SINGAPORE (May 12): Sino Grandness Food Industry Group has announced RMB52.8 million ($10.8 million) of earnings for the 1Q ended March 31, down nearly seven times from the RMB360.2 million reported in the same quarter a year ago.
The lower net profit was mainly attributable to a decline in group revenue; changes in fair value of options derivatives in relation to convertible bonds; in addition to the absence of gain on the restructuring of convertible bonds in 1Q17, says the group in a Friday filing to the SGX.
Revenue for the quarter fell 12.2% to RMB635.1 million from RMB723.7 million on lower sales of beverages, as well as canned products in overseas markets, which declined by RMB84.4 million and RMB6.2 million as compared to a year ago, respectively.
According to Sino Grandness, the y-o-y decline in sales revenue of beverages was due to changes in the consumption environment of the domestic beverage market in China.
Distribution and selling expenses fell marginally by 0.7% to RMB113.6 million due to lower advertising and promotion expenses, transportation costs, and staff benefit costs.
However, administrative expenses grew 7.7% to RMB41.6 million as a result of an increase in legal and professional fees of RMB9.8 million, which were partially offset by a decrease in exchange loss of RMB4.3 million and share-based payment expenses in relation to the group’s employee share option scheme (ESOS) of RMB1.1 million.
Finance costs grew 98.3% to RMB12.5 million over the quarter on higher bank borrowings.
Given the recent completion of the group’s rights issue in March this year, Sino Grandness chairman and CEO Huang Yu Peng notes a stronger balance sheet for the group with a significantly improved cash balance to RMB780.4 million as at March 31, compared to RMB297.7 million in end-2016.
"In the long run, I remain optimistic about the growth potential of the consumer market in the PRC due to its huge population base and rising disposable income. To capitalise on the growth opportunities ahead, the group will continue to invest in various advertising and promotional activities as well as sales and marketing initiatives to enhance its brand visibility and brand recognition,” says Huang.
“Additionally, the group will continue to grow our product range and explore various strategic collaborations in order to expand our online and offline distribution channels.”
Shares of Sino Grandness closed 2% higher at 25 cents on Friday.
