I’m adding a little bit to my position in Hanfeng Evergeen today, picking up shares at US$9.38, which is just a few cents below the fair price in Toronto as I type this of CAD$9.91, with Hanfeng shares moving up smartly today by a few percent in the first hour of trading.

Hanfeng Evergreen releases their earnings tomorrow, August 7, and this is NOT a bet that earnings will be spectactular — I have no crystal ball, though everything I know about the company continues to be positive. I am building a position and want to own more shares for the long term, so I’m picking up a few shares now and will probably buy more after the earnings release.

What has been happening with the company since I wrote them up as one of my “best ideas” about a month ago? Well, in the main we’ve had good news from the company, and bad news on the stock.

As you’re no doubt aware if you follow Hanfeng or own shares, the price has dipped considerably — down by about 25%. In this case, I’m pleased to see the buying opportunity that I believe this price dip represents.

What has happened with the company since I wrote about them in detail?

They have continued to broach new agreements with partners for both joint ventures and the supply of raw materials — as I’ve noted before, part of their growth strategy is to open joint venture plants that are located on site at major fertilizer plants, and they finalized an agreement last week that had been announced earlier for a new site in Shandong. The interesting news about the Shandong agreement, which was announced in principle back in June, is that they when they did their feasibility studies Hanfeng was able to reduce the budget considerably (by 25%).

Following on as this does from the previous joint venture, where they were also able to realize some cost savings in construction, this gives me some confidence that even with rapid expansion the company is careful with shareholder money and is able to manage this expansion effectively. They have built 3-4 new plants a year since 2006, and it appears likely to me that they will continue to look for additional joint ventures to keep up a similar pace going forward.

And the market, which is really the ...