Sino Grandness

link.

NEWS RELEASE
SINO GRANDNESS RECEIVES POSITIVE RESPONSE AT CHENGDU TRADE
EXHIBITION
• Indicative orders for “Garden Fresh” juices received to-date exceeded RMB470m, up
21% compared with more than RMB390m received after exhibition last year
• Launched new beverage products including loquat-lemon and loquat-kumquat juices
• Sponsoring popular variety show on Shenzhen Satellite channel airing from 27 March
2015 called 男左女右(“Men vs Women”) to boost Garden Fresh brand awareness

looking at non-alcoholic beverages, Hangzhou Wahaha and Bright Food (Group) are probably the major players in china and would make better investments for investor wanting exposure to chinese beverage market.

basing its future business success on just loquat line sounds a bit far fetched IMHO. There are so many other more prominent drinks and fruit juices to compete with.

SinoG should perhaps concentrate more on its core canning business. Usually when company try to expand new business and not look after its core business, the story doesn't end well.

like many of the s-chip, this is a pretty speculative/volatile counter. Fortunately for those vested, the CHina and HK stock markets are on steriods at the moment, so could be plenty more upside in the short term. When "investing" in such companies, it is a gamble at best, so analysing the business and fundamentals are just a waste of time. Just put some money in with a strict cut loss and see how far it can run would be the best way to go.

There is nothing wrong with single product beverage company. Wanglaoji is has been doing super with just one product single brand. Sino g has bearly started to grow, the key is can they sustain the growth over the next few years to extablish a stronger brand image and branch out to expand into their product mix. They have been doing so far so good, of cuz the execution risk will remain very high, and you also can call it a gamble. Cokecola started out as a gamble 100yrs ago too.

Wahaha is a privately held company, public has no access to the shares. Go for Wantwant 151.hk if you cannt stomach the risk of a fledging company like sinog, but the price u would pay for wantwant is pe25, more than 7x pb with lesser than2% div yield. Hk listed share is not any less volatile, daily swing of +/-10% is normal.

Vested

(09-04-2015, 03:20 PM)specuvestor Wrote: oldman9 I suspect you are probably not too old old people like us tend to be much more skeptical when we see money lying on the streets.

Personally I hope I have been rather unbiased and as factual as possible in this thread. But if forumers here just make their decision based on posts without further DD or analysis, then it is no diff from listening to stock tips off the street. Nobody owe us a duty because when we make money we also don't pay out either Personally I like constructive non-abusive posts, pros or cons, that helps to analyse better. But as usual, when PERSONAL money is concerned, you see a lot of emotions attached.

Personally when a stock is up I trace back VB threads on what can go wrong, and conversely what can be positive when stock is down. Then again my style is catayst driven fundamentals, so it might not work for everyone.

After a while one should be able to filter out the noise and who are the VBs to follow. And sometimes the noise gives good indication, might not be accurate, of where the market sentiment lies and what Mr Market is looking at. In this thread portuser is a good VB to track and ask for fundy, but execution is your own. That's the other 1/2 of the game and we can blame no one.

Hi Specuvestor,

I am certainly not 89 years old, neither am I young .

To me, due diligence is a matter of degree. As outsiders we have no chance to study the company thoroughly. From oldman's perspective, I see no reason why the founder will want to screw himself after establishing himself as a reliable supplier of house brand canned vegetable of European supermarket chain. I also take comfort that the company was scrutinized by bondholders twice, the Thais once and lastly, another time for the IPO of Garden Fresh.

When Prayudh invested in the company after the newman9 report, that got me thinking. Why on earth will he do that unless he knows something. All this together with the decision to use Euromonitor recently greatly discounts Newman9's report.

Now that the PE is low and with the spin off in sight, Oldman believes he did the right thing.

Thanks,


Oldman9.

(09-04-2015, 08:48 PM)BlueKelah Wrote: looking at non-alcoholic beverages, Hangzhou Wahaha and Bright Food (Group) are probably the major players in china and would make better investments for investor wanting exposure to chinese beverage market.

basing its future business success on just loquat line sounds a bit far fetched IMHO. There are so many other more prominent drinks and fruit juices to compete with.
...............

Garden Fresh was the first to stumble upon the idea of making juice from loquat. Fortunately, major beverage players have not entered the fray, and Garden Fresh has become the dominant player, capturing 78.2% of the loquat juice market in China, according to Frost & Sullivan.

Without threat from the big boys and as the therapeutic efficacy of loquat is well-known, revenue of Garden Fresh rose strongly to RMB 1,877m in 2014 from RMB 180m in 2010.

Had Garden Fresh chosen a common fruit for its juice, it would have to match other players on price as well as advertising and promotion.

Garden Fresh spent a mere 4.3% of revenue on A & P in 2013.

In 2014, the expense ratio rose to 10% as Garden Fresh is expanding the footprint of loquat juice.

On the other hand, Huiyuan has to compete with big orange juice companies such as Minute Maid, resulting in 18% of its revenue going to A & P in 2014.

There is no doubt now about Sino G's business but the trade receivable is still a major problem. Vested but am concerned about this. Seems like a problem that can never go away.

Is there anyway to address this? Or are we missing out something?

Extracted some data from Sino Grandness ("SG") annual report as follows:-

EPS RMB0.425 = S$0.0935
NAV/sh RMB2.364 = S$0.52

At 40cts share price, trading at 4.3x trailing PE and 0.77x book value

Rev increased 24.6%
COS increased 22%
GP increased 29% with margin at 40% (FY13: 39%)
All increases in tandem

∆ rev : RMB 558.4m
∆ Distribution costs: RMB 161.6m
∆ rev / ∆ Distrib costs : 3.456x

Overall, FY14 results are good but dampened by FV ∆ in liab of CB
SG is in expansion mode powering ahead with its beverage segment which everyone knows, significant increase in distribution costs to open new channels and promoting sales.

Just like all entities in growth phase, expansion weighs on working capital needs. Refer to SCF on pg 48, additional working requirements (excl ∆ in fixed deposits pldeged) approx. RMB 428.4m (FY13: RMB 352.6 m).

Trade recevables (ref NTFS12) increased RMB 476.76m appx 75%
Trade receivables days (trd rcv/rev*365) at 143.7 days (FY102.25 days)
credit terms range 60~90 days & those overdue almost all within 0~3mths band.
long period to settle them but settled them with no doubtful rcv issues

trade payables days (ref NTFS18 & NTFS11) (trad pay/pur*365) at 30 days (FY13: 16.5 days)

inventory days (inv/pur*365) at 11 days (Fy13: 12.2 days)
seems production to sales cycle being fast. no issues on stock obsolescence also noted.

noted NTFS 2, if no IPO, max redemption for CB at RMB652.3m (appx S$143.5m)
also as disclosed, negotiation with banks for loans appx RMB305.9m (S$67.3m) & at 31/3/15 untapped bank facility at RMB242.8m (S$53.4m). If really no ipo and worst case redemption at RMB652.3m with these 2 sources tapped, remaining appx 103.6m should be able to be met with its cash & cash equivalents without much issue.

noted audit opinion being clean unqualified with no going concern issue flagged by its auditors, Foo Kon Tan LLP ("FKT") in its audit report dated 31/3/15.
noted they should have done lotsa work & follow up on SG financing needs as the disclosures as above disclosed events up till date of report.

noted pg 32, audit fees for the year to FKT @ $298,750 & services rendered for proposed listing of subsidiary at $142,000. quite substantial fees


now share price back up near 40cts, the price the Mahagitsiri bought in


http://infopub.sgx.com/Apps?A=COW_CorpAn...202014.pdf

Butcher

Thank you for drawing attention to page 50 of the annual report:

"The Proposed IPO is still in progress as at the date of the financial statements. In the event that the Proposed IPO is not completed by the maturity date of the two convertible bonds (refer to Note 17) which is due in June 2015 and July 2015 respectively, the Group would have to repay the convertible bonds. The estimated maximum cash redemption sum for the convertible bonds is approximately RMB 652.3 million.

The Group is of the view that it will have sufficient cash resources to repay the convertible bonds in the event of a full redemption in cash upon the maturity dates for the following reasons:

..................

- as at 31 December 2014, the Group’s cash and bank balances were approximately RMB 223.6 million (2013: RMB 91.3 million). As at 28 February 2015, the Group’s cash and bank balances has improved further to approximately RMB 400.0 million;

- the Group is actively monitoring the collection from its customers. As at 31 December 2014, the Group’s trade receivables amount was approximately RMB 1.1 billion. As at 28 February 2015, approximately RMB 427.0 million has been received from customers;

- as part of its normal business operations, the Group is in regular contact with various banks to secure, extend or renew its banking facilities. The Group presently has untapped banking facilities of about RMB 128.4 million as at 31 December 2014 extended by various banks in the PRC. As at 31 March 2015, the Group has untapped banking facilities of approximately RMB 242.8 million;

- the management is in the midst of exploring and discussing with various international banks to secure additional bank loans of approximately USD 50 million (RMB 305.9 million);

- the management may negotiate with the convertible bondholders for partial redemption and/or extension; and

- while continuing to move ahead with its plan with the Proposed IPO, the Group’s management will also actively monitor and manage its cash fl ow positions, banking facilities, trade receivables and capital investment plans. If required, the senior management shall reduce investment sums or postpone its capital investment plans in the new plant in Anhui Province in order to further strengthen its cash fl ow position.

Management anticipate that the repayment of the convertible bonds will be met out of operating cash fl ows and additional borrowings that are under negotiation. Accordingly, management has a reasonable expectation that the Group has adequate resources to meet its funding requirements or repay its borrowing facilities as and when they fall due or in the case of a redemption and to continue in operational existence for the foreseeable future."


CB default risk should be minimal, by now --- RMB 400m cash + RMB RMB 242.8m untapped credit lines from PRC banks is slightly below the maximum CB redemption amount of RMB 652.3m.

Sino has been preparing for the maximum bond redemption of RMB 652m (if it submits A1 form, redmeption will become RMB 580m):

End of.................................................Dec 14.......Jan 15......Feb 15...........Mar 15
Cash...................................................223.6m......297.7m........400m.........not available
Untapped credit lines from PRC banks........128.4m......149.6m.....not avialble.......242.8m

If they managed to pay off the exchangeable bonds in June and July it will be binary positive because it "shows me the money".

If Garden Fresh is also audited by a name such as Foo Kon Tan LLP then it is probably not going to be listed anytime soon.

Hi Specuvestor,


Are you saying that the sponsors are using Foo Kon Tan LLP for the IPO? Or will they use credible ones.
Thanks.

Oldman9