SinoGrandness

SinoGrandness:
CIMB released a NR report on the company in which it highlighted supply based growth factors with the construction of new plants in Sichuan, Hubei and Anhui driving up supply of its beverages and canned food. The company expects the expansion to result in better gross margins.

Additional updates:
1. SinoGrandness is on track to spinoff Garden Fresh in HK, with a succesful spin off expected to remove a key overhang while failure to do so could results in a penalty of around Rmb700m.
2. Strategic investment by Thailand's Prayudh Mahagitsiri could introduce cross selling opportunities between the co and his JVCo, Quality Coffee Products. Prayudh recently bought 60.6m shares with over 75% of the shares locked up for 10 years.
3. Co launched yogurt drinks and more healthy snacks in China recently. With Thai investors onboard, the co could venture into Thailand.

Current valuations are undemanding at 2.7x CY14 P/E vs SG peers of 10.5x. Possible rerating catalysts include a potential dividend payout, successful listing of Garden Fresh.