Sino Grandness

[CityFarmer]

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"

I see. I have learned the basic for CB valuation. It has two part, one is bond valuation (i.e. the amortized cost?), and the other is the equity call option valuation (i.e. option derivative?).

The bond part is standard, as described, depends on discount rate, and cash flow

The option derivative is determined by BOPM, as stated (other method is the well-known Black-Scholes model), which involves market price volatility and others

https://en.wikipedia.org/wiki/Binomial_o...cing_model

(not vested, sharing the basic, while waiting for expert views)

[CityFarmer]

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.

Let me contribute, before Boon,
2) It may be due to the recent partial redemption of the bonds. I knew partial redemption was done last year.

(not vested)

[portuser]

The partial redemption (of principal amount of 19.5m of CB1) was not recent. It happened in Oct 2014.

[Boon]

Hi crubs,
 
If you were trying to look through the numbers for an answer to explain what constitutes “Fair Value”, you will never find it there.
 
Explanation to changes in values as you have observed are separate issue.
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[Oldman9]

Hi Boon

No need to argue. Don't think we can progress anywhere.

As you have an interest in this counter long or short, just attend the EGM and find out for yourself. By the way, it's stated clearly in the circular that Cb1&Cb2 will hold 23.4%.

How do i identify you? Will you be wearing a cap? Its very easy to identify me..I am oldman. hahaha.

cheers
oldman9

Hi crubs,
 
If you were trying to look through the numbers for an answer to explain what constitutes “Fair Value”, you will never find it there.
 
Explanation to changes in values as you have observed are separate issue.
________________________________________________________________________________________________________

[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.

Let me contribute, before Boon,
2) It may be due to the recent partial redemption of the bonds. I knew partial redemption was done last year.

(not vested)

The redemption you mention is already reflected in the drop in value of the liability component of the 2011 CB between the period 4Q 2014 and 1Q 2015 (as shown in my table posted earlier)

[Boon]

Hi Boon,

Thanks for the information. Let's see what is the reference profit when it is launched. By the way, are you short on SG? Just curious since you are so actively against it. If you are not, please do short to prove that you have faith in your analysis.

Hi alex,

Shorting could be one way to prove that I have faith in my analysis – but it is not the only way.
 
As our moderator “Cityfarmer” has pointed out earlier, I have yet to draw a conclusion on my analysis.    
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[chinafarmer]

I recall many supporters of the loquat have shouted that it will pay a dividend of x% of its profits, especially with the Thai coming on board. In addition, many have also looked forward to a special dividend payment from the proceeds of the loquat juice IPO if it happens.

Page 15 of Circular states clearly that shareholders will not get a single cent from the disposal of shares in the IPO of the loquat business.

As at the Latest Practicable Date, the Company has no plans for any specific use of the proceeds from the Proposed Material Dilution and/or the Proposed Disposal, other than for the working capital for future expansion and development of the Group. The Company will in due course announce via SGXNET the utilisation of the proceeds from the Proposed Material Dilution and/or the Proposed Disposal.

[Boon]

Hi Boon

No need to argue. Don't think we can progress anywhere.

As you have an interest in this counter long or short, just attend the EGM and find out for  yourself.  By  the way, it's stated clearly in the circular that Cb1&Cb2 will hold 23.4%.

How do i identify you? Will you be wearing a cap? Its very easy to identify me..I am oldman. hahaha.

cheers
oldman9

Hi crubs,
 
If you were trying to look through the numbers for an answer to explain what constitutes “Fair Value”, you will never find it there.
 
Explanation to changes in values as you have observed are separate issue.
________________________________________________________________________________________________________

Hi oldman9,
 
I wish you were right !
 
CB1 and CB2 have been working “overtime” with little or no overtime pay, do you think their owners would be happy without being fairly and adequately compensated for it? It would be nice if the bondholders were happy to provide “free lunch”.
 
I will be wearing a black cap if I decide to go. By the way, do you think there will be free lunch available in the EGM?
______________________________________________________________________________________________________________________________________

[leeeta]

Boon

You seem to be so sure of your analysis. You are dead set that profit for 2014 is only Rmb117.3M, while some of us have tried to explain to you that the figure is Rmb334.9M (adjusted). Perhaps you should take up oldman9's suggestion and attend the Egm. Would do us a lot of good if you can explain to shareholders why profit is only Rmb117.3M. We might learn something from you.