sino grandness - undervalued stock

To those who bought Sino Grandness since I've been recommending it at 40 plus cents, I hope you've held on till now. This has been a tremendous ride for us and I myself am sitting on more than 200% gains on this stock.

If you consider that Sino Grandness IPOed just less than 4 years ago at 20 plus cents, you must say that Sino Grandness has so far proven to be one of the best ever Chinese stocks to list in Singapore.

Looking at the way Garden Fresh is growing and the much higher valuations it will receive in Hong Kong, it's staggering how much capital it could raise in its upcoming IPO in Hong Kong, relative to Sino Grandness's market cap at the price we bought it at.

It also looks like its can food business is benefiting from Garden Fresh's increasingly wide distribution network, and is set to go on a very impressive growth path of its own.

This is a management that can produce results and is able to walk the talk.

All this when the Shanghai Composite is still at a mere 2100 plus points. Although it has recovered somewhat from its December low of 1800 plus points, (and we see a similar level of recovery in the FT ST China (s-chip) index as well) 2100 plus points means its still pretty much in bear market territory. This is still only about 1/3 of its all-time high in October 2007 of over 6000 points.

Sino Grandness has no doubt outperformed the market but if this is what it can do during a bear market, imagine what it could do during a China bull market.

In the short run, anything can happen. But in the medium to long run, I believe both Sino Grandness & China Minzhong still have significant room to rise, particularly if China as a whole returns to a bull market. Although my average price for China Minzhong is only about 60 cents, I will be looking to accumulate more of China Minzhong, particularly if it falls below $1. For Sino Grandness, I think we should just sit and enjoy the ride for now. In the short run, anything can happen, but in the long run, the odds still look very good. The kind of growth it looks like achieving could make this a historical multi-bagger for years to come.

Ethan999,
Do you know how Garden Fresh managed to place its juice in supermarket chains such as Walmart, Carrefour and Tesco?
Will larger beverage companies produce loquat juice too?
Thank you.

Ethan999, loquat juice is the best seller for this company.what is so great abt it... i dont understand. And wont it be like honey in attracting 'bees'' in the form of competitors.?

Hi Sana,

With the exception of state sanctioned monopolies or duopolies (which are usually trading at very high valuations) , in virtually every industry out there, there are competitors for every company.

For instance you and I may have no idea how to build a ship or start an airline company so the barriers to entry may theoretically seem high, but look at the sheer number of shipbuilding and airline companies out there - in a world of 7 billion people there will always be other entities which can replicate what you're doing - competition is a fact of business, you just got to focus on your own product.

For example, Hangzhou Wahaha Group, a producer of the mineral water brand Wahaha (well known in China), owned by the 2nd richest man in China, is achieving more than 1 billion USD in net profit per year. How easy is it to produce mineral water? Yet Wahaha has remained as one of the top mineral water brands in China for many years now, it's all about how you manage your brand.

Tingyi Holding group, one of the largest producers and distributors of instant noodles, beverages and baked goods in China, is trading at a P/E of 31 with a market cap of over 112 billion Hong Kong Dollars. But how many companies out there can produce instant noodles, beverages and baked goods - so many. If ease of product replication was a genuine barrier and the only factor that determines whether you can become big and successful, Tingyi, along with thousands of other examples, would not be where they are today. The only companies with huge market caps would be the state sanctioned monopolies and duopolies.

ethan999, Your reference of Tingyi prompted me to read the financial results of the company.

In 2012, revenue of Tingyi's beverage segment was US$ 4.93 billion (RMB 30.7 billion), about 35 times that of Garden Fresh.

Yet, its gpm was 29.6%, much lower than the 42.8% of Garden Fresh.

Do you know how Garden Fresh managed to outdo the titan?

How water tight is Sino's agreement with fsrmers' coopetatives for the supply of loquats? Can they sell to higher bidders?