Sino Grandness

Sino Grandness: 3Q13 was better than expected with net profit doubling to Rmb168.2m as revenue shot up 56% y/y to Rmb746.3m. Revenue from Garden Fresh beverages surge 79% to Rmb436.5m. The volume growth for Garden Fresh was attributed to the expansion of distribution network in PRC. MBKE highlighted that new channels include chain restaurants, and big supermarkets contribute a lesser concentration of sales at 25% vs 50% a year ago. Overall, canned products sales rose 32.3% to Rmb309.8m. Domestically, the sales growth was 94%. Increase in sales for canned products was due to increased production capacities, and increased orders both domestically and abroad. Receivables remains at a manageable 90 days. Management says it is on track to achieve record profit for FY13. A new brand of snack food called Hao Tian Yuan was also recently launched. NAV at end Sep was Rmb 2.188. The Garden Fresh spinoff is also progressing well and MBKE reckons it can be completed by Oct 2014. Latest broker ratings as follows: MBKE’s Buy call remains, with increased TP of $1.00 from $0.94. UOBKH maintains Buy, TP: $1.02