sino grandness - undervalued stock

The strategic investor is unveiled: It's a subsidiary of Thoresen Thai Agencies Public Company Limited.

tta.listedcompany.com/newsroom/20141001-tta-set01-en.pdf


Puzzles me : Why would a dry bulk carrier company / parent want to venture into F&B?

PM Group, which is involved in instant coffee production in Thailand in joint venture with Nestle under the Nescafè brand name, will have a 3.77% stake in Sino Grandness.

PM Group and Thoresen have common shareholders.

www.pm-groups.com/pmgroups/about.php

I guess there must be some synergy for the Thai company to accept such a placement, not unlike what Indofood did to China Minzhong, although it was forced by the short sellers. Good for minority investors to have another pair of eyes to look out for signs of trouble in this S-chip. (vested)

I have to add that in the case of IndoFood and CMZ, it was a take-over, so not that similar after all, on hindsight.

Key points of the proposed placement by Sino Grandness :

Proposed Placement of 86m new shares at 61cent to two Thailand Conglomerates namely PM Group and Thoresen Thai Agencies (“TTA”) wholly-owned subsidiary Soleado, both of which are connected to the Mahagitsiri Family. The flagship company of the PM Group, Quality Coffee Products Co., Ltd. was established in 1989, under partnership with Nestle S.A., Switzerland, as the sole producer of their world-famous instant coffee – Nescafè.


Mr Prayudh Mahagitsiri, also known as the Coffee King of Thailand is the Chairman of PM Group and also the Honorary Chairman of TTA. According to www.forbes.com , Mr. Prayudh Mahagitsiri was ranked amongst the 15th richest men in Thailand as of June 2014.



Upon completion of the placement, TTA (through Soleado) shall own 9% while PM Group shall own 3.77% of the enlarged share base of Sino Grandness.

What it means for sino grandness

a.Securing a long term strategic investor :

Demonstrating its long term confidence in the prospects of the food and beverage (“F&B”) industry in China as well as the growth strategies of the Company, Soleado has agreed to a 10 year lock up period for approximately 47.1m shares subscribed. In return, Soleado shall be entitled to one board seat in Sino Grandness.

b.Leveraging on Mr Mahagitsiri extensive experience and business contacts

Mr Prayudh Mahagitsiri shall be appointed as the Honorary Chairman of Sino Grandness.

c. Stronger balance sheet and potential collaboration

This investment not only shall strengthen the balance sheet of the Sino Grandness, but more importantly it shall open up new opportunities for the Group to explore collaboration with Mr Mahagitsiri, PM Group and TTA in terms of developing new products and new markets in South East Asia.”

About PM Group

PM Group is one of the top, privately-held Thai conglomerates with interests in consumer products, industrial products, property development, golf courses, entertainment, education and investments. PM Group’s consumer products operations in Thailand include Nescafè, Krispy Kreme and Coffee Gallery. Under the leadership of its Chairman Mr. Prayudh Mahagitsiri, PM Group manages the businesses of various subsidiaries and associate companies with assets valued at over USD 2 billion.


The flagship company of the PM Group, Quality Coffee Products Co., Ltd. was established in 1989, under partnership with Nestle S.A., Switzerland, as the sole producer of their world-famous instant coffee – Nescafè.


Foremost of Mr. Prayudh Mahagitsiri’s many ‘first-in-Thailand’ projects was bringing Nescafè instant coffee from Switzerland to Thailand. He convinced Thais, who were staunch tea lovers then, to start drinking instant coffee and persuaded the farming community to take up the bean cultivation. His endeavour of introducing and nurturing coffee culture has earned him the sobriquets of ‘coffee king of Thailand' and ‘Mr. Nescafè'. According to www.forbes.com , Mr. Prayudh Mahagitsiri was ranked amongst the 15th richest men in Thailand as of June 2014.


About Thoresen Thai
Thoresen Thai Agencies Public Company Limited (“TTA”) is a leading strategic investment holding company listed on the Main Board of the Stock Exchange of Thailand (TTA:TB) with a market capitalization of over THB 30 billion. The company grows through a diversified portfolio of attractive long-term investments globally. TTA’s current businesses include, but not limited to, worldwide dry bulk shipping, middle-east based offshore oil & gas services, high-quality fertilizer production and distribution, and deep seaports as well as integrated logistics services and warehouses in South East Asia.

The investment into Sino Grandness by TTA is the first step for TTA toward creating sustainable growth via the diversified investment by expanding its footprint into high growth Food and Beverage in the People’s Republic of China.

Estimated gross proceeds SGD52.4m for capex, net work expansion and working capital needs.

Sino Grandness will start paying dividends:

Dividend Policy
Pursuant to the Subscription Agreements, for as long as certain shareholding requirements as set out in the respective Subscriptions Agreement are satisfied, the Company shall have the
following dividend policy, which will be announced by the Company, that, whenever feasible, the Company will declare and pay dividends to the Shareholders in an amount of at least 10% of the consolidated net profits of the Company as reflected in the audited accounts of the Company.

infopub.sgx.com/FileOpen/Sino_Grandness_...cement&FileID=316875