sino grandness - undervalued stock

Stellar results from Sino Grandness and very positive outlook as well, surpassed all the already bullish analysts' expectations for it. Will probably shoot up tomorrow - except that it may be suppressed by market sentiment in US and Europe.  

Hi ethan999, doesnt this look worrying? Sino Grandness' results were sterling, yet the stock is still stuck at 50 cents. The market is burdened with lots of macro worries about US, europe, etc.

Anyway, just to share with everyone in this forum, DMG had a good report out this morning and raised its TP:


Q11 net profit was ahead of expectations at RMB54m (our estimates: RMB38m) largely due to better-than-anticipated canned revenue and GPM of RMB187m and 33% (our estimates: RMB126m and 30%), which benefited from a poor harvest of asparagus in Peru and long beans in Kenya, as well as absence of anti-dumping tariff for canned mushroom to Australia.

In addition, SFGI saw positive flow through from its price hike early in the year.

Beverage revenue and GPM of RMB97m and 41% were both slightly above our projections.

After a strong set of 1H11 results, we revise our FY11 and FY12 earnings estimates up by 13% each to RMB168m and RMB188m respectively.

We now expect 3Q11 and 4Q11 earnings to come in at RMB41m (+5% YoY) and RMB42m (+14% YoY), as SFGI expects to incur higher A&P expenses for its beverage business in China.

Maintain BUY with a higher TP of S$0.76 (old: S$0.68), pegged to 6x FY11F P

Hi Joes,
Considering the Dow fell 265 points last night, and the STI is down over 50 points today, I suspect Sino Grandness would have been down a lot more than just 0.5 cents if not for the sterling results. Given that the CEO has been accumulating more shares over the last month or 2, I suppose it should be no surprise that the results have been very good.
Unfortunately however good a stock's financial ratios are, the marco-picture meaning the stock market and economy as a whole will always be an unquantifiable factor with too many unknowns and too many possibilities. In the 'PEG' ratio, 'G' is the trickiest of the 3 variables as it is determined not only by the company's own performance but the macro-picture as well; and it is 'G' that determines the value of all future cashflows. 
Interestingly, despite the Dow's abysmal performance of late, at the beginning of the year the Dow was actually lower than it is now - in fact on January 3rd it was at 11577.43. At that very same time, s-chips like Yangzijiang, Sino Grandness, Eratat Lifestyle were all much higher than they are now, in fact they were mostly quite close to their 52 week highs.
So the short-term performance of the Dow is not always an accurate indicator of the short term performances of Chinese companies, particularly those listed in Asia. At the beginning of the year, Asia was outperforming the West until a few months ago where money seemed to be flowing back to the US from emerging markets. Currently, it's possible that the trend could be reversing once again and that more funds are flowing back to emerging markets which have outperformed the Dow over the last couple of weeks. For instance, the Shanghai Composite is close to flat today despite the carnage elsewhere. 
Asia really needs to rely on China becoming more domestic-consumption oriented in order to make up for the decline of the West. Hopefully in the long run this will be good for stocks like Sino-Grandness, Eratat, China Minzhong etc. Of course in the worst case scenario where there is absolute carnage in Europe then no market will be spared. 
 

sino grandness is amogn those S-chips that reported a jump in earnings recently. Stock is worth more than its current 45 cents.
 

Big Q of over 1,000 lots to buy at 40 cents and less than 200 lots to sell at 40.5 c

I like this undervalued stock but dare not buy yet as the EU problems may take many mths  to resolve. If Bernanke doesn't announce or hint of QE3 tomorrow night , the Dow will thumble. I understand the EU short selling ban will expire end next week? Maybe I should see what happens  after EU short selling resume and then consider to slowly collect this stock?