sino grandness - undervalued stock

A successful IPO will add RMB745m to the equity of Garden Fresh, making it a stronger company.
Firstly, bondholders will swap their RMB370m bonds for equity.
Secondly, if listed at 15 times 2013 earnings of RMB250m (to have minimum dilution of Sino's stake in Garden Fresh), Garden Fresh will be valued at RMB3,750m. Issuing 10% new shares will add RMB375m to the coffer.

Based on Sino Grandness annual report, Garden Fresh had RMB 314m as equity at the end of 2012.
This will become RMB 564m if Garden Fresh delivers the target profit of RMB 250m in 2013.
Equity of Garden Fresh will be RMB1,309m after IPO, not counting the profit in the early part of 2014, and the company is debt-free.

With the strong balance sheet, Garden Fresh can further expand its production and distribution networks.

Maybank Kim Eng has the same analyst covering Sino Grandness and Midas.

On 16/08/2013, the stock was at 0.505. The analyst had a target price of 0.75 (ie, +0.245 = 48.51% upside.)

On 15 Aug, the Sino Grandness stock was at $1.47 and the analyst set a target of $1.89 (ie, 29% upside).

source: www.nextinsight.net/index.php/story-arch...3/7361-target-prices

The PE valuation of Midas is very high while Sino Grandness is very cheap. Yet the analyst is seeing much more % upside for Midas.

Why is that so?

My remisier shook his head .... he recalled some clients sold down Sino G in a panic (when Glacus attacked Minzhong).
They bought at ~ $1.40, sold at ~ $1.10, $1.00....The S-chip fear took over.

But now rebounded ---> $1.35.

Combination of the fear factor and herd mentality very powerful.

I bought more when it went down to $1.03. But my original price is just over 40 cents Even the CEO and cornerstone investor Asdew were buying more, usually a good sign.

Annualised eps will give a PE of 5.6X. It is one of the very high-growth Chinese companies which are dramatically undervalued. Just $1.35 this morning. It's nowhere near the 10X PE (~$2.40)that one would expect of a S-chip with good potential.