Sino Grandness Food

UOBKayhian on 23 Oct 2014

FY14F PE (x): 3.4
FY15F PE (x): 2.8

An anonymous author newman9 from Value Investor Club (VIC) had issued a sell
report on Sino Grandness (SGF) with a price target of S$0. SGF found the allegations
baseless and is working with lawyers and auditors to issue an official press release in
due time. We will continue to monitor the situation closely for further development. Riskaverse
investors should only accumulate the shares after Garden Fresh’s listing
becomes more apparent. Maintain BUY. Target price: S$0.95.

Maintain BUY and target price of S$0.95 as we continue to monitor the situation closely
for further development. Our target price assumes GF’s listing will go through at 16x
PE, a 20% holding company discount on its eventual stake of GF and a 5.0x 2015F PE
valuation on its remaining business. We will review our recommendation and target
price again after the release of its 3Q14 results in mid-November. Intrinsic value of
S$0.75 if the listing exercise fails. We would value SGF at S$0.75, pegging its 2015F
PE to Singapore-listed peers’ average of 4.55x. This valuation would also have taken
account the potential equity and debt raising in 2015 to redeem fully the two convertible
bonds