Guangzhao specialises in the cultivation, research and development, and sale of 'Guangzhao Fast Growing Poplar' a variety of poplar that has been successfully cultivated to grow 2-3x faster than common varieties of poplars in more saline soil. The Group expects to start harvesting its Guangzhao poplar trees in early 2008. This should unlock the value of its biological assets, and result in a 31 per cent revenue growth from 65.9 million renminbi in FY07F to 101.8 million renminbi in FY08F.
Guangzhao developed a set of procedures that allows for the quick and successful mass cultivation of poplar at relatively lower cost. As 'Guangzhao Fast Growing Poplar' grows 2-3x faster, this reduces the costs associated with the leasing or owning of land for cultivation, and increases the turnover time for the land.
The breakthrough in the cultivation technology of salt-tolerant tissue-cultured fast-growing 'Guangzhao Fast Growing Poplar II' (GZ-2) is expected to lower the company's cost of cultivation even further. The company will be able to acquire cheaper saline/arid barren land for cultivation; especially in the high salinity arid regions in northwestern China. Competition and demand for the use of such land is minimal.
Furthermore, in an attempt to improve the inner China cities' standard of living, the PRC government has offered grants to any company able to cultivate crops successfully in these regions. The company is positive that its new GZ-2 will enable them take advantage of this grant.
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