Sino Grandness

Sino Grandness: 1Q14 net profit was shaved 2.8% y/y to Rmb68.6m, while revenue was higher by 27.5% (but lower 12% q/q) to Rmb477.6m attributable to increased beverage and canned products sales in China as distribution expanded, partially offset overseas sales. Bottom line was weighed by distribution costs which increased 122% to Rmb70.7m. This marks the 3rd consecutive quarter that revenue has been declining, and is the lowest since 1Q13. IPO of Garden Fresh is progressing slower than expected due to more stringent listing rules by HKEx, and MKE believes that Sino Grandness has not officially submitted the IPO application to HKEx yet. MKE flags downside risk on event of IPO delay. Maybank KE downgrades to Hold from Buy with lower TP of $0.76 from $1.06