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Monday, 16 November 2009

Sino Grandness Food Industry Group Limited

Sino Grandness Food Industry Group Limited is offering 85.52m shares (makes up of 70m new shares and 15.52m vendor shares) at 29 cents each.  2m shares will be offered to public and the rest via placement.  The offer will end on 19 Nov 2009 at 12pm.

The Company is a manufacturer and export-oriented supplier of quality canned fruits and vegetables. 

Revenue increased from RMB 95.824m in FY2006 to RMB 330.268m in FY2008 and net profit grew from RMB 11.018m to RMB 52.72m in the same period.  Based on the enlarged share cap of 245,172,414 shares, the EPS for FY2008 is RMB 21.5 cents or 4.07 Singapore cents. That will translate into a listing PE of 7.12x.  While Q1 financials were provided, it appeared that there are some seasonality in the financials of the Company where Q1 is the "lull" period. The market cap post listing will be S$71.1m 

Looking at the make up of the pre-ipo investors, this company went through 2 rounds where some of the first round pre-ipo investors were "bought out" by the 2nd round pre-ipo investors. The more prominent current pre-ipo investors will be Philip Ventures and Kim Sneg Holdings. The Company also disclosed some litigation issues with Elloitt Advisers in HK for US$300,000 in its prospectus.

Based on current sentiments, I believe that the Company will be worth a stag. I would not speculate on its long term prospects as Q1 results is not very indicative. This will be a sell on first day stock for me for now.

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