Sino Grandness

[specuvestor]

I haven't been following that closely after this thread was closed and hopefully moms-and-pops reading this thread won't get sucked in.

As expected SFGI raised RMB319.5m in rights BEFORE the SB2 payment date of ~RMB200m. We can continue to count the beans and not that difficult to guesstimate when they will need cash again. BTW I think the original CB creditors got most of their principal back with SB1 and SB2 bonds.

I'm sure the other forums are reading this and I just have to say that you guys are more die-hard than cult followers. Seriously come earthquake and fire nothing will change your mind so I can't be bothered. What need to be said had been said 15 months ago. To be honest Huang is quite amazing.

1) Dividends has been paid from the listco and IMHO funded by TTA CL placement hence cash left is US$20m minus US$2m dividend is US$18m. As per my previous post: "We know they raised about US$25m from TTA about 18 months back and now looking for another US$20m from TTA in form of convertible loan instead of placement like last time. Why? Prima facie we can guess the cash burn rate is roughly US$18m a year." Hence I would think they have roughly a one year window if IPO doesn't happen which is also incidentally close to the SB2 payment date.
http://www.valuebuddies.com/thread-3371-...#pid128649

2) Now that dividend is paid and cannot be rescinded, I will take my time to formulate my queries and will update accordingly if I wish to.

3) As per I posted, I'm guessing that the 2Q listco balance sheet will show $20m increase in "investment into subsidiary" and $20m decrease in "loan to subsidiary". Little to no cash movement. Let's see.

4) SB1 has been paid as expected which is close to the cash amount end 2015 balance sheet. The question is of course why they need to have SB1 and SB2 payment dates rather than just one SB date since GF cashflow can afford it. There are those in other forums asking why they so geh-kiang put in an expected IPO date. I think it is actually related to why the creditors allow SB1 & SB2 dates. In any case if PHIP not out this week, the date will be missed, which is not unusual that SFGI misses deadlines for creditors. 

The above points are in relation to why I think the dividend and SB1 repayment events would actually clarify their cash positions. From that day on, any additional verifiable cash outlay can be credited to real operational cash flow. We can count the beans from here.

5) Without any significant adjustment in CB optionality and interest expense 2Q results will be weaker QoQ with lower margins and higher A&P. If PHIP delays further they will likely need to incorporate 1H results into prospectus.

These are specific projection points I am highlighting, with historical figures as a mean rather than an end.

https://www.valuebuddies.com/thread-3371...#pid130609

[Young Investor]

Garden Fresh loquat juice is being served in VIP lounge of China Southern Airline in the Shenzhen Aiport.

According to the Airlines, it attaches great importance to food safety

南航地服明珠室设专人，负责食品监督管理，对涉及食品运输加工环节的区域进行检查，发现问题，及时整改，并以《南航明珠贵宾休息室食品安全管理规定》为标准，统一食品安全专项检查单，完善、细化检查单内容，制订：试吃制度、库房管理制度、食品安全知识培训制度和设备设施管理制度。

南航地服明珠室全面加强全员食品卫生安全培训，特别是安全意识的教育和引导，不断强化从业人员的食品安全风险防范能力，全面提升食品消毒专业技能，确保乘坐南航航班旅客放心享受美食。



http://mp.weixin.qq.com/s/ep4QPhKMlJTCwEHfl-iOrg

[specuvestor]

^ From observation of various posts even in other forums we can see most of the confirmation comes from Guangdong

Babyblue u sound like a reasonable forumer. But this time u were too quick to post your remarks without finding out more. Less haste more speed

Let me try to answer you with an answer to portuser as well. I seriously believe garden fresh is real. And if u look at their subidiary one can be very sure they are active in Guangdong and Sichuan. Question is the magnitude of sales and their cashflow

As portuser mentioned, without the EB they might not be able to reach this scale now. I dont disagree with this. What i disagree is that a rational businessman will risk default and >20% interest penalty to grow his business. Would u borrow ah long to invest capex to grow your biz? Working capital maybe yes, not long term capex.

The 2011 EB was delayed to 30 June originally and then delayed to 25 July again to be inline with 2012 EB holders. Why? What do u think the EB holders were thinking when they delayed to 30 June originally?

Then the chairman represented he will fully pay the EB but will likely pay partial as the EB holders wanted a stake. But instead of paying EB holders he again used more than RMB 500m cash for expansion. Would it not make sense to pay back partial debt say RMB 150-200m and use RMB300m for capex which are not going to affect the 2016 IPO PE anyway. To date the existing EB holders have not received a single $ back. Chinese say 有借有还 再借不难. He could have easily done a refinancing (not restructuring)

And then we have this restructuring into not 1 but 2 straight bonds of different maturity when their cashflow is so strong. Why?

We know they raised about US$25m from TTA about 18 months back and now looking for another US$20m from TTA in form of convertible loan instead of placement like last time. Why? Prima facie we can guess the cash burn rate is roughly US$18m a year.

How do we know to look at cashflow like this rather than simple finance / accounting 101? Cause we been through dot com where reality can be more bizarre than dreams

[PkNanas]

^ From observation of various posts even in other forums we can see most of the confirmation comes from Guangdong

Babyblue u sound like a reasonable forumer. But this time u were too quick to post your remarks without finding out more. Less haste more speed

Let me try to answer you with an answer to portuser as well. I seriously believe garden fresh is real. And if u look at their subidiary one can be very sure they are active in Guangdong and Sichuan. Question is the magnitude of sales and their cashflow

As portuser mentioned, without the EB they might not be able to reach this scale now. I dont disagree with this. What i disagree is that a rational businessman will risk default and >20% interest penalty to grow his business. Would u borrow ah long to invest capex to grow your biz? Working capital maybe yes, not long term capex.

The 2011 EB was delayed to 30 June originally and then delayed to 25 July again to be inline with 2012 EB holders. Why? What do u think the EB holders were thinking when they delayed to 30 June originally?

Then the chairman represented he will fully pay the EB but will likely pay partial as the EB holders wanted a stake. But instead of paying EB holders he again used more than RMB 500m cash for expansion. Would it not make sense to pay back partial debt say RMB 150-200m and use RMB300m for capex which are not going to affect the 2016 IPO PE anyway. To date the existing EB holders have not received a single $ back. Chinese say 有借有还 再借不难. He could have easily done a refinancing (not restructuring)

And then we have this restructuring into not 1 but 2 straight bonds of different maturity when their cashflow is so strong. Why?

We know they raised about US$25m from TTA about 18 months back and now looking for another US$20m from TTA in form of convertible loan instead of placement like last time. Why? Prima facie we can guess the cash burn rate is roughly US$18m a year.

How do we know to look at cashflow like this rather than simple finance / accounting 101? Cause we been through dot com where reality can be more bizarre than dreams

Hi Specuvestor,

I think Sino Grandness is one of company that not easy to get a handle on (as it has outstanding & evolving bond, TTA investment, Sam Goi, Loan from TTA group, attempted IPO, Right Issue etc etc over the past years) and lack of trust thereof.

https://www.pressreader.com/thailand/ban...3262447589

According to the Bangkok Post report, Mr Prayudh has spent large sums on P80 logan essence, in particular with Manny Paquiao, the famous boxer, as the brand ambasador)

Purely from rational (I hope) thinking, Mr. Prayudh is well established businessman, thus trust that he must have done his due dillegence, does it not the appointment of Sino Grandness as the sole and exclusive distributor of logan essence in China and Hong Kong stamp of approval for Sino's distribution and marketing reach?

[specuvestor]

Hi PkNanas

Just for context we have covered this company since their CB issuance days and I have been to their AGM twice. So we didn't read about it. We followed it

If you are keen you can look back the thread. Mr Prayudh is a shrewd business man but not infallible just as Buffett had been wrong. But from their point of view they managed the risk via asset allocation. I think a lot of people don't understand this.

A lot of people also think creditors extend their loans means confidence. They should check out the O&G sector and the difference between refinancing and restructuring. If you ask me of all the names being thrown up, eg SHK, Taiwanese, GS, TTA, etc the smartest (or "most connected") money in the past 5 years is Asdew's Alan Wang... went in before splits, got out before rights, on a sizable 5% position.

NB BTW Wechat Food is not related to Tencent...

[GreedandFear]

^ From observation of various posts even in other forums we can see most of the confirmation comes from Guangdong

Babyblue u sound like a reasonable forumer. But this time u were too quick to post your remarks without finding out more. Less haste more speed

Let me try to answer you with an answer to portuser as well. I seriously believe garden fresh is real. And if u look at their subidiary one can be very sure they are active in Guangdong and Sichuan. Question is the magnitude of sales and their cashflow

As portuser mentioned, without the EB they might not be able to reach this scale now. I dont disagree with this. What i disagree is that a rational businessman will risk default and >20% interest penalty to grow his business. Would u borrow ah long to invest capex to grow your biz? Working capital maybe yes, not long term capex.

The 2011 EB was delayed to 30 June originally and then delayed to 25 July again to be inline with 2012 EB holders. Why? What do u think the EB holders were thinking when they delayed to 30 June originally?

Then the chairman represented he will fully pay the EB but will likely pay partial as the EB holders wanted a stake. But instead of paying EB holders he again used more than RMB 500m cash for expansion. Would it not make sense to pay back partial debt say RMB 150-200m and use RMB300m for capex which are not going to affect the 2016 IPO PE anyway. To date the existing EB holders have not received a single $ back. Chinese say 有借有还 再借不难. He could have easily done a refinancing (not restructuring)

And then we have this restructuring into not 1 but 2 straight bonds of different maturity when their cashflow is so strong. Why?

We know they raised about US$25m from TTA about 18 months back and now looking for another US$20m from TTA in form of convertible loan instead of placement like last time. Why? Prima facie we can guess the cash burn rate is roughly US$18m a year.

How do we know to look at cashflow like this rather than simple finance / accounting 101? Cause we been through dot com where reality can be more bizarre than dreams

Hi Specuvestor.

Wrt to your comment :

" What i disagree is that a rational businessman will risk default and >20% interest penalty to grow his business. Would u borrow ah long to invest capex to grow your biz? Working capital maybe yes, not long term capex"

Whilst I don't disagree with your point, in general, I do want to put it in context. For the past ten years, the name of the game in China has been for private companies to grow to a critical size so as to be able to IPO. The difference between the private multiple and the public valuation multiple has been huge (easily 1.5 - 2x) and there has been a voracious appetite for IPOs. Hence, funding your expansion / capex more prudently with equity is expensive (the owners are selling new shares at a low multiple that will be worth 1.5 - 2x that upon IPO) and as a result there is a very active pre-IPO market which typically involves paying 8 - 12% coupon plus equity warrants at either a fixed price or at a pre-agreed discount to IPO price (say 10-20%). If there is no IPO, the financing needs to be redeemed at a 15 - 25% IRR depending upon how risky the company is. If the IPO happens, this works out to be much cheaper than equity financing but, as you point out, if it doesn't it gets very very expensive. Why does this market continue ? Because in literally hundreds of deals, the outcome was positive and hence it is tempting for owners to go for this type of financing. IMO, it is not an irrational way of financing yourself but clearly, Sino Grandness overrrelied on this financing and should have financed more through straight equity even though it is more expensive..


Not vested but have followed this saga for a long time

[specuvestor]

Hi GreedandFear

I don't disagree with what you say and indeed there is also the market for Trust Loan and WMP financing. Many of us here are also familiar with this infamous article:
https://nextinsight.net/index.php/story-...unabridged
“Water enough money into any company, even a fake one could become real some day.”

But I think 2 context is misplaced: I wrote the above to illustrate that if Sinogrand really had the hundreds of millions cash to repay debt then a rational businessman wouldn't do that. It is not the case that he needed money per se based on his balance sheet.

Secondly what you described is the pre-IPO market. Sinogrand is already a listed company answerable to OPMI not sophisticated pre-IPO investors. Frankly if only pre-IPO investors or Angels / VC involved I can't be bothered to post so much here. Their involvement in this high risk financing says something about management. If they had taken time and patience to grow their business beyond Guangdong and Sichuan rather than aim for IPO jackpot I think the story would have been very different

[piaopiao]

Specuvestor,

You said "I seriously believe garden fresh is real. And if u look at their subidiary one can be very sure they are active in Guangdong and Sichuan. Question is the magnitude of sales and their cashflow."

What is the information that led you to believe garden fresh is real?

Also do you have sales data of garden fresh in Guangdong and Sichuan?

[specuvestor]

Piao Piao

You can read various posts online that shows GF drinks in the stores in Shenzhen, HK and Guangzhou area. I've only seen a post that claims they saw the product in northern China. The anecdotal evidence explains why some don't see their products hence claim their non existence, yet many sees them in Guangdong area, including their promotions and advertisements.

They have factories in Sichuan and Hubei with Guangdong as main trading center but I don't think they ever breakdown revenue by province, which would have been illuminating.

Edit: Hubei is the factory not Guangdong Shenzhen

[yeokiwi]

I am not sure whether this was posted although I could not find it with searching the website.

It is a bit dated though.

https://geoinvesting.com/singapore-liste...tten-core/
https://geoinvesting.com/geoinvesting-re...statement/