Sino Grandness

Sino Grandness: Counter up 9% yesterday, as the Company announced the completion of its private placement of 28.5m shares, at an issue price of $0.82/ share. Placement shares represent approx. 10.75% of the existing issued share capital of the company. As Sino Grandness is in the midst of preparing for a separate listing of their fruit and vegetable juice business (Garden Fresh) by 2014 (either in HK or Taiwan), Lim & Tan had a comparative valuation with similar co’s listed in HK/ Taiwan, based on grp’s consensus earnings, which street expects to rise 34% in 2013 to Rmb329m and about 50% of it is derived from Garden Fresh, translating to Rmb165m. While much bigger in size than Sino Grandness, comparable co’s such as Uni President, Tingyi and Want Want are all trading at an average P/E of 25x 2013 earnings. Assuming a 60% discount (10x PE) due to its smaller size, Garden Fresh alone would command a market cap of $330m ($1.24 per share) vs Sino Grandness’ current market cap of $253.2m ($0.955). Sino Grandness’ current market value of $253.2m is only valuing the entire co at 3.7x 2013 earnings.