Sino Grandness

[Boon]

So, what are the upsides and downsides ?

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[crubs]

So, what are the upsides and downsides ?

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Restrictions on disposal of the ListCo Shares
Immediately following the Proposed Listing, the Company will own not less than 51% of the enlarged issued and paid-up share capital of the ListCo. Pursuant to the requirements of the HKSE Rules and to demonstrate its commitment to the ListCo, the Company, being the controlling shareholder of the ListCo shall not:

[crubs]

Non-cash interest expenses of CB falls under amortization.
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“Reference Net Profit” :
The Projected Net Profit (or if available, the Net Profit) for the financial year of the HK Issuer commencing on 1 January 2013, provided that such Projected Net Profit is as disclosed in the prospectus relating to the QIPO or has been approved by an Extraordinary Resolution. For the avoidance of doubt, Reference Net Profit shall exclude any one time fees arising directly from the QIPO and any Fair Value Change

“Projected Net Profit”:
With respect to a financial year of the HK Issuer, the consolidated projected net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial year, as determined by the HK Issuer acting in good faith and a commercially reasonable manner

Net Profit :
With respect to a financial quarter or a financial year of the HK Issuer, the consolidated net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial quarter or year, as applicable, as confirmed by the audited accounts of the HK Issuer 

Do you know how the CBs are valued ? Do you know why is some portion classified as non-cash expense and some fair value ?

[CityFarmer]

Do you know how the CBs are valued ? Do you know why is some portion classified as non-cash expense and some fair value ?

It is interesting. I don't know CB valuation, depends on the classification.

Any detail?

Regards
CF

[weijian]

In their 1H2016 report, China Minzhong reported that it is reviewing its beverages business (mainly loquat juice). Looking at how the advertising/promotional cost are winding down (even though CNY is around the corner), it seems like CMZ has thrown in the towel. IIRC, CMZ has a 2nd distant market share of loquat juice...Winner (Garden Fresh) takes all now?

[tiongkokgor]

There's no amortization expense relating to convertible bonds.

Please refer to the cash flow statement and Note 17 Page 93 of the FY2014 Annual Report of Sino Grandness.

The increase in the fair value of the convertible bonds in the Balance Sheet is attributed to both the interest expense and changes in fair value of the option derivatives in relation to the convertible bonds. Both items are accounted in the P&L statement and reduce the profit.

Is it possible that the "Fair Value Change" in the Reference Net Profit refers to both the interest expense and fair value of the option derivatives?

Non-cash interest expenses of CB falls under amortization.
___________________________________________________________
“Reference Net Profit” :
The Projected Net Profit (or if available, the Net Profit) for the financial year of the HK Issuer commencing on 1 January 2013, provided that such Projected Net Profit is as disclosed in the prospectus relating to the QIPO or has been approved by an Extraordinary Resolution. For the avoidance of doubt, Reference Net Profit shall exclude any one time fees arising directly from the QIPO and any Fair Value Change

“Projected Net Profit”:
With respect to a financial year of the HK Issuer, the consolidated projected net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial year, as determined by the HK Issuer acting in good faith and a commercially reasonable manner

Net Profit :
With respect to a financial quarter or a financial year of the HK Issuer, the consolidated net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial quarter or year, as applicable, as confirmed by the audited accounts of the HK Issuer 

Do you know how the CBs are valued ? Do you know why is some portion classified as non-cash expense and some fair value ?

[crubs]

In their 1H2016 report, China Minzhong reported that it is reviewing its beverages business (mainly loquat juice). Looking at how the advertising/promotional cost are winding down (even though CNY is around the corner), it seems like CMZ has thrown in the towel. IIRC, CMZ has a 2nd distant market share of loquat juice...Winner (Garden Fresh) takes all now?

Weijian,

China Minzhong was ranked 3rd in 2014 with a 2.8% market share in the loquat juice market according to Euromonitor. The management disclosed this during the 3Q presentation.

Sales of its Branded Beverage (their 真田 series of loquat juice and tea) have continued to decline Y-on-Y (RMB 38m vs RMB 57m) and Q-on-Q (RMB 38m vs RMB 59m)

Gross Profit Margin also declined. GPM this quarter is 35.2%, compared to 47% last quarter and 42.1% in the same period last year.

You are right, they decreased A&P pending a strategic review.

[crubs]

Do you know how the CBs are valued ? Do you know why is some portion classified as non-cash expense and some fair value ?

It is interesting. I don't know CB valuation, depends on the classification.

Any detail?

Regards
CF

Here's the changes in Liability Component and Option Derivatives at Fair Value over 7 quarters.

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Page 52 of the 2014 AR

"The amortised cost of the convertible bonds was based on the cash flows of the convertible bonds at their corresponding discount rates and the option derivatives were determined by the Binomial Option Pricing Model, and which are subject to the limitation of the Binomial Option Pricing Model that incorporates market data and involving uncertainty in estimates used by the directors of the Company in the assumptions."

I don't know CB valuation either. Can any more experienced investors share ? This will be crucial in determining what constitutes "Fair Value"

[Boon]

There's no amortization expense relating to convertible bonds.

Please refer to the cash flow statement and Note 17 Page 93 of the FY2014 Annual Report of Sino Grandness.

The increase in the fair value of the convertible bonds in the Balance Sheet is attributed to both the interest expense and changes in fair value of the option derivatives in relation to the convertible bonds. Both items are accounted in the P&L statement and reduce the profit.

Is it possible that the "Fair Value Change" in the Reference Net Profit refers to both the interest expense and fair value of the option derivatives?

Non-cash interest expenses of CB falls under amortization.
___________________________________________________________
“Reference Net Profit” :
The Projected Net Profit (or if available, the Net Profit) for the financial year of the HK Issuer commencing on 1 January 2013, provided that such Projected Net Profit is as disclosed in the prospectus relating to the QIPO or has been approved by an Extraordinary Resolution. For the avoidance of doubt, Reference Net Profit shall exclude any one time fees arising directly from the QIPO and any Fair Value Change

“Projected Net Profit”:
With respect to a financial year of the HK Issuer, the consolidated projected net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial year, as determined by the HK Issuer acting in good faith and a commercially reasonable manner

Net Profit :
With respect to a financial quarter or a financial year of the HK Issuer, the consolidated net profits of the HK Issuer and its subsidiaries after taxation, interest, depreciation and amortisation with respect to such financial quarter or year, as applicable, as confirmed by the audited accounts of the HK Issuer 

Do you know how the CBs are valued ? Do you know why is some portion classified as non-cash expense and some fair value ?

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.
 
Non-cash interest expenses <=> liability component
Change in fair value <=> option derivative
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[crubs]

Boon,

Can you explain the changes in values for the liability component and option derivative over the last 7 quarters ?

Specifically
1) How did the valuers derive the numbers ?

2) Why did liability component dropped from RMB 647m to RMB 459m between Jun-15 and Sep-15 ? (Shouldn't the amount of money owed increase over time ?)

3) Why did option derivative fair value jumped from RMB 130m to RMB 374m between Jun-15 to Sep-15 ?

Some workings are appreciated.