Sino Grandness

CP, you have suggested the possibility that Sino Grandness may be doing "channel stuffing" to have recorded strong Q3 sales.

The Thai should have considered considered this possibility before they sunk in their monies (even after Newman9 report).... even if the Thais overlooked this point, the fact that Garden Fresh is sold in reputable outlets proves otherwise.


Since 2012... Garden Fresh has been sold in 600 over 7-eleven outlets in Guandong. 7-eleven carries only popular items becoz of small space. If its slow moving the juices would have been out long ago.

Recently - a listed Hong Kong distributor Hin Sang group ... have started to roll out garden fresh juice in 200 Wellcome stores in HK. Sino Grandness just stated in the recent announcement that that they will rollout to 900+ 7-eleven stores in Hong Kong in coming weeks. Both 7-eleven & Wellcome stores are owned by Jardine Matheson.

Lastly Sino Grandness has stated that they will now expand the distribution of the juices to South East Asia very soon...and it is highly possible that the Thais may be spear heading this distribution.

Channel stuffing? well, I guess a lot of these people have not done their homework then.

Tks for the detailed explanation.

Hope everyone has done their HW properly

(else the shortists are going to have their "field day"......)

(28-02-2015, 10:29 PM)leeeta Wrote: CP, you hv suggested the possibility that Sinog may be doing "channel stuffing" to hv recorded strong q3 sales.

The Thai should have considered considered this possibility before they sunk in their monies (even after Newman9) rpt.... even if the Thais overlooked this point, the fact that GF is sold in reputable outlets proves otherwise.

Beside Walmart, Cosco etc...

Since 2012... GF is sold in 600 over 7-11 outlets in Guandong.

Recently - a listed HK distributor Hin Sang grp ... have started to roll out GF juice in Wellcome stores in HK (they shud hv done their due dilligence before distributing them to Wellcome stores in HK). Sinog just stated during the result briefing that that they will now rollout to 900+ 711 stores in HK in coming weeks. Both 711 & Wellcome stores are owned by Jardine Matheson. Cant be they also hv not done their homework.

Lastly Sinog has stated that they will now expand the distribution of the GF juices to SEA very soon. Looks like maybe it may hit our shores by end 2015 or early 2016.. i dunno...and it is highly possible that the Thais may be spear heading this.

Channel stuffing? well, I guess a lot of these ppl have not done their homework then.

Watch their cashflow and current liabilities which are coming due......


not vested.....

(28-02-2015, 01:53 PM)CY09 Wrote: It is the value of the convertible bonds that has to be paid soon. SFIG adds the interest expense into the b/s each year if i rmb correctly. It is surprising that the company decided to restate their finance cost over the past two full FYs to reflect the convertible bond finance expense. It is like a subtle action telling me they are considering to pay bondholders instead of IPO

Convertible bonds are hybrid financial instruments with debt- and equity-like features.

"Change in fair value of the option derivatives in relation to convertible bond" is the value of the equity component of the convertible bonds. It was RMB 126.19m (RMB 14.03m in 2013 plus RMB 112.16m in 2014) as at 31 Dec 14.

If IPO of Garden Fresh does not materialise, Sino Grandness will continue to have full ownership of Garden Fresh, and the RMB 126.19m will be reversed.

Bondholders will be paid RMB 650.4m (being the sum of RMB 183.8m on 30 June 2015 for 2011 bonds and RMB 466.6m for 2012 bonds on 25 Jul 15), as stated in pg 10 of 3Q results announcement.

The RMB 650.4m payable to bondholders comprises RMB 350.5m principal amounts and RMB 299.9m interest costs.

Despite being confident of a listing of Garden Fresh, Sino Grandness has indicated that to be prudent, it is securing bank loans.

Advisers to the Thai investors would have examined the adequacy of Sino's contingency plans before subscribing 86m Sino shares and locking up 47m of them for 10 years.

If IPO materialises, interest costs will be reversed.

Excluding the one-off fair value change and interest costs, 2014 profit would have been RMB 451m, instead of RMB 233m, according to company's news release.




By the way, earlier Sino had not booked any interest expenses for the convertible bonds.

The bonds were issued at discounts, 13% for 2011 RMB 100m bonds and 10% for 2012 RMB 270m bonds. They were stated at their respective discounted values initially. Sino periodically charged a sum against its profit to finally arrive at the full principal amounts.

Someone wrote the following at Sharejunction. Just sharing...

http://www.sharejunction.com/sharejuncti...me=Skeptic


****
Well if supposing you are fraudulent, you can only go so far in reporting inflated revenues and profits before people who understand market conditions on the ground start suspecting. Sino probably knows they are already under heavy scrutiny and suspicion.

Somehow they are going to have to be able to explain the lack of positive cash flow (relative to reported net profits) despite reportedly huge revenue and profit growth for so many quarters now, so it looks like they decided they had to ' engineer a huge Q4 loss' to try to balance things out a little. As an earlier poster has pointed out, somehow administrative and selling expenses have shot up without any proper explanation. Otherwise even the more susceptible among us are going to start questioning why their cash position is perpetually so poor compared to their huge reported net profits over so many years now.

Note that despite all that, if you take away the placement money from the Thais, cash flow would have been NEGATIVE again. My suspicion is that now that they have already gotten the Thai money and they know that they are under heavy scrutiny and they have no way to explain the perpetual lack of substantial positive cash flow, results will be pretty negative from now on. I don' t expect the IPO to go through expect reported results to be pretty negative at least in the near future since if they are fake, they' ve already milked it for all its worth with another cool 40 million SGD from the Thais (although you never know), if of course, they don' t get found out by some auditors before then.

Once again let me remind all that this is a brand whose reported figures imply retail sales at 40% that of Huiyuan Juice in China, and HIGHER sales than that of Pepsi' s Tropicana and Vitasoy in China, despite the heavy advertising expenses and exposure invested by Huiyuan, Pepsi and Vitasoy and nearly non-existent advertising from Garden Fresh in China.

It is much much much easier anywhere in China, even in Guangdong, to find Huiyuan, Pepsi' s Tropicana and Vitasoy being sold at retail points. You will struggle very hard to find Garden Fresh outside of Guangdong - I' m not saying it is totally non-existent, but that is is very very hard to find compared to Huiyuan, Tropicana or Vitasoy. I challenge any of you to A) find any ongoing TV advertisement of Garden Fresh currently screening in China B) Ask any friend outside Guangdong province (which is only 1 of over 30 provinces in China) to go to any convenience store or mum-and-pop store or supermarket and see if they can find ' 鲜 绿 园 ' and then ask them if they can find &lsquo 汇 源 &rsquo and you will see the results for yourself. Garden Fresh sales are likely being heavily over-reported from my on-the-ground observation in China.

I used to be shareholder myself until my relocation to China allowed me to better understand market conditions and consumer behavior in China. Huiyuan juice is like the Marigold of China. It can be found everywhere in China including places like Harbin, Hainan Island and Xinjiang province. They even have deals with the Chinese military and certain airline companies. I think any rational objective person on the ground will see that there is no way Garden Fresh can be achieving sales that are 40% that of Huiyuan' s. Think for yourself, if the profits are real, why are they never ever collected? For so many years now, never any significant positive cash flow? And placement and/or convertible bond raising virtually every year?

Now this is just an opinion but it is an honest unbiased one from the ground in China. I don' t dare to short this one because I never know when it may be suspended and then I can' t even buy back. But I will not touch it with a ten foot pole.

Don' t you say weren' t warned.

Let me address Skeptic's doubt about Sino Grandness.

1) Garden Fresh sales is only 1/3 of Huiyuan and not 40% as suggested.

2) Garden Fresh is not YET a national brand like Hui Yuan and therefore does not make sense for them to do large scale advertisement like Huiyuan... but do note that Sino Grandness's advertising cost has been steadily increasing. From the result briefing, we understand that some advertising cost for 2015 has been booked into the 4Q report.

3) It is true that Garden Fresh is not everywhere as they are only in a few provinces, but yet, investors have seen Garden Fresh products in some stores in Hangzhou and Shanghai .

4) In the next few weeks, they will roll out their juices to over 900 7-eleven stores in Hong Kong and this happens after the roll out to Wellcome stores. Both Wellcome and 7-eleven are owned by Jardine Matheson. If Garden fresh is an obscure brand and not selling well in other 7-eleven outlets in China, would Jardine be so naive ? Roll out to South East Asia is also on the cards with the possibility that the Thais are involved in the distribution.

5) Garden Fresh was introduced in 2010. After gaining popularity, two factories were built and another being constructed in Anhui. This explains why there are no positive cash flow.

6) For a long time, there has been wide spread suspicions that Garden Fresh has been inflating revenues and profits. Mr Prayudh must have been aware of this yet he volunteered to lock up Sino Grandness shares for 10yrs. In other share placements, I do not recall investors volunteering to lockup their shares , let alone 10 yrs. Are we to believe that a seasoned businessman like Mr Prayudh, who is associated with Nestle since 1973 as sole producer for 3-1 nescafe, has been duped by the younger Mr Huang?

Click this link to hear Mr Prayudh's interview on CNBC on why he invested in Sino Grandness.

Since the factories are the reason why there is no positive cashflow, maybe it's time to check the factories, does it really existed as stated?

For those who are already shareholders of SG, hold with faith.
For those who intend to buy, buy with faith.

(28-02-2015, 09:28 PM)BlueKelah Wrote: GPM 40+%?? Looks like everyone gonnna be selling loquat juice soon :-D

-- via Xperia Z1 with tapatalk

Yes. There are several companies producing loquat drinks now, with the following market shares (based on survey by Frost Sullivan):

Garden Fresh.............78.2% 
Furenyuan................10.9%
Minzhong.................6.6%
Tianghai Donfang.......3.9%
Kagome...................0.2%

Minzhong has reported that gpm of its loquat drinks is more than 40%.

Young Investor Wrote:Yes. There are several companies producing loquat drinks now, with the following market shares (based on survey by Frost Sullivan): Garden Fresh.............78.2% Furenyuan................10.9% Minzhong.................6.6% Tianghai Donfang.......3.9% Kagome...................0.2% Minzhong has reported that gpm of its loquat drinks is more than 40%.

Since SG share of the market is already so high, the percentage can only come down ?

(01-03-2015, 01:09 PM)Curiousparty Wrote:

Young Investor Wrote:Yes. There are several companies producing loquat drinks now, with the following market shares (based on survey by Frost Sullivan): Garden Fresh.............78.2% Furenyuan................10.9% Minzhong.................6.6% Tianghai Donfang.......3.9% Kagome...................0.2% Minzhong has reported that gpm of its loquat drinks is more than 40%.

Since SG share of the market is already so high, the percentage can only come down ?

What's the basis of predicting that a high market share can only come down? Its like saying a company that made record profits for a year will confirm not make another record profit in the future.

My point being, predicting trends from a point data doesn't seem suffucient or rigorous.