Sino Grandness

Sino Grandness: UOB Kay Hian expect Sino Grandness to post a doubledigit growth in earnings in 2013 after it achieved record rev and profit levels in 2Q12. Believe the beverage segment will drive the next stage of growth for the co. Expect its in-house brand Garden Fresh to record a 120% yoy growth in rev in 1H12 alone. The group increased its distribution points in China and its beverage production capacity by 4x. Sino Grandness is also trying to automate its production line for its juices and has had trial runs in March. Mgt expects this to ramp up production volume beginning in 2Q12. Meanwhile, its canned fruits and vegetables business remains the cash cow, with a targeted 15-20% growth in annual revenue. 3Q12 and 4Q12 should be seasonally better for Sino Grandness, as it also expects to enjoy more orders from its export markets. Going forward, Sino Grandness will focus on the China mkt and targets to grow its presence there via two means: more advertising & promotional (A&P) activities and more new products. Grp recently strengthened its A&P and R&D teams to achieve these goals. Overall, recommend BUY on the stock with $0.64 TP based on a sector average PE of 3.0x. Technically, the stock is likely to edge higher should it be well supported at above $0.45. Resistance levels could be found at $0.52 and $0.60.