Questor share tip: Genus makes more China progress The low milk price in certain countries, especially the US, has resulted in a 6pc fall in profits at the group's ABS unit. Cows need to be pregnant to produce milk and low prices mean that farmers have not maintained herds. However, the company's major future profit growth will be in China and substantial progress has been made on this front. Karim Bitar, a former president of the European arm of drug group Eli Lilly, has been chief executive of Genus for about 18 months and the financial results of his strategic focus on China should become evident in 2014. Just a third of pigs produced in China are reared by intensive methods, the rest essentially being raised in backyard farming. This is changing rapidly as the industrialisation of food production - which is needed to support the soaring global population - gathers pace. In January a new "nucleus farm" of 1,000 sows capacity was stocked with the latest genetics from North America. A site for its joint venture farm with Shennong Agricultural Group has been identified and it will be stocked from the new nucleus farm. This farm should produce 3m animals for slaughter when it is fully up and running in 2014. Shennong is a major pork producer in China's Yunnan region and Genus is injecting £2.7m into the venture for a 65pc share. Genus shares have always traded on a high earnings multiple because of the superb future prospects of its business. They are currently on an earnings multiple of 25, which is significantly higher than their five-year average multiple of around 20. However, this falls to 21.8 this year and 18.6 in 2015. Last year, management clearly stated that this year would be "transitional" and tough, with the benefit of the new strategy coming through next year. Questor, therefore, is unconcerned about the valuation of the business. However, it does seem pretty full so a hold rating is maintained.