Sino Grandness

Sino Grandness: Announced strong 2Q12 results which was above estimates. Rev at Rmb 470.6m, +63.9% yoy and +64.9% yoy, while net profit at Rmb 83.1m, +54% yoy and +46.5% yoy. Gross margins at 37% vs 35.5% yoy. Grp’s strong rev growth, was highly attributed to its beverage segment which saw sales increase 139.8% yoy to Rmb233.5m, while canned products registered a 27.2% increase as grp ramped up domestic sales, contributed by an increase in its production capacities and orders secured from existing major customers in both overseas and PRC. Going forward, grp remains comfortable on prospects, noting that its juice business and canned vegetable products would be able to leverage on the strong domestic consumption in China and abroad. We note further that strong results in grp’s beverage segments could bring grp closer to a potential listing/spin off of its beverage segments onto the HKEX.