Sino Grandness

[CityFarmer]

Read through the report at
https://www.dropbox.com/s/84s7q9ktbps22q...4.pdf?dl=0

really make one worry about investing in China companies!!

The report is very comprehensive indeed

I briefly run thru the report. It seems creditable with reliable references to Euromonitor and Nielsen.

(not vested)

One of the key point in the VIC report, is the CB issue. The report dated Sept, 4, while the company latest update on the CB below, dated Oct, 08.

A principal amount of RMB 19.5 mil of CB was redeemed with RMB 37.9 mil, over 3 years period. It seems safer and more profitable to own the CB...

"Further to the announcement dated 28 September 2011, the Board of Directors (the
“Board”) of Sino Grandness Food Industry Group Limited (the “Company”) wishes to
announce that, Bondholders representing 80.5% of the principal amount of the
Convertible Bonds have indicated that they intend to exercise their right to extend the
Maturity Date of the Convertible Bonds from 19 October 2014 to 30 June 2015. The
extension is subject to the execution of various documents."

http://infopub.sgx.com/FileOpen/Sino_Gra...eID=317474

[[DY]]

Why does the private placement give you added confidence in the accounting?

and yes, the dividend policy would apply equally to everyone.

Thanks. Because buy-side analysts that private investors employ usually do more thorough research, due to their own stake in the investment.

To be honest, I have my doubts about this company. And I don't think you should place too much reliance or derive too much comfort from the fact that a private investor took a chunk of shares.

But I hope you are right.

I am not vested in any way. Just a curious and interested observer of the s-chip industry in general.

[CityFarmer]

KayHian's analyst report, after a trade show event, dated 14 Oct 2014. TP $0.95 and rating BUY.

Will the analyst do quick update with totally different rating and TP, after the viral VIC report?

(not vested)

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VALUATION/RECOMMENDATION
 We view that the recent corporate actions have been beneficial to shareholders
despite the share price weakness. New funding from the PM Group will alleviate
capex needs, 80.5% of the bond holders have exercised the maturity date until Jun
15 and investors have been assured of a formal dividend policy as compared to
none currently. The PM Group can also boost GF’s growth within Southeast Asia
and/or enter into product development in the longer term.
 Maintain BUY with a higher target price of S$0.95 due to a lower dilution of GF’s
listing as 19.5% of CB1 has been redeemed. SGF’s share placement to PM Group
at 61 cents/share should also lend some support to share price.

http://remisiers.org/cms_images/research...ndness.pdf

[Yoyo]

Hi Gaudente, thanks for sharing the VIC report.

Take me quite a while to digest the report. Seems like Sino Grandness has cornered itself for representing to be big, yet not well recognised/noted as a worthy contender to its peers and business partners. Independent statistics also did not note its presence as a key player in the market. It will be interesting to see how would Sino Grandness counter VIC claim upon receiving news of it.

In the VIC report pg 27 under Valuation, it is stated the need to effect adjustment of RMB 365m for "Adjusting the convertible bonds to reflect the full liability". Need help here. What does this means, and how the 365 is come about. Thanks in advance.

Noted that Sino Grandness has made tax payment of RMB 111m in Year 2012 and RMB 139m in Year 2013. IIRC, one VB has advocated verifying the genuineness of tax payment via checking the key contributors of tax revenue of the state, something to this effect. If he likes, he can chip in to spice up this examination.

[portuser]

Yoyo
I can’t locate in page 27 mention of adjustment of RMB 365m referred in your post reproduced below:

“In the VIC report pg 27 under Valuation, it is stated the need to effect adjustment of RMB 365m for "Adjusting the convertible bonds to reflect the full liability". Need help here. What does this means, and how the 365 is come about.”

Anyway, adjustment arises when bonds are redeemed.

Page 25 of the report provides RMB 723m (comprising RMB 195m and RMB 527m) as the maximum redemption amount when Garden Fresh fails to submit application for listing.

The first component of RMB 195m is the maximum for the RMB 100m bonds issued in 2011; whereas the second component of RMB 527m is supposedly for maximum redemption amount for the RMB 270m bonds issued in 2012.

Turning to pg 30 and 31 of Sino’s 4 July 12 circular, one finds that RMB 527m is not the correct figure. The correct one is RMB466.56m.

The RMB 195m maximum redemption is the result of compounding RMB 100m for 3 years at 25% annual interest.

It would appear that the anonymous author obtained RMB 527m by compounding RMB 270m for 3 years, at the same 25%.

The interest applicable to 2012 RMB 270m bonds is lower, at 20%, and this give rise to RMB 466.65m given in Sino’s circular.

The correct sum should therefore be RMB662m (=195 + 467) instead of RMB 723m provided by the anonymous author.

Bond liabilities stood at RMB 358m in 30 June 14 accounts. The adjustment of RMB 365m worked out by the author is the difference between RMB 723m and RMB 358m.

The adjustment should be RMB 304m (=662-358).

[CityFarmer]

Company formal response to VIC report below.

(not vested)

----------
It has come to the attention of the Board of Directors (the “Board”) of Sino Grandness Food Industry
Group Limited (the “Company”) that a report dated 4th September 2014 (the “Report”) containing
negative statements relating to the sales and financial position of the Company and its subsidiaries (the
“Group”) has been circulated on the internet. The unnamed authors of the Report claimed to have
short and other positions in the Company, and “stand to realize gains in the event that the price of the
stock decreases”.
The Report further states that, “the authors make no representation or warranties as to the accuracy,
completeness or timeliness of the information, text, graphics or other items contained in this report.”
The Company strongly rejects the baseless and unsubstantiated assertions made in the Report. The
Company shall seek legal advice in relation to the Company’s legal position on the Report.
The Company wishes to inform shareholders that the Group is in a sound financial position and had
complied with all the statutory and listing requirements. The Company also reaffirms that its financial
statements and accounting policies strictly follow and adhere to the Singapore Financial Reporting
Standards (“SFRS”).
The Company would like to reiterate that its financial statements have been subject to annual audits
by Foo Kon Tan Grant Thornton LLP (“Grant Thornton”). The Company would like to reiterate that
consistently, and with no exception, the independent auditor’s reports issued are without qualifications
whatsoever.
Grant Thornton have also stated in their letter to the Board that, in their opinion “the consolidated
financial statements of the Group and the statement of financial position of the Company are properly
drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards
so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31
December 2013 and of the results, changes in equity and cash flows of the Group for the financial
year ended on that date.”
http://infopub.sgx.com/FileOpen/Sino_Gra...eID=319198

[sykn]

Despite my initial skepticism about the VIC report (I had to join VIC as a guest member in order to be given the right to download the report), I decided to dump my holdings and recover most of my initial investment so that I can sleep better at night. Unfortunately, the valuation tools I use are not able to detect fraud, and after the Eratat saga, I feel that the high risks are not worth the potential gains, at my own comfort level. Just to share as another data point for ValueBuddies. Caveat Emptor!

[CityFarmer]

Further business update from the company. The content is obviously targeted on Nelson/Euromonitor's data in VIC report.

(not vested)

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As a result of first mover advantage as well as the Group’s sustained efforts in product
development, on-going investments in advertising and promotional activities, Garden
Fresh sales have grown rapidly over the past few years and Garden Fresh brand is now
ranked as the No.1 loquat juice brand in China according to a market research report by
Frost & Sullivan (“F&S Report”). According to the F&S Report, loquat juice retail sales
in 2013 amounted to approximately RMB2.48 billion and accounted for approximately
1.4% of the overall fruit size market in China with retail value of RMB179 billion.
------
http://infopub.sgx.com/FileOpen/Sino_Gra...eID=319199

[Greenrookie]

Further business update from the company. The content is obviously targeted on Nelson/Euromonitor's data in VIC report.

(not vested)

------
As a result of first mover advantage as well as the Group’s sustained efforts in product
development, on-going investments in advertising and promotional activities, Garden
Fresh sales have grown rapidly over the past few years and Garden Fresh brand is now
ranked as the No.1 loquat juice brand in China according to a market research report by
Frost & Sullivan (“F&S Report”). According to the F&S Report, loquat juice retail sales
in 2013 amounted to approximately RMB2.48 billion and accounted for approximately
1.4% of the overall fruit size market in China with retail value of RMB179 billion.
------
http://infopub.sgx.com/FileOpen/Sino_Gra...eID=319199

Personally, Not vested, but SG got to do better than that.

e.g. At which stage is the Garden Fresh IPO application? Get counter parties at that stage to issue statement.

CMZ response is better, and got ah gong behind, better still...

YZJ response to a court case is lacking in details, but at least they said it has no merits and has submit their case to the court.

Telling people our numbers are audited is of no use, all fraud cases/ problematic companies has got their numbers audited what...

[sykn]

This is precisely the root of my doubts! The Garden Fresh IPO has been delayed for a long time with no decent explanation from management. Unfortunately the reason given in the VIC report is a bit on the dark side, but it's the only reasonable one I could think of. But as I said earlier, my sharing is based only on my own analysis and comfort level; in no way am I trying to influence investment decisions of others either way.