Sino Grandness

Sino Grandness: 4Q13 saw a 10% y/y slump to Rmb59.2m. Topline grew 36.3% to Rmb553m. This brings FY13 revenue and net profit to a record Rmb2.3b and Rmb401.1m (+38.5%) respectively, although these missed street estimates. 4Q13 topline was led by a 56.7% growth in beverage business at Rmb370.6m. For canned products, the 80% growth in domestic revenue at Rmb46.5m was partially offset by 5.2% decline on overseas revenue at Rmb135.9m. Bottomline was weighed by ballooning distribution and administrative costs (higher dep’n on new Hubei Plant, FX losses, and professional fees on spinoff) which offset revenue gains. On its spin-off, management did not provide much updates, except that work have commenced. Maybank-KE previously understood that official IPO applications to the HK Stock Exchange would be submitted by Jun’14. IPO is expected to be completed by 19 Jun, with minimal risk of delay. Promotional activities, expansion of production capacity and R&D efforts will also be stepped up to capitalize growth opportunities ahead. Sino Grandness is trading at 4.1x forward P/E. Maybank KE reiterates Buy call with TP 1.06