Sino Grandness

[Oldman9]

.............. Looking forward to the IPO. Hope it turns out well. Wondering what the IPO price will be for Garden fresh and what the stock value of Sino Grandness will be by then. Understand the valuation of F&B business in Hong Kong is around 16 to 25x. Oldman agak agak only. Does anyone know? Can Garden Fresh fetch such a valuation?

I read somewhere (oldman forgot where I read from), that management will give special dividend to shareholders once IPO goes through. Anyone knows how much will be given? And normally how soon will such dividends be paid?

It may not be realistic to hope for a bumper special dividend and other benefits that may come with a successful IPO of Garden Fresh.

Sino Grandness is making no such assumption, and has been preparing for the contingency that bondholders want to cash out if Garden Fresh fails to get listed soon.

Sino is talking to international banks to borrow more to meet possible bond redemption. (On 31 Jan 15, it had RMB 300m in cash and RMB 150m untapped credit lines from PRC banks.)

Bondholders are entitled to RMB 650m if no application for listing is submitted. Otherwise, the amount will reduce to RMB 580m.

Sino's 2014 profit was much higher than the reported RMB 233m. This reported profit was the result of deducting three one-off items:
(1) non-cash penalty interest expenses (RMB 206m) related to convertible bonds,
(2) non-cash changes in fair value of option derivatives (RMB 112m) related to convertible bonds, and
(3) cash penalty interest (RMB 17m) paid to holders who redeemed 19.5m bonds in Oct 14.

2014 profit was therefore RMB 468m after adding back the three one-off items.

This profit should enable Sino to borrow RMB 300m, say, to redeem all convertible bonds.

Combined borrowings of RMB 504m (existing RMB 54m + untapped RMB 150m from PRC banks + RMB 300m from international banks) are not excessive in relation to equity of RMB 1,576m, as gearing is just 32% (compared with Huiyuan's 41%).

The RMB 468m profit amounts to an EPS of 15 S'pore cents. Alongside the 51-S'pore cent NAV, the current 31c share price is undemanding.

A successful IPO of Garden Fresh is a bonus. A failed attempt would not spell doom because Sino has planned for such contingency.

Hi Portuser

thank you for taking time to answer/update. Much appreciated.
I understand that the IPO is not 100% and so is the special dividend but if it does go through then it is good. So far no one has given me an answer on the valuation of Garden fresh if its listed..do you mind share something?

By the way, you mentioned that it is not all doom if the IPO does not materialize as the company has planned for contingency. That, I agree with you but in my humble opinion IPO is the catalyst to share price appreciation else the share price will continue to trade between 20cts to 50cts for a long time. Will this be the case unless another catalyst appears?

Again thank you for taking time to answer.

Oldman9