Zhongpin Inc. (HOGS) has been expanding its operations in China by building a new pork plant in Tianjin and a new food oil plant in Changge in the Henan province.

The pork producer has received cash subsidies from the Chinese government to aid in the expansion Incorporatedluding $3.1 million to construct the Tianjin plant which will produce chilled and frozen pork. The Tianjin plant is expected to open in January 2010.

Zhongpin has surprised on estimates 3 out of the last 4 quarters by an average of 9.44%. On Nov 9, the company saw record results for the third quarter. It surprised on the Zacks Consensus Estimate by 15.79% as earnings were 44 cents compared to the Zacks Consensus of 38 cents.

Revenue rose 26.7% to $194.9 million from $153.8 million in the year ago quarter as hog prices trended higher in July and August and then held the higher levels in September.

Zhongpin was cautious about its guidance for the remainder of 2009 as the company didn’t believe pork prices would rise further in the fourth quarter. Analysts have lowered the 2009 Zacks Consensus Estimate in the last 60 days to $1.50 from $1.51 per share. They still expect growth in 2010, however, of 16.93%.

Value Fundamentals

Zhongpin is now a Zacks #2 Rank (buy) stock. It is still cheap, with a forward P/E of just 9.6 and a price-to-book ratio of only 1.87. Zhongpin also sports a 1-year return on equity of 21.03%, which is much higher than the industry average of 11.08%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Zacks Investment Research

1. (HOGS) Zhongpin Inc. – Value – Zacks Rank BuyZhongpin Inc. (HOGS), the China-based meat and food processing company, grew revenue by 41.5% in...
2. (HOGS) Zhongpin Inc. – Value – Zacks Rank BuyZhongpin Inc. (HOGS), the Chinese-based meat and food processing company that handles pork as well...
3. (HOGS) Zhongpin – Shares are currently trading at good valuations with a P/E ratio of 10.7Zhongpin, Inc. (HOGS) continue to shows excellent growth rates as analysts upwardly revise their estimates....
4. (HOGS) – Zhongpin Inc – PEG ratio is approximately 0.26, a significant discount to the industry average of 1.2Zhongpin Inc. (HOGS) just raised earnings guidance and it trading at a bargain PEG ratio...
5. (HOGS) – Zhongpin Inc – PEG ratio is approximately 0.26, a significant discount to the industry average of 1.2Zhongpin Inc. (HOGS) just raised earnings guidance and it trading at a bargain PEG ratio...
6. (HOGS) – Zhongpin Inc – PEG ratio is approximately 0.26, a significant discount to the industry average of 1.2Zhongpin Inc. (HOGS) just raised earnings guidance and it trading at a bargain PEG ratio...

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