Singapore Exchange lists Yamada Green Resources

Yamada’s shares to begin trading on Friday at 9.00 am with 5.3 times subscribed total issue.

Yamada Green Resources Limited (“Yamada”) a major supplier of self-cultivated shiitake mushrooms and manufacturer and supplier of processed food products in Fujian Province, PRC is pleased to announce that it has received a strong response to its initial public offering (“IPO”) of 105,000,000 Invitation Shares at S$0.22 each, comprising 2,000,000 Offer Shares by way of public offer and 103,000,000 Placement Shares by way of placement. The Shares will be listed on the Main Board of the Singapore Exchange Securities Trading Limited.

As at the close of the Application List at 12 noon on 6 October 2010, there were 3,455 valid applications representing an aggregate of 449,012,000 Offer Shares received for the 2,000,000 Offer Shares available to the public. In addition, 103,000,000 Placement Shares have been validly subscribed for and/or purchased. Based on the total Invitation of 105,000,000 Shares and total valid applications for 552,012,000 Shares (comprising 449,012,000 Offer Shares and 103,000,000 Placement Shares), the issue was 5.3 times subscribed. The Shares are expected to commence trading on a “ready” basis on 8 October 2010 at 9 am, according to a Yamada report.

Mr Chen Qiuhai, Yamada’s Executive Chairman and CEO remarked: “We are very heartened with the market’s positive response to our IPO. It demonstrates investors’ confidence in our business model and prospects and their wish to support our growth.

For us, the IPO is just the beginning as we will strive to consistently enhance our business and financial performance with the aim of delivering returns to our new shareholders.”

Mr Nicholas Ng, Chief Executive Officer of DMG & Partners Securities Pte Ltd - the Issue Manager for Yamada’s IPO commented: “It is our pleasure to introduce Yamada to the Singapore market. This IPO has seen strong demand and I think it is because investors can understand the China market growth story and the growing popularity and demand for green and healthy food products like shiitake mushrooms in China. We believe that with its competitive edge and solid fundamentals, Yamada will benefit from these trends and will serve their institutional and retail investors well.”

Business Strategies & Future Plans
Expand shiitake mushroom cultivation bases and eucalyptus plantations
Yamada currently operates shiitake mushroom cultivation bases measuring an aggregate of 2,614.4 mu in Fujian Province, PRC. It plans to further lease an additional 2,500 mu of agricultural land in Fujian Province, PRC for tenures of approximately 20 years in order to expand its shiitake mushroom bases.

In order to achieve upstream resource sustainability, Yamada will also expand its eucalyptus plantations by acquiring additional non-mature eucalyptus plantations and the corresponding forestry land use rights measuring 10,000 mu and 20,000 mu for the financial years ended 31 December 2010 and 2011 (“FY2010 and FY2011”) respectively. Yamada currently has 20,000 mu of eucalyptus plantations, which it expects to harvest from 2012 to generate sawdust for the production of synthetic logs used in shiitake mushroom cultivation. The additional eucalyptus plantations are expected to be mature for harvest from 2014.

Establish own distribution and marketing network
In order to reach out to customers of self-cultivated shiitake mushroom in other parts of PRC beyond Fujian Province, Yamada intends to establish eight distribution outlets and appoint three distribution agents in strategic locations in Shanghai and Guangdong, Jiangsu and Zhejiang Provinces by the end of FY2010. In addition, it intends to establish six distribution outlets and appoint additional five distribution agents in Guangdong, Jiangxi and Hubei Provinces, PRC by the end of FY2011. In doing so, Yamada will be in a better position to manage and drive its marketing efforts and promote its self-cultivated shiitake mushrooms in these strategic locations, which are well-established food distribution hubs and markets.

In view of the expected increase in self-cultivated shiitake mushroom output following the expansion of its shiitake mushroom cultivation bases, and the broader geographical regions where its products will be sold via the establishment of distribution outlets, Yamada intends to establish a logistics centre in Zhangping City, Fujian Province, PRC by the end of FY2011 to streamline and improve its inventory and distribution management.

Strengthen processing capabilities for konjac-based processed food products
Lastly, in order to meet the anticipated increase in demand for its konjac-based processed food products, Yamada intends to acquire an additional production line and relevant auxiliary facilities and equipment for the processing of konjac instant noodles by the end of FY2010. This will increase the annual processing capacity of konjac instant noodles by approximately 60%.

Use of Proceeds
Yamada plans to use the net proceeds of approximately S$13.8 million from the issue for the following purposes:

• approximately S$4.6 million to expand its shiitake mushroom cultivation bases;
• approximately S$5.0 million to expand its eucalyptus plantations;
• approximately S$2.0 million to establish its own distribution and marketing network;
• approximately S$1.8 million to strengthen processing capabilities of its konjac-based processed food products; and
• the balance will be used as general working capital purposes for existing operations as well as to cater to additional working capital requirements pursuant to its expansion.