High demand for fruit and vegetables and dairy expansion the main drivers Green farming agribusiness company Chaoda Modern Agriculture (Holdings) is not about to 'buy the farm' as it has published margins that would be the envy of Microsoft Corp. Chaoda posted an astonishing 53 per cent increase in earnings before interest, tax, depreciation and amortisation. Turnover increased 20 per cent to 2.23 billion yuan for the year to June, mainly on the back of production base expansion. The management said the company was geared at between 30 and 40 per cent. Profit attributable to shareholders after exceptional items rose 30 per cent to 1.31 billion yuan compared with last year. Its core fruit and vegetables business accounted for 94 per cent of total business, with a gross margin of 70 per cent. The company declared a final dividend of 11.1 fen per share. Company chairman Kwok Ho said Chaoda aimed to consolidate its production bases and increase land holdings to take advantage of the massive demand for fresh produce. Chaoda recently invested heavily in its dairy business as a future earnings driver. Business was progressing well, Mr Kwok said, adding that the company's Inner Mongolia production base housed more than 3,000 head of dairy cattle, including 600 cows imported from Australia and New Zealand. He said the firm had invested 200 million yuan in Inner Mongolia and estimated that an additional 200 million yuan would be needed in the coming years. Chaoda is aiming for a 450 million yuan profit from the operation by 2010. Despite the healthy results, Chaoda's share price is still falling short of bullish fund manager expectations. Chaoda has the lowest price-earnings ratio in the MSCI China stocks family. 'The company has consistently performed for investors and I think the true value of the stock should be about $5,' said Yang Liu, a managing director at Atlantis Investment Management, whose fund began accumulating stock in Chaoda when it was as low as 60 cents.