A couple of things I took away from the SinoGrandness Q1 Report
So Sino Grandness released their Q1 results earlier today - rather impressive results all around, to be honest. Steady increases across all product segments, with decent coverage and growth with regards to their Garden Fresh subsidiary.
Anyone interested in checking out the reports for themselves can find them on the SGX website here.
For those of you who aren't interested in scrolling through the full report, here are the cliffnotes:
- Q12016 profit experienced a 233.0% increase from Q12015,
- revenue from their beverage segment increased by 30%, (strong demand for Garden Fresh juices)
- revenue from their canned goods segment (both domestic and international) increased by 10%.
- Garden Fresh has become the main sponsor for The Voice of China,
- Sino had a successful trade exhibition show.
Distribution and Selling Expenses have gone up as expected, and I fully expect the numbers to keep rising as Sino raises Advertising Expenses in its attempt to spread brand awareness on its long-term goal to be a major F&B giant.
If you're invested in Sino Grandness, you're no doubt awaiting news of the impending Garden Fresh IPO on the Hong Kong Stock Exchange (HKSE), which tentatively occurs in July this year. Stock price has undergone a 100+% increase since the start of the year, and (fingers crossed) if nothing goes wrong, Sino's stock price is expected to soar upon IPO.
I didn't manage to read the report until a couple of hours ago (midnight now, had to work late today), but here are a couple of things I took away from the report:
1) The canned foods segment isn't dead in the water
This may seem pretty minor, compared to the big hubbub surrounding Garden Fresh, but if Sino's cash cow has its successful spin-off, Sino has to look towards expanding its non-beverage sector. As Mr. Huang Yupeng - CEO of Sino Grandness - mentioned during the AGM a few weeks back, post-IPO plans involve a shift in focus towards their canned goods business. The company recently took out a strategic 20 million USD loan from a subsidiary of their Thai investors for the stated purpose of expanding their non-beverage business.
Seeing a 10% growth in Q1 earnings for both their domestic and international canned goods segment is a good indication for the future.
2) Garden Fresh is still going strong
Sponsoring The Voice of China, having a successful trade exhibition, having ads on buses - they all sound pretty good. Garden Fresh seems to be on the track to success. Beverage revenue for Q1 increased almost 30%, with higher Advertising Expenses to help raise brand awareness. Greater brand awareness in the China market will only serve to boost sales, especially when Garden Fresh has little competition in the loquat juice market.
The share dilution that comes if the Thai loan is approved via EGM is a small price to pay for a strategic alliance. More importantly, this represents faith on the part of Sino's Thai investors - they believe the IPO will go through, and are willing to fork out a minor 20 million USD for the right to convert the outstanding loan amount to Sino shares upon IPO.
There was an article in the Straits Times a couple of days ago, indicating rumours of Nestle (a contact of the Thai investors) having an interest in Garden Fresh. If this comes to fruition, it can only mean great things for Garden Fresh.
Higher revenue reported across all segments in the Q1 report. (Source: SinoG site).
Anyone interested in checking out the reports for themselves can find them on the SGX website here.
For those of you who aren't interested in scrolling through the full report, here are the cliffnotes:
- Q12016 profit experienced a 233.0% increase from Q12015,
- revenue from their beverage segment increased by 30%, (strong demand for Garden Fresh juices)
- revenue from their canned goods segment (both domestic and international) increased by 10%.
- Garden Fresh has become the main sponsor for The Voice of China,
- Sino had a successful trade exhibition show.
Distribution and Selling Expenses have gone up as expected, and I fully expect the numbers to keep rising as Sino raises Advertising Expenses in its attempt to spread brand awareness on its long-term goal to be a major F&B giant.
If you're invested in Sino Grandness, you're no doubt awaiting news of the impending Garden Fresh IPO on the Hong Kong Stock Exchange (HKSE), which tentatively occurs in July this year. Stock price has undergone a 100+% increase since the start of the year, and (fingers crossed) if nothing goes wrong, Sino's stock price is expected to soar upon IPO.
I didn't manage to read the report until a couple of hours ago (midnight now, had to work late today), but here are a couple of things I took away from the report:
1) The canned foods segment isn't dead in the water
This may seem pretty minor, compared to the big hubbub surrounding Garden Fresh, but if Sino's cash cow has its successful spin-off, Sino has to look towards expanding its non-beverage sector. As Mr. Huang Yupeng - CEO of Sino Grandness - mentioned during the AGM a few weeks back, post-IPO plans involve a shift in focus towards their canned goods business. The company recently took out a strategic 20 million USD loan from a subsidiary of their Thai investors for the stated purpose of expanding their non-beverage business.
Seeing a 10% growth in Q1 earnings for both their domestic and international canned goods segment is a good indication for the future.
The canned goods business will be the focus after the IPO.
2) Garden Fresh is still going strong
Sponsoring The Voice of China, having a successful trade exhibition, having ads on buses - they all sound pretty good. Garden Fresh seems to be on the track to success. Beverage revenue for Q1 increased almost 30%, with higher Advertising Expenses to help raise brand awareness. Greater brand awareness in the China market will only serve to boost sales, especially when Garden Fresh has little competition in the loquat juice market.
The share dilution that comes if the Thai loan is approved via EGM is a small price to pay for a strategic alliance. More importantly, this represents faith on the part of Sino's Thai investors - they believe the IPO will go through, and are willing to fork out a minor 20 million USD for the right to convert the outstanding loan amount to Sino shares upon IPO.
There was an article in the Straits Times a couple of days ago, indicating rumours of Nestle (a contact of the Thai investors) having an interest in Garden Fresh. If this comes to fruition, it can only mean great things for Garden Fresh.
Is food-giant Nestle interested in a Garden Fresh stake? (Source: Straits Times/NetResearch Asia)
-%-%-
All in all, good Q1 results, and I'm looking to see what else the company has in store for the rest of us. Just wanted to pen my thoughts down.
You guys have a good one.
Until next time.
Creed
Its financials look complicated and questionable. Diluted EPS did not change much despite there are convertible bonds on its balance sheet. Borrowings has increased despite positive free cash flow. Inventory valuation not provided in detailed, in particular whether full product costing or standard costing is adopted. Not so simple in a big Chinese organisation with many product range. This type of organisation require strong financial leadership, without which, the numbers cannot be produced within a short timeframe.
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