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(01-04-2015, 08:53 PM)leeeta Wrote: [ -> ]

(01-04-2015, 12:49 AM)roxhockey Wrote: [ -> ]But why leave it so late? They have had so much time, why leave it until now to get things started? Wouldn't it have been much better to have everything prepared and then you can launch the IPO when the market is favourable?

Now they are running the risk of running out of time should something take longer than expected or the IPO window closes for whatever reaaon...

I just cant see any good reason why theres even a question as to whether theyre prepared for the IPO? This should have been locked in.

Blame the HK ipo process and policy changes in late 2013. Guess, a lot of ipo managers have to readjust their strategies/plans in light of the new policies. The new policy requires that everything must be completed before companies can submit the forms. Stringent checks are also required to be performed and for Sino Grandness, 60-70% of their 200+ distributors have to be interviewed. All that takes time.

I know nothing on the company IPO, but I do know a bit on HKSE, due to my holding of SGX. I would like to provide an input here.

Assuming the culprit is the HK IPO procedure and policy changes in late 2013. I reckon the company shouldn't be the only one affected, but across the board.

Let's look at HKSE IPO performance in 2014
- Total equity raised was HK$232.5 billion, a 38 per cent rise from 2013.
- 122 companies were newly listed, compared to 110 in 2013

Source: https://www.hkex.com.hk/eng/newsconsul/h...05news.pdf

I am not sure where is the problem, but the culprit shouldn't be the HK IPO procedure, which others were able to get listed.

(not vested)

Cityfarmer

According to Sino Grandness, the professionals started work in early 2014 on preparatory work on listing of Garden Fresh. 
The question is how long it takes, in general, for the professionals to complete their work, such as visiting distributors, sales outlets etc, before the sponsor submits the application form to the exchange.

Thanks.  

(02-04-2015, 04:12 PM)Young Investor Wrote: [ -> ]Cityfarmer

According to Sino Grandness, the professionals started work in early 2014 on preparatory work on listing of Garden Fresh. 
The question is how long it takes, in general, for the professionals to complete their work, such as visiting distributors, sales outlets etc, before the sponsor submits the application form to the exchange.

Thanks.  

The point is, the "HK IPO process and policy changes in late 2013" doesn't seem has delayed the IPO, because others seem IPOed as normal, base on the data provided.

How long will it typically take? I will let investment bankers to tell us. We should have investment bankers around here, I guess.

(02-04-2015, 04:52 PM)CityFarmer Wrote: [ -> ]vx

(02-04-2015, 04:12 PM)Young Investor Wrote: [ -> ]Cityfarmer

According to Sino Grandness, the professionals started work in early 2014 on preparatory work on listing of Garden Fresh. 
The question is how long it takes, in general, for the professionals to complete their work, such as visiting distributors, sales outlets etc, before the sponsor submits the application form to the exchange.

Thanks.  

The point is, the "HK IPO process and policy changes in late 2013" doesn't seem has delayed the IPO, because others seem IPOed as normal, base on the data provided.

How long will it typically take? I will let investment bankers to tell us. We should have investment bankers around here, I guess.

Could it be that some of those listed in 2014 had their applications approved prior the changes?

Anyway the new policy requires substantial due diligence to be completed first unlike the past. see link

" Early and substantial due diligence

There is a view that substantive or key due diligence is sometimes carried out “last minute” and this affects the quality of the due diligence. Going forward, sponsors will be expressly obliged to complete all reasonable due diligence before submitting a listing application (what is usually referred to as the A1 proof). This includes advising and resolving issues concerning eligibility criteria, internal controls and directors’ credentials, which are fundamental to the suitability of a listing applicant. A sponsor will also need to disclose all material issues to the regulators which it believes will be necessary to the Exchange’s consideration of whether the applicant is suitable for listing."

examples of good due diligence (Page 43) includes the following..
The following due diligence actions, among others, are advisable as appropriate:
• interviewing company officers from various departments to explore all aspects of the company’s business;
• contacting major customers, suppliers, distributors, licensees and/or bankers to verify management’s
representations;
• inspecting the factory in which the company’s products are manufactured;
• reviewing the internal financial model with the company’s management and inquiring about expected
financial results;
• reviewing trade journals and industry-related publications to ascertain industry trends, market trends
and competitive information;
• subjecting the company’s budget to line-by-line scrutiny;
• reviewing material contracts, board minutes and other corporate documents; and
• maintaining close involvement of management throughout the prospectus-drafting process.


And now under the new policy, sponsors are criminally liable together with an issuer and other persons if there is evidence that each of them knowingly or recklessly participated in issuing a prospectus containing false or misleading information, hence the need for extra caution and stringent checks to be made. see link page 58 point 281.

Other sources of information...
New listing rules to strengthen HK IPO markets.

HK regulator says no law changes needed for IPO sponsor liability

Hi buddies

Can anyone help oldman on the valuation of Garden fresh if its listed? Hope someone can enlighten me.
Thank you

Oldman9

No of shares=673.5M shares

Garden Fresh Revenue for FY 14= 1.87B
Assuming PBT margin of 25.1% and 25% tax rate (FY 13; beverage net profit margin was 26.6%)
Thus Garden Fresh net profit for FY 14 is about 352M RMB. Applying a 10x PE, Garden Fresh is worth about RMB3.52B or s$770M. With Bondholders getting 23.4%, SFIG shareholder's share is s$590M; 87.6 cents per SFIG share

Extra steps: Adding in the value of its canned vegetables which is about s$140m [Assumptions: Vege business: tax rate at 30%, PBT RMB 188M, PE 5 times]. total value of SFIG group is s$760m. adding s$30m proceeds from Thai placement.

Therefore value of company is s$1.128/share, 90 cents (applying 20% MOS)
If it is a fraud, value of SFIG equals 0.

<vested>

Actually it is obvious that garden fresh actually have a business. The question is whether the sales can be as high as indicated. It is not as binary as some seemed to imply

Problem is the structure of SinoGrandness exchange bond is very reliant on the the IPO, effectively making it an all or nothing, which many VBs are concerned. Portuser has a good analysis but based on the premise that the cash flows are correct. This is where the binary nature lies

(03-04-2015, 07:09 PM)CY09 Wrote: [ -> ]No of shares=673.5M shares

Garden Fresh Revenue for FY 14= 1.87B
Assuming PBT margin of 25.1% and 25% tax rate (FY 13; beverage net profit margin was 26.6%)
Thus Garden Fresh net profit for FY 14 is about 352M RMB. Applying a 10x PE, Garden Fresh is worth about RMB3.52B or s$770M. With Bondholders getting 23.4%, SFIG shareholder's share is s$590M; 87.6 cents per SFIG share

Extra steps: Adding in the value of its canned vegetables which is about s$140m [Assumptions: Vege business: tax rate at 30%, PBT RMB 188M, PE 5 times]. total value of SFIG group is s$760m. adding s$30m proceeds from Thai placement.

Therefore value of company is s$1.128/share, 90 cents (applying 20% MOS)
If it is a fraud, value of SFIG equals 0.

<vested>

Garden Fresh 2014 profit would be impacted by sharply higher expenses on advertising and promotion (A&P).

In 2013, the RMB 60m on A&P amounted to a mere 4.4% of Garden Fresh revenue of RMB 1,382m. Consequently, operating margin was high:

...................................................2013
Sales (RMB m)...............................1,382
Gross profit......................................579
Gross margin (%).............................41.9

Operating profit................................385
Operating margin (%).......................27.9


In 2014, RMB 142m more was spent on A&P than the preceding year; and for the first time A&P extended to canned fruits.

If RMB 20m of the RMB 142m A&P increment was for canned fruits (2014 revenue of RMB 295m), then RMB 122m was for Garden Fresh juices.

2014 A&P expenses for Garden Fresh amounted to around RMB 182m (RMB 60m in 2013 + RMB 122m increment in 2014), or 9.7% of revenue of RMB 1,877m, which was 5.3 percentage point higher than 4.4% in 2013.

If in 2014 admin and distribution consumed the same proportion of revenue as in 2013, the 5.3 ppt increase in A&P would have lowered operating margin to 23.6%, from 27.9% in 2013:


..........................................................2014..........2013.........Change

Revenue (RMB m)...............................1,877.........1,382.........35.8%

Gross margin (%).................................42.9...........41.9..........1 ppt

Operating margin (%)............................23.6...........27.9.........(4.3 ppt)

Operating profit (RMB m)........................443............385..........15.1%

less
Finance cost (RMB m)..............................17.............17..........nil

Pre-tax profit (RMB m).............................426...........368.........15.8%.

Net profit (RMB m)*.................................320...........276.........15.8%

* after 25% tax

Garden Fresh 2014 profit might not be as high as RMB 352m determined by you.

taking a more conservative approach, current share price of Sino is only 53% discount relative to RNAV.

Given all the inherent risks as discussed by many forumers in this thread, one might seriously want to consider whether to take this risk or now.

(03-04-2015, 09:37 PM)Curiousparty Wrote: [ -> ]taking a more conservative approach, current share price of Sino is only 53% discount relative to RNAV.

Given all the inherent risks as discussed by many forumers in this thread, one might seriously want to consider whether to take this risk or now.

On what basis did you get a P/e of 10 when F&B companies in Hong Kong are getting between 18 - 25 ?