fallen_logsEucalyptus trees in Yamada's plantation in Fujian: It takes about two hours to cut 10 trees.
Photos courtesy of Yamada Green Resources

ON FEB 25, Yamada Green Resources, which is listed on the Singapore Exchange, announced that it had obtained its first logging licence 
from the authorities in Fujian province.

As the pictures on this page show, Yamada has since proceeded to harvest eucalyptus trees from its plantations to obtain sawdust. 

As permitted by its logging licence, Yamada has harvested eucalyptus trees in 5,534 mu out of its plantation of 51,193 mu.
This is a key raw material for the production of synthetic logs on which shiitake mushrooms are cultivated. 

The licence allowed Yamada to harvest its eucalyptus trees from 5,534 mu (1 mu is equivalent to 667 sq m) of its plantation of 51,193 mu (equivalent to nearly 5,000 football fields).

This has produced enough sawdust for 60% of the total 60 million synthetic logs required in FY2014 (ending June 2014) for its cultivation of shiitake mushrooms.

logs_shedDepending on weather conditions, it takes 7 to 20 days for the logs to be dried.The other 40% of the required synthetic logs were bought from farmers who harvested logs from elsewhere -- as they have done in past years.

Yamada paid RMB5.5 million for the logging fees.

And it also had to pay for labour to chop down the trees; transportation from the forest to processing stations where the wood was converted into saw dust; and labour for the processing of the wood.

In all, there was cost savings of 6% from the use of 60% wood from its plantation. 

process_logsLogs are processed for sawdust
If the wood requirements of the company are 100% fulfilled by its own plantations, the amount of savings could reach 10% and would be significant in absolute dollars, considering that Yamada paid in excess of RMB200 million for synthetic logs supplied by farmers in the previous financial year. 

3Q results

Yamada's just-announced 3Q2013 (ended March 31) revenue was stable at RMB240.7 million.

sawdust_packsPacks of sawdust with nutrients added are the base on which shiitake mushroom will sprout.Also stable
 was the 
overall average unit selling price of self-cultivated fresh shiitake mushroom 
for 9M2013.

Mushroom and black fungus accounted for 82.8% of the Group’s revenue in 3Q.

However, the Group's gross profit margin fell in 3Q from 35.1 per cent to 25.3% because of the rising cost of synthetic logs.

Yamada said the cost has been rising 
since 2008 at approximately 10% year on year. 

nextgenAs they mature, eucalyptus trees produce side growth constantly, which is regularly pruned. In the picture, a healthy side shoot has been identified and allowed to grow to become the next generation after the original trunk has been chopped down.
The company is increasingly finding its way on to the radar screen of investors after well-known businessman Sam Goi took a placement of new shares in Feb 2013, contributing about S$9.4 million in net proceeds to the company.

He bought 82.19 million shares at 11.9 cents apiece. The stock recently traded at 25 cents.

In a couple of days, we will bring you our report on Yamada's 3Q results briefing. Look out for it! 

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