Sino Grandness

[Oldman9]

as usual, this will be noise in a few months time. Why bother to debate on " whether BDO is credible or not"...  What's the intention ultimately, shorting?

I doubt anyone has the balls to short now.. Please show us if you are shorting. I will be impress and respect since you do actually short and not just talk this stock down.

So a long-only fund manager should never has negative view (talk down) on any stock, since he/she will never short? 

Hahaha.. nice one CF. I have no answer for your comment!  Speaking of funds, do they hedge? I think they only de-risk if in this case.

Hi CF

You did not make comments to the above hahaha. Why target me?
I will not apologize. I consider that you have made an error and I shall forgive you.

oldman9

[crubs]

Specuvestor,

"The fact is also that with 1/2 Huiyuan's sales and likely less than half Huiyuan's geographical coverage, they have double Huiyuan's income"

Other forummers have taken the time to repeatedly explain the reasons behind the different performance between Hui Yuan and Garden Fresh. One factor is the higher retail price of loquat juices compared to ordinary fruit juices. Another factor is its dominant market positioning with an 86% market share in the loquat juice segment. This is in contrast to Hui Yuan which competes in the very competitive orange and apple juice segments. Also, Garden Fresh's single layer distribution model also reduces bad debt as compared to Hui Yuan's multi layered model.

Many people still refused to accept these explanations and choose to compare the income statements of both companies superficially. 

"and have also defaulted on the CB not once but twice (2nd time being June/ July last year)"

This statement in untrue. Garden Fresh did not default on its debt. There was no official announcement by its creditors that it defaulted.

http://www.investopedia.com/terms/d/default2.asp
"Default is the failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment."

Garden Fresh has met all legal obligations. The legal obligations have changed, but can you prove it is because Garden Fresh had no means of paying ? Going by specuvestors analogy, does that mean that anyone who engages in discussions with its creditors on maturity has defaulted ? In that case, every company that has refinanced, rolled-over or restructured at maturity has defaulted.

Obviously the word "default" is used here to fear monger.

"It is amazing to me that some forumers think the CB owners are philanthropic or that the power of negotiation still lies with SinoGrand after they defaulted."

It is amazing to me that some forumers refuse to believe that Garden Fresh had some bargaining power due to its strong performance. The outcome of the CB restructuring confirms this. Let's logically think this through.

If the CB holders had known this was a fraud and in crisis, immediate redemption upon maturity or a full repayment schedule would have been drawn out 2 years ago. They would not have wanted even a single share of Garden Fresh.

If the CB holders wanted a partial redemption to hedge their bets on the IPO happening, then why did they allow Garden Fresh to pay majority of the sum only AFTER the IPO happens ? Why did they allow a lower interest rate on that amount ?

If the CB holders were not optimistic of Garden Fresh, why did they even take a stake ? they were not obliged to. The choice to convert lies with them.

The fact is during the course of the CB and at the few maturity dates, the CB holders had all the power to get their money back and chose not to subscribe in GF shares yet they have chosen to do so. Do you seriously think Huang could have pointed a gun to their head and forced them to do otherwise, to play along and deceive shareholders ?

The outcome of the CB restructuring shows that indeed the CB holders wanted GF shares. With that, they have forgone their authority to demand payment and the bargaining power lies in Garden Fresh because Huang could simply pay them back the full amount + interest and not let them have GF shares (this is possible because the CBs matured before the A1 form was submitted).

The favourable outcome of the CBs for Sino Grandness could only mean that the CB holders wanted GF shares and were willing to give Sino Grandness favourable repayment and redemption terms for it. It is clear that there was an informal agreement between Huang and CB holders and that Sino Grandness does have bargaining power as Huang has mentioned. 

[Oldman9]

Maybe Specuvestor mixed up the roles of auditors and reporting accountants.

Reporting accountants are not expected to conduct audits.


http://www.bdo.co.uk/capital-markets/act...ransaction

Hi Specuvestor,

Are you confused with the roles ?
Your comments earlier gave me some unnecessary jitters. I believe other investors also felt jittery. So what now?

I went to take a look at the draft prospectus of Qiniqin Foodstuff as suggested by Portuser. Same thing... So can you comment please?

Thanks and cheers
oldman9

Hi oldman9

The context was PiaoPiao stated "As reporting accountant, bdo would have reviewed the work of qual-mark hk, yida shenzhen, tiancheng hubei, sanhe sichuan and wanbang sichuan and form an opinion. If bdo is uncomfortable, it would not have accepted the appointment as reporting accountant."

BDO in their Accountant's Report has already stated "no audited financial statements have been prepared" and "The Financial Information has been prepared from the Underlying Financial Statements, with no adjustments made thereon" and "The directors of the Company are responsible for the preparation and the true and fair presentation of the Financial Information" ie the accuracy is not BDO's problem. There is no reason for BDO to be uncomfortable if the Board agrees to this basis. I didn't want to write all these down in my previous post cause I think better for forumers to read the whole context.

This type of creating a new entity for listing is also not new. Neither are S-chips new. But it's not common to create BVI entity on top of Cayman for listing. I'm not familiar with the details but we have auditors and accountants in this forum that might be able to advise us on what is the incentive.

The context is also that you and I know the chairman said the auditor will be a big 4 for the IPO in the last AGM. People specifically asked this for a reason. That's why we have been asking who is the auditor and who is the sponsor. Qinqin foodstuff is a spinoff from parent which is well known Hengan, whose auditor is PWC.

The fact is also that with 1/2 Huiyuan's sales and likely less than half Huiyuan's geographical coverage, they have double Huiyuan's income, and have also defaulted on the CB not once but twice (2nd time being June/ July last year), even after Chairman say during AGM categorically that they will pay back all. That is when I decided this looks too familiar and it is not my game. It is amazing to me that some forumers think the CB owners are philanthropic or that the power of negotiation still lies with SinoGrand after they defaulted.

The fact is also that if they manage to IPO GardenFresh then all the analysis is moot, at least for a few years. Their cashflow issue would have been resolved and none wiser. Management is hosting a luncheon next Tuesday to institutions on their results, but likely focus will still be on the IPO... so let's see how they come out of it.

What I am concern is what people learn from this episode, which is my incentive for taking lunchtime to post. VB has been a great place for me and others to browse, and I think many people take it as a serious and insightful forum, though it has less post in a day than some other forums in an hour. And I think VB has a great track record in fundamentally analyzing key events and identifying issues before they become apparent, which I hope the track record can continue.

So that's my way of paying forward by giving whatever facts I know. AGM is 25 April and I think their accounting numbers in 1Q should be good as previously posted.

Hi Specuvestor

thanks for your long  explanation .

With ref to you 1st april post,   http://valuebuddies.com/thread-3371-post...#pid127794,  you said you were keen to know who is  the sponsor and auditor. Obviously you did not know then there is no appointment of auditor. I don't think you know then that the parties to be appointed is the reporting accountant and not the auditor. And the job of the reporting accountant is to review the performance of the auditor.

If there is a factual error,  it should be corrected. VB would then be a good forum for the healthy exchange of views.
Many thanks for your effort.

Cheers
Oldman9

[CityFarmer]

as usual, this will be noise in a few months time. Why bother to debate on " whether BDO is credible or not"...  What's the intention ultimately, shorting?

I doubt anyone has the balls to short now.. Please show us if you are shorting. I will be impress and respect since you do actually short and not just talk this stock down.

So a long-only fund manager should never has negative view (talk down) on any stock, since he/she will never short? 

Hahaha.. nice one CF. I have no answer for your comment!  Speaking of funds, do they hedge? I think they only de-risk if in this case.

Hi CF

You did not make comments to the above hahaha. Why target me?
I will not apologize. I consider that you have made an error and I shall forgive you.

oldman9

Firstly, I missed it, doesn't mean you can do it. I would fault you before the notification, but not after that. 

Next, I can't vet all posts based on the time allocation. VBs are allowed to rise moderator report to alert me on potential offences or irregularities. I will follow up from there.

Lastly, the notification is for all VBs, rather than only targeted on you, similarly for all previous alert. In fact, I don't have the time to target any individual, as moderator.

The apology means nothing to me in the virtual faceless world, but it gives an indicator who are likely you.

Basic warning will be issued, on the basic of disrespect to moderation. We need the order to ensure a smooth operation of our VB, for the benefit all.

Regards
Moderator

[CityFarmer]

Moderator Log:

Time to put up a log for communication with our VB members, as moderator.

VB has basic posting rules, for the absolute No-No on posting. It is necessary but not sufficient, to ensure a pleasant VB experience. From time to time, I, as moderator, need to intervene, based on the current context. I, by no mean, have done a perfect job, with the limitation of time and skill, but I shouldn't be too wrong, by the following guidelines

- Maximizing respect, patience and leniency to our senior members, especially those with high reputation. Those buddies are likely contributing more than gaining from our VB. They deserved the privileges, the same concept on our PG (Pioneer Generation) scheme.

- We do respect all other members, but less leniency and patience on new members. They should observe our house rules, and respect the moderation. I reckon, all of us, can do without VB, but a smooth operation is vital for VB. I will not hesitate to carry out action(s), to protect a pleasant platform for us to share and exchange views for life-time learning.

- We should embrace noobs since VB is a platform to promote mainly value investing and financial literacy. I was a noob when I started in VB, who knew nothing on time value. Thankfully for the patience of our seniors, I became who I am today, and able to continue learning. I urge all new members to show appreciation to our seniors upon helps and clarifications. They did it on their time and FOC.

Last and not least, my apologies for an imperfect job done. I have tried my best. Thank you

Regards
Moderator

[specuvestor]

Specuvestor,

"The fact is also that with 1/2 Huiyuan's sales and likely less than half Huiyuan's geographical coverage, they have double Huiyuan's income"

Other forummers have taken the time to repeatedly explain the reasons behind the different performance between Hui Yuan and Garden Fresh. One factor is the higher retail price of loquat juices compared to ordinary fruit juices. Another factor is its dominant market positioning with an 86% market share in the loquat juice segment. This is in contrast to Hui Yuan which competes in the very competitive orange and apple juice segments. Also, Garden Fresh's single layer distribution model also reduces bad debt as compared to Hui Yuan's multi layered model.

Many people still refused to accept these explanations and choose to compare the income statements of both companies superficially. 

"and have also defaulted on the CB not once but twice (2nd time being June/ July last year)"

This statement in untrue. Garden Fresh did not default on its debt. There was no official announcement by its creditors that it defaulted.

http://www.investopedia.com/terms/d/default2.asp
"Default is the failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment."

Garden Fresh has met all legal obligations. The legal obligations have changed, but can you prove it is because Garden Fresh had no means of paying ? Going by specuvestors analogy, does that mean that anyone who engages in discussions with its creditors on maturity has defaulted ? In that case, every company that has refinanced, rolled-over or restructured at maturity has defaulted.

Obviously the word "default" is used here to fear monger.

"It is amazing to me that some forumers think the CB owners are philanthropic or that the power of negotiation still lies with SinoGrand after they defaulted."

It is amazing to me that some forumers refuse to believe that Garden Fresh had some bargaining power due to its strong performance. The outcome of the CB restructuring confirms this. Let's logically think this through.

If the CB holders had known this was a fraud and in crisis, immediate redemption upon maturity or a full repayment schedule would have been drawn out 2 years ago. They would not have wanted even a single share of Garden Fresh.

If the CB holders wanted a partial redemption to hedge their bets on the IPO happening, then why did they allow Garden Fresh to pay majority of the sum only AFTER the IPO happens ? Why did they allow a lower interest rate on that amount ?

If the CB holders were not optimistic of Garden Fresh, why did they even take a stake ? they were not obliged to. The choice to convert lies with them.

The fact is during the course of the CB and at the few maturity dates, the CB holders had all the power to get their money back and chose not to subscribe in GF shares yet they have chosen to do so. Do you seriously think Huang could have pointed a gun to their head and forced them to do otherwise, to play along and deceive shareholders ?

The outcome of the CB restructuring shows that indeed the CB holders wanted GF shares. With that, they have forgone their authority to demand payment and the bargaining power lies in Garden Fresh because Huang could simply pay them back the full amount + interest and not let them have GF shares (this is possible because the CBs matured before the A1 form was submitted).

The favourable outcome of the CBs for Sino Grandness could only mean that the CB holders wanted GF shares and were willing to give Sino Grandness favourable repayment and redemption terms for it. It is clear that there was an informal agreement between Huang and CB holders and that Sino Grandness does have bargaining power as Huang has mentioned. 

1) Yes I've read the past comments and IMHO not superficial. Like I said much earlier on when some were doubting the products, I believe loquat drinks are there... question is how much. Mainland Chinese knows about Huiyuan's products... or even Synear dumplings. Simplistically it means for every 2 or 3 Chinese drinkers of Huiyuan products you will know 1 who drinks loquat juice. Singapore has many mainland Chinese to do simple survey if u ask around. That's what someone asked management in the last AGM as well and the answer was that the distribution and consumption is very focused.

2) Restructuring as per stated in the A1 submission is different from refinancing. They defaulted and restructured is correct. Noble is currently doing their refinancing now at L+225 for their April and May debt that is due. If they miss paying, they have defaulted. It's not ambiguous most of the time.

3) This is very simple if u think in terms of you are the CB holder who hasn't received a single cent in past 2 years. How are you going to reduce your risk for an optionality of IPO that has been delayed for 2 years. It's not always about maximizing upside else property companies would not be selling properties in an up market
From Mr Huang's perspective, the way to maximize shareholders' interest would be to repay the debt as he said he would in the last AGM and if there are vested parties that he wants to keep, reissue another tranche (ie refinance) as easy as he issue SB1 and SB2.

Oldman9 I have been consistently asking for the auditor and sponsor. I think I know where u coming from so this old post may satisfy you that I am aware... but leeta was incorrect... the person was asking for auditor:
http://www.valuebuddies.com/thread-3371-...#pid111519

And reporting accountant don't have to review the performance of the auditor, depending on the scope, as in this case.

[Debronic]

I do not quite understand the animosity you guys showed here. So much time spent on arguing one investment from both camps when it could have been spent on doing research and finding the next undervalued gem.

To me, if you get your analysis right, the market will reward you eventually and your bank account will thank you for it. There is no need to come back here and justify how you have been right and so on and so forth. Likewise, if you have not bought into it because of various reasons and you still believe those were valid, then so be it because time will tell whether you would be been vindicated.

I personally did not buy into Sino Grandness because while trying to do independent research several times, I managed to find little or no useful information available online (blogs posts showing trade shows with little useful details don't count for me). I searched in both English and Chinese just FYI. No indication as far as I can see that their garden fresh juice is nearly as popular as other more well known brands like Huiyuan. You may dismiss this as inconsequential. But for a FMCG company with sales of CNY2.3b, which put in perspective is CNY16 per person in China per year if just 10% of the population or 140 million people have tried it, it seems weird that there is hardly any mention online (Chinese are a very net savvy bunch mind you) any where other than sources straight from company or individuals quoting the company's sources. Not to mention that the company's own online stall on Taobao seems to be struggling to sell Garden Fresh drinks:

https://shop115071046.taobao.com/search....tsell_desc

Compare this with Huiyuan's:
https://huiyuangf.tmall.com/search.htm?s...&tsearch=y

You can see the prices for the loquatl juice is slightly cheaper: CNY 48 for 12 packs of 250ml loquatl juice vs CNY 46 for 12 packs of 200ml Huiyuan orange juice but the sales volume on taobao and tmall are a world of difference. 31801 orange juice cartons sold in last 30 days vs 13 loquatl juice cartons. In fact, Sino Grandness' pistachio nuts seems to be much more popular than its drinks.

Of course, other things like BVI or cayman incorporation does not help allay my fears because all S-chips in trouble so far seems to be offshore incorporated.

That said, if my concerns turn out to be unwarranted and the company is in fact a great investment opportunity that I have missed, then I say good for those who have spotted it. It will just be another lesson for me.

Edit: I am going on a break so won't be replying to this topic in case I add more fuel to fire.

[crubs]

Specuvestor,

3) If you believe the CB holders are asking for partial redemption to minimise the IPO risk, why did they allow Garden Fresh to repay majority of the principal ONLY AFTER they have IPO-ed ? If they are minimising IPO risk, won't they have demanded that the partial redemption be paid immediately ?

As I have mentioned "If the CB holders wanted a partial redemption to hedge their bets on the IPO happening, then why did they allow Garden Fresh to pay majority of the sum only AFTER the IPO happens ? Why did they allow a lower interest rate on that amount ?"

If fact, majority of the redemption is still subject to IPO risk. Your reasoning does not seem to hold.

1) Sure, let's just put it out there that you deem asking a mainland Chinese in Singapore who is out of touch with his home country a more reliable source than the due diligence of 3 market research firms(company engaged AC Nielsen), 2 bond holders (Goldman and KGI), IPO sponsor (DBS) and a strategic investor (TTA). Your mainland chinese friend in Singapore is more accurate than all of them combined.

2) Again, the company did not announced any missed payment. The CB holders did not announce any missed payment. If you are unwilling to consider the possibility that the restructuring is due to the better than expected performance of Garden Fresh and insist that it is categorised as a default, then we have a fundamental disagreement that cannot be solved.

I have considered the possibility of default and CB holders having the upper hand. But as I've mentioned, the outcome of the CB restructuring convinced me otherwise. 

[babyblue]

I do not quite understand the animosity you guys showed here. So much time spent on arguing one investment from both camps when it could have been spent on doing research and finding the next undervalued gem.

To me, if you get your analysis right, the market will reward you eventually and your bank account will thank you for it. There is no need to come back here and justify how you have been right and so on and so forth. Likewise, if you have not bought into it because of various reasons and you still believe those were valid, then so be it because time will tell whether you would be been vindicated.

I personally did not buy into Sino Grandness because while trying to do independent research several times, I managed to find little or no useful information available online (blogs posts showing trade shows with little useful details don't count for me). I searched in both English and Chinese just FYI. No indication as far as I can see that their garden fresh juice is nearly as popular as other more well known brands like Huiyuan. You may dismiss this as inconsequential. But for a FMCG company with sales of CNY2.3b, which put in perspective is CNY16 per person in China per year if just 10% of the population or 140 million people have tried it, it seems weird that there is hardly any mention online (Chinese are a very net savvy bunch mind you) any where other than sources straight from company or individuals quoting the company's sources. Not to mention that the company's own online stall on Taobao seems to be struggling to sell Garden Fresh drinks:

https://shop115071046.taobao.com/search....tsell_desc

Compare this with Huiyuan's:
https://huiyuangf.tmall.com/search.htm?s...&tsearch=y

You can see the prices for the loquatl juice is slightly cheaper: CNY 48 for 12 packs of 250ml loquatl juice vs CNY 46 for 12 packs of 200ml Huiyuan orange juice but the sales volume on taobao and tmall are a world of difference.  31801 orange juice cartons sold in last 30 days vs 13 loquatl juice cartons. In fact, Sino Grandness' pistachio nuts seems to be much more popular than its drinks.

Of course, other things like BVI or cayman incorporation does not help allay my fears because all S-chips in trouble so far seems to be offshore incorporated.

That said, if my concerns turn out to be unwarranted and the company is in fact a great investment opportunity that I have missed, then I say good for those who have spotted it. It will just be another lesson for me.

Edit: I am going on a break so won't be replying to this topic in case I add more fuel to fire.

I really wish facts are checked before being asserted. The first link is not as you have mentioned, the company's own online stall. It is a store by the name of 振鹏达食品. So factually wrong. The second on the other hand is a store from huiyuan itself.

Im not vested in Sino, but I think I see so much negativity on this stock, with so many so quick to point out red flags when actually in other circumstances(non s chip companies) those are not red flags. For eg; Increasing receivables, sure, but in other cases, we deem it a red flag only when its accompanied by stagnating or decreasing Revenue. Ie; percentage is important. Also, was it a default? Firstly technically it is obviously not. In other circumstances we wont even be raising that term. Substantively, whether it was a default, there is more scope for discussion. But we should consider that bondholders could have not extended the maturity and asked for the redemption. Is it more likely than not that they will do it, only because they had incentives to do so, which is that they stand to gain more from an ipo. 

At the end of the day, the mother of all red flags in many of our minds is simply that this is an S chip. Which is fine, if you think S chips are inherently or structurally much more dishonest, much more likely to be scams, than stay away.

But dont be so quick to form conclusions without doing the requisite research. And if you have done the requisite research, may be take a step back and think whether you have pre conceived beliefs that are influencing your reading and interpretation of facts.

[Boon]

Found an interesting document on the web..........

http://doc.mbalib.com/view/0115f028b6a00...409d3.html

2012年度“鲜绿园”营销计划书.

2012 Target Sales mentioned in the document = RMB 40 million
 
VS

2012 Beverage sales as reported by Sino G = RMB 873 million  __________________________________________________________