Japfa a promising emerging market play - if earnings stay stable

SHARES in Japfa Limited have staged a strong comeback this year as the agri-food group recovers from the headwinds of the past year; the stock has been one of the best performing year-to-date, doubling in value to 94.5 Singapore cents, back above its initial public offering price of 80 Singapore cents.

This may not be entirely surprising given that many other consumer staples stocks have also fared well this year. On top of that, Japfa appears to hold much promise as a play on the growth of the middle class Asia - if it doesn't let market volatility get the better of it again.

Japfa produces milk, poultry and beef in Indonesia and has replicated the same industrial farming business model in Vietnam, Myanmar and India for poultry, and in China for dairy products. The vertically integrated group markets fresh milk, UHT milk and cheeses under the "Greenfields" brand, and al…