Sino Grandness

(15-02-2016, 07:21 PM)Boon Wrote:

(15-02-2016, 04:33 PM)crubs Wrote: Hi Boon,

Before I continue, just to double check. From your post #1290 and #1296, are you saying that the Net Profit used to value Garden Fresh should exclude Fair Value changes and include Non-cash Interest Expense ?

Hi crubs,
 
I would rather use After/Before than Exclude/Include to avoid making the same mistake again in my earlier computation. Ha-ha!
 
Net Profit should be profit
 
After taxation, interest, depreciation and amortisation (of non-cash interest expenses related to CB)
 
Before Fair Value Change arising from CB
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By the way, I think government grant (infrequent) is another example of “extraordinary items” that would give rise to higher profit.
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Boon,

Ok, I go according to your method ah.

In 3Q 2015, Sino Grandness reported profits of RMB 76.7m right ?

This includes a positive finance cost of RMB 187m and a negative change of RMB 224.4m to fair value.

Adding back changes to Fair Value of RMB 244.4m, The adjust profit is RMB 321.1m !! How is this possible ? So high ? Huang must be very pleased if that's the case.

There is a 9 month results. Similarly there was last year's full year results

(15-02-2016, 08:41 PM)CY09 Wrote: There is a 9 month results. Similarly there was last year's full year results

Hi CY09,

Yes there are 9 mths and full year too. Can you please clarify the point you are making ? Are you saying Boon's method is not applicable to 3 mths ? only for 9 mths and full year ?

A longer period of results reflect a more accurate position of financial results, eliminates seasonality factors as well and one time occurrence of events which may severely improve or deprove results

Investors rarely just base their analysis on a single quarter because of this. This applies to the methods of free cash flow calculation and p&l result. Putting it to boon analysis, it is applicable to all 3month, 9 month or full year. As investors, it is definitely better to base our analysis across a longer period of reported financial quarters than just on one quarter of results

(15-02-2016, 09:09 PM)CY09 Wrote: A longer period of results reflect a more accurate position of financial results, eliminates seasonality factors as well and one time occurrence of events which may severely improve or deprove results

CY09,

Ya correct what, according to Boon's method isn't it adjusted already for "Fair Value" changes to "reflect a more accurate financial position" ? What else is seasonal or one-time ?

Hi crubs, while I admire your straw man analogy. My statement is directed to the use of time period. you may wish to consider your analysis across 3 quarter instead of one quarter as per post #1311

*Last post on this explanation

(15-02-2016, 08:08 PM)crubs Wrote:

(15-02-2016, 07:21 PM)Boon Wrote:

(15-02-2016, 04:33 PM)crubs Wrote: Hi Boon,

Before I continue, just to double check. From your post #1290 and #1296, are you saying that the Net Profit used to value Garden Fresh should exclude Fair Value changes and include Non-cash Interest Expense ?

Hi crubs,
 
I would rather use After/Before than Exclude/Include to avoid making the same mistake again in my earlier computation. Ha-ha!
 
Net Profit should be profit
 
After taxation, interest, depreciation and amortisation (of non-cash interest expenses related to CB)
 
Before Fair Value Change arising from CB
_____________________________________________________________________________________________________________________________________
 
By the way, I think government grant (infrequent) is another example of “extraordinary items” that would give rise to higher profit.
_______________________________________________________________________________________________________________________________________

Boon,

Ok, I go according to your method ah.

In 3Q 2015, Sino Grandness reported profits of RMB 76.7m right ?

This includes a positive finance cost of RMB 187m and a negative change of RMB 224.4m to fair value.

Adding back changes to Fair Value of RMB 244.4m, The adjust profit is RMB 321.1m !! How is this possible ? So high ? Huang must be very pleased if that's the case.

hi crubs,

Ha-ha! Don't confuse the issue.
 
It is for the purpose of computing Reference Net Profit of Listco in a specific financial year to work out the Aggregate Conversion Proportion of CB1 & CB2 only.
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(15-02-2016, 03:29 PM)chan99 Wrote:

(15-02-2016, 01:40 PM)Boon Wrote:

(14-02-2016, 11:02 PM)crubs Wrote: Boon,

Thank you once again for showing me that you do not know anything about Sino Grandness' situation !

You are right about situation D, but that is Not Sino Grandness' situation. You have missed out a major point. Do you know what you missed out ?

I suggest you read the circulars again before debating with me.

Or tell me when you give up so I can give you the answer

Oh by the way, it was also explained during the July 2012 EGM. Too bad you just started looking at this company and there's a lot that you still don't know.

Haha yes, thank you for helping me explain "Extraordinary Item". Now we are getting closer to the truth.

Hi crubs,
 
Your statement: “Too bad you just started looking at this company and there's a lot that you still don't know.”
 
True, there’s still a lot that I still do not know about this company as I had just started looking at this company recently.
 
There are pros and cons of being late but overall not necessarily a bad thing, I reckon.    
 
Did I specifically say situation D applied to SG?
 
You could add in situation E to reflect SG’s true situation but the facts remained that interests expenses associated with CB had been incurred.
 
Non-cash interest expenses related to convertible bonds amounted to RMB61.8m (in FY2014) and RMB86.9m in (FY2013).
 
Were these interest expenses of RMB 61.8m and RMB 86.9 m “extraordinary items?
 
NO, there were NOT extraordinary items. There were ordinary expenses incurred by normal business operational activities.
 
There is nothing in the contract that specifically says these interest expenses were “extraordinary items”.
 
Be it the concept of “extraordinary items” or other comparable “concept”, what do you think are the “intent” and “spirit” behind the adoption of such concept in the contract? 
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Hi Boon,

These CBs are Zero coupon Bonds if I am right. The fact that the company had fulfilled all the conditions set out in the initial agreement had changed the complexion of the CB into quasi equity and it got 2 components - the NPV based on the discount rate & the changes in fair value. In effect the company did not pay any interest to the CBs till date & when it goes to IPO they will be paid in full in the form of shares at an agreed valuation. So how can we consider the amortization expenses when nothing has been paid to CBs till date?

Hi chan99,

The liability component was measured at fair value on initial recognition and carried at amortised cost at effective interest rate method. 
 
The option derivatives (the conversion option and the extension option) were measured at fair value on initial recognition and remeasured at the end of each reporting periods with the changes in fair value recognised in profit or loss. 
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Hi CY09 and Boon,

Okay, page 9 of the 3Q results announcement says "Non-cash interest costs relating to convertible bonds decreased from RMB67.4m in 9M2014 to and assumed an income position of RMB24.8m in 9M2015"

Wah how does non-interest cost assume an income position ? That means Garden Fresh borrow money still can earn money on interest ?

So according to your method, this is part of their on-going operation la, making money out of borrowing money.

Since you say your method is right, can your method of calculation explain this phenomenon ? and what is the logic behind it ?

(15-02-2016, 10:24 PM)crubs Wrote: Hi CY09 and Boon,

Okay, page 9 of the 3Q results announcement says "Non-cash interest costs relating to convertible bonds decreased from RMB67.4m in 9M2014 to and assumed an income position of RMB24.8m in 9M2015"

Wah how does non-interest cost assume an income position ? That means Garden Fresh borrow money still can earn money on interest ?

So according to your method, this is part of their on-going operation la, making money out of borrowing money.

Since you say your method is right, can your method of calculation explain this phenomenon ? and what is the logic behind it ?

Hi crubs,
 
Please refer to page 118 and 119 of AR2014
 
Can you explain why there was a need for an adjustment in FY2013.
 
Interest expense was adjusted from 19.102 m to 88.818m.
 
Changes in fair value of option derivatives in relation to convertible bonds had been adjusted from zero to 43.638 m.
 
This is relevant to your question, I believe.
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