Good Morning!
Like other people, 1.3 BILLION Chinese love to eat. And Anpulo Food Inc. (ANPFF) serves up their favorite kind: PORK.
It’s not a complicated story full of intrigue like those ghost cities or “creative” accounting. ANPFF turns pigs into pork jerky.
China’s appetite for pork is legendary. They eat more than half the pigs on the planet! And they’re STILL not satisfied!
This makes ANPFF a very different kind of China play. Whatever happens with their economy, you can bet those 1.3 BILLION stomachs will growl!
And with that in mind, I wonder if punishing ANPFF along with those other Shanghai stocks was overdone. If so, I’m not alone:
ANPFF has fallen so far in the last few crazy months that it’s hard to get the real perspective on how big even a “little” bounce can be.
Let me put it in focus: that tiny green divot up there earned traders close to 30% yesterday without working up a SWEAT!
So if ANPFF can make us happy today, it doesn’t necessarily chew up a whole lot of technical real estate. Another way to say that: big sky here.
But with ANPFF finally nudging its RSI above 30 yesterday, we could be capturing more of that sky if the move turns into an oversold BOUNCE!
Never any promises, especially when dealing with China stocks, but usually the RSI crossing 30 is a sign that the sellers have lost control.
After about 6 WEEKS of “oversold,” statistics naturally start to get more than a little combative. They push back, driving the price action with them!
ANPFF has massive digits to stretch on even a perfunctory “reversion to mean” style rebound. After all, 30% barely made a dent in that chart.
Maybe traders are finally appreciating the ANPFF business as something concrete and tangible? Pro tip: do NOT mess with a Chinese family’s pork!
ANPFF is a small slice of the overall Chinese pork economy. They only have the capacity to process 250,000 pigs a year.
They “only” sell about 600 MILLION yuan worth of pig product a MONTH to stores like Walmart and Carrefour. That’s $1.3 BILLION annualized!
And as hungry as China is getting, each live pig brings about $1.37 per pound so ANPFF seems to be barely scratching its total potential now.
These are premium pigs. They’re “green” certified, which you can bet is a HUGE differentiator in a country where the food rules can get hazy.
All in all, it seems like a whole lot of business packed into a stock that’s been knocked down to barely $0.50 per share!
Where we come in is of course the bounce. If traders are recognizing that big business in a $0.50 bag now, the realization can be explosive.
We just missed 30% worth of explosive and it didn’t even dent the chart. That tells me the ANPFF party has a LOT of groove for the team to capture!
Sincerely,
Michael Reef
yourstockguy@gmail.com
