Sino Grandness

Sino Grandness: DMG Upgrades to Buy and lifts TP to $0.65 from $0.46. House no reviewed numbers and believe that earlier earnings estimates – which were in line with consensus – may be too conservative. As such, house raise FY12 earnings estimates by 11%, making house the most bullish on the street. Expect 3Q12 earnings of RMB77m vs RMB45m in 3Q11. Bullish stance is backed by: 1) Stronger orders for its export canned foods from Europe, 2) Raised ASP and gross margin assumptions for its asparagus and mushroom canned foods to be in line with 2Q results, 3) Lower opex and finance cost assumptions, which resulted in net margins rising from 14.1% to 15.5%. House change valuation methodology from sum-of-parts to P/E and derive a higher TP of S$0.65, pegged to 3x FY13F earnings (mean historical trading band). Results will be announced on Nov 6th after market close.