SINO GRANDNESS: Share price in a slump. What gives?

Sino Grandness' share price has suffered a sharp downtrend, scaring investors who were holding the stock in anticipation of the IPO of its beverage division. The price dropped to 52 cents on Monday, which is a long way down from the 77.5 cent level the stock touched in early June this year.  Then yesterday evening (Tuesday), it was announced that the Thai substantial shareholder had sold 1.7 million shares on Monday at an average price of about 52.55 cents. This triggered some panic-selling and, doubtless, opportunistic short-selling this morning.  It ended the day at 48.5 cents.  (At the time of writing, there is no announcement of the Thais selling again). Late 31 Aug update: It's announced that the Thai shareholder, Thoresen Thai Agencies (TTA) had sold another 550,000 shares on 30 Aug at an average price of 52.1 cents.   A press release said: "TTA clarified that the sale of the Shares were undertaken as part of its portfolio management, of which the Shares were purchased in the open market in 2015. TTA reassures it remains committed to its core strategic holdings of the Company which Soleado invested back in 2014 as a result of the share placement."

Investors have been asking: 

1. Are the Thais (who hold a stake of about 14% in Sino Grandness) disappointed that the IPO of Garden Fresh has not materialised and are less hopeful of it now? 

2. Are they raising cash to prepare for a fund-raising exercise by Sino Grandness to pay off its maturing debt? 

It's difficult to know the answer but the fact is the share price has suffered.

It may be temporary. Only time will tell if the share price will languish, or recover, and if the Thais will continue to sell.

It is interesting to note that a low share price -- if it stays low for long enough -- confers an attractive advantage to TTA.

As background, in May this year, TTA lent Sino Grandness US$20 million in the form of a convertible loan that came with the following conditions: 

The loan could be converted into Sino Grandness shares based on whichever is lower: 

a) 55 cents per Sino Grandness share, or

b) 20% discount to the volume weighted average price per share traded on the stock exchange during the last 60 market days immediately preceding the date of the conversion. 

Sino Grandness' best-selling product -- loquat beverages. File photoThus, if Sino Grandness share price stays lower than 55 cents, TTA would be able to convert its loan into shares (capped at 50 million shares) and be paid the rest in cash. 

The advantage is not assured as there is an approval hurdle and there is significant waiting time.

Shareholders must approve the loan conversion at an EGM, and after 12 months from the date the loan was disbursed, or after the date of completion of the IPO of Garden Fresh, whichever is earlier.