Sino Grandness

[BlueDogMeow]

...It was merely an example of the difference between quantity of earnings, and quality of earnings...which you were alluding to in your FY13/14 reference.

Hi Bluedogmeow,

The % of completion method for accounting revenue is usually applied for long term contracts like those in the construction industries. As far as I am aware, this method has never been applied in the FMCG industry.

I am very skeptical of your posts now. Perhaps sharing something factual from Huiyuan, President, Ting Yi or Want Want financial statements/annual reports etc may be more convincing.

The quality of earnings takes into account of all factors, not just GAAP/IFRS earnings. Take for example two businesses which have long-dated contracts with their clients.

Company A book revenue on a percentage-of-completion basis while Company B book the entire contract on day 1.

While company B has higher profits, Company A has better earnings quality. Would you attach the same multiple, say 20x, to both company?

SinoG is similar. But more in the case of margins and cashflow.

Bluedogmeow,

Sino Grandness FY2013 and FY2014 profits were RMB 418 mil and RMB 467 mil respectively. 1QFY2015 profit was RMB 105 mil versus 1QFY2014 profit of RMB 73 mil.

Why do you say the company's business has very poor earnings quality?

Hey guys. Seems like my account on the forum, Sharejunction, was banned. And it seems my posts have been closely tracked and deleted, even on a new account. This forum is not as fun as you guys seem more...realistic.

In the other forum, someone said that SinoG has been paying millions in IPO fees since 2013. In my experience, spinoff doesn't usually take that long. Tribune Media spun off Tribune Publishing in less than 2 months. BHP spun off South32 within 1 year, and the same for Windstream and CSAL. It is a huge red flag that SinoG refuses to divulge the firm that will be helping the company spin off its beverage assets, even after two years and spending some much in fees.
Even if SinoG is legit, it sure as hell is a business with very poor earnings quality.

@ Leeta: I have never said anything about inventories, only accounts receivables. Also, competition is not local. It is global. What is stopping me from contracting the vegetable canning job to another country? The companies SinoG supplies to has thin margins. If I am Lidi and have the choice between buying canned vegetables @$1.50 versus one from Myanmar or India @$1.20, I will definitely take the India alternative. Vegetable canning is not rocket science...and assuming a $2 selling price, I just increase my gross profit per can from $0.50 to $0.80.

Also, it seems some people have been saying that I am a high school student. If that is so, I am pretty impressed by myself. Running a fund below 18.

Regards,
poopfeast420