-over-year.
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Value Proposition

• ALN is the largest producer and distributor of chestnuts in China.
• The processed food industry in China is growing at 8% annually.
• China consumes more chestnuts than any other country.
• ALN produced 234 products in 2008, including 52 new products in the convenience foods segment.
• ALN operates five facilities, which include deep-freezing lines, canning lines, and convenience food lines.
• Currently, the stock trades at less than a 5x P/E, in a peer group that trades at a 10-12x P/E multiple.
• The projected value of the stock is approximately $7 - $8, representing a current upside of 150%.

American Lorain Corporation (ALN) is an integrated food manufacturing company. The Company develops, manufactures, and sells chestnut products, convenience foods, and frozen, canned and bulk food (FCB food). The Company produces approximately 45 varieties of chestnut products. ALN’s convenience food product includes Ready-to-cook (RTC), Ready-to eat (RTE), and Meals ready-to-eat (MRE) food products including fish, meats and jams. The Company also produces various FCB food including frozen vegetables and fruits.

Investment Highlights

• Net revenue increased 5.3% year-over-year to $38.7 million in 3Q09 from $36.7 million in 3Q08
• Gross profit increased 17.9% year-over-year to $9.1 million in 3Q09 from $7.7 million in 3Q08
• The Company reported $33.2 million in working capital as of September 30, 2009.
• ALN entered into a strategic agreement with Beijing K.P.I Hi-24 Convenience Stores Co., Ltd., for the development of MRE products. Revenue from this agreement could reach $1.5 million.
• In September ALN entered into cooperation agreements with two restaurant chains, KUNGFU Catering Management Co., Ltd and CSC Catering Management Co., Ltd. ALN will distribute its convenience food products to these companies. The agreements are estimated to be worth approximately $2.1M and $8.8M, respectively.
• On October 28, 2009, ALN completed a Securities Purchase Agreement, where ALN issued 5,011,169 shares of common stock, 1,753,909 series A warrants, and 501,115 series B warrants. The aggregate purchase price was $12 million, with common stock being sold at $2.40 per share and series A and series B warrants having strike prices at $3.70 per share. ALN intends to use the funds for a national campaign to market its brand and more specifically its convenience food products
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  Recent News: American Lorain Corp 05/13/10 7:00 AM EDT American Lorain Corporation Reports Results for the First Quarter 2010 - PR Newswire 05/10/10 12:00 PM EDT American Lorain Corporation to Host First Quarter 2010 Financial Results Conference Call - PR Newswire 05/10/10 9:21 AM EDT Emerging Stock Report Initiates Independent Research Coverage on American Lorain Corp. - Globe Newswire 05/10/10 8:00 AM EDT Diamond Halpern Capital is Issuing Coverage of American Lorain Corp. - PR Newswire 04/28/10 8:07 AM EDT American Lorain Corporation Launches 'Lunch Box' Products in 550 7-Eleven(R) Convenience Stores - PR Newswire 04/05/10 8:00 AM EDT American Lorain Corporation to Present at the First Annual Halter Financial Summit on April 7, 2010 - PR Newswire

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