GLG Life Tech: High Probability For Significant Near-Term Upside
GLG Life Tech Corporation (Nasdaq: GLGL) engages in the research and development, growing, refining, production, and distribution of stevia extract to the food and beverage industry worldwide. Stevia extract is a natural sweetener extracted from the stevia plant. The company has a strategic alliance with Cargill, Incorporated, to supply stevia extract to Cargill for manufacturing a natural and zero-calorie sweetener brand called TRUVIA, a major brand which was originally co-developed by Coca Cola (KO) and Cargill. GLG Life Tech Corporation was founded as a public company in 2005 and is headquartered in Vancouver, Canada.
In addition to its thriving stevia operations, GLG has aggressively entered the Chinese market and is moving rapidly to dominate within an industry which is currently valued at $21 Billion, and growing.
In December 2010, GLG entered into a joint venture agreement with China Agriculture and Healthy Foods Company Limited (CAHFC) --- which enjoys a government-mandated monopoly on the production and distribution of sugar-free beverages in The Peoples Republic of China. The new venture, named Dr. Zhang's All Natural and Zero Calorie Beverage and Foods Company ((AN0C)), was established for the sale and distribution of zero calorie beverage and food products in China that are sweetened with GLG's stevia extracts.
In Ap ril of 2011 GLG began producing and distributing the first stevia sweetened `ready-to-drink` (RTD) teas in China. The 6 products (jasmine, black and green teas) took the market by storm, and after only three months the company had distributed over 27 million bottles, putting the company alongside the top (sugar-sweetened) national brands competing in the RTD tea category. The company will be launching 32 products by the end of 2011 in the functional/health drink category and 6 beverage categories: RTD Teas; Vitamin Enriched Waters, Carbonated Soft Drinks, Juice Milk, Herbal Drink, Children's Drinks, Functional/Health Beverages.The production lines are rockin and rollin; the distribution channels are zipping along; and the products are flying off the shelves into the shopping carts of Chinese consumers.
GLG holds an 80% controlling stake in AN0C with CAHFC holding 20%. Dr. Luke Zhang is Chairman and CEO of AN0C and is supported by an experienced team of senior executives recruited from the beverage industry in China.
The markets initial reaction to the announcement of the joint venture was joyful, to say the least: GLGs stock soared 60% over the next two months, from $7.50 to $12.00. However, a month before the product-launch, the stock fell into a tailspin, and the market has yet to factor in the phenomenal success and aggressive expansion of the product line in China. Plus, the market seems to have forgotten completely that GLG is the supplier of stevia to Cargill and markets throughout the world.
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