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Daniel J. Riner  

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  • SkyPeople/Coca-Cola Buyout Thesis In Play [View article]
    Thanks Ryan!
    Apr 23, 2015. 02:51 PM | Likes Like |Link to Comment
  • SkyPeople/Coca-Cola Buyout Thesis In Play [View article]
    Short answer: Risk factors are real, as with any investment and any stock. The long-run, risk-adjusted, probability-weighted capital appreciation is well worth it to put forth an investment in this company at these basement prices.
    Apr 23, 2015. 01:06 PM | Likes Like |Link to Comment
  • SkyPeople/Coca-Cola Buyout Thesis In Play [View article]
    The IRR would not be worth it for management to sell out at $5. That would be paltry returns for the amount of years they have invested in this company.

    This will be double digit range bound when buyout is realized.
    Apr 23, 2015. 01:05 PM | 2 Likes Like |Link to Comment
  • SkyPeople/Coca-Cola Buyout Thesis In Play [View article]
    Apr 22, 2015. 02:41 PM | 1 Like Like |Link to Comment
  • SkyPeople/Coca-Cola Buyout Thesis In Play [View article]
    My quick reply to you is that at an Enterprise Value of $400 million and a MV of debt of $60 million, the implied share price would be around the $12 range, which I clearly write in this article and in my previous articles as a possible likely range of being bought out at.

    Average premium for the universe of stock buyouts is in the 30% range. Coke doesn't really care how big the premium is as they have a war chest to spend in Asia. However, there will be a premium to shareholders b/c the company is more than 50% owned by the CEO, Xue, and he isn't selling without a premium, which is obvious.

    The point is that it won't likely be bought out until these 2 major projects are finished (which gives time for share price appreciation) and operational (as Dutch said) and the distribution channels are built to a reliable and stable measure with a clear customer base. So far these are all becoming a reality sooner, rather than later. Buyout time in my mind is 24 months, as I mention above.
    Apr 22, 2015. 01:38 PM | 1 Like Like |Link to Comment
  • 10 Top Dividend Stocks [View article]
    Great article, check out HCP as a potential REIT. It's a healthcare REIT that has increased its dividends every year for the last 30 years. It is probably a little overvalued at the moment, but a great pick up in a downturn market.
    Apr 22, 2015. 07:29 AM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]

    Anything that increases the brand image of their product is worth mentioning as they have a credibility issue, not a quality of product issue. The point is that no one in America (their investment base) actually believes the product is real except for a few knowledgable people that have either traveled to China and purchased the drink or were a part of the original road show years ago.

    You have to keep in mind that management is quite inexperienced as most managers are for a relatively new IPO company. We are also dealing with a culture that (assuming you are American) is quite difficult to for Americans to understand the ways in which they go about business. Most Americans will see something done in China a certain way and assume an erroneous conclusion when the truth is diametrically opposite to their thoughts.... Furthermore, you have to understand that this is a country where things are slow moving. You can't just go to China and expect to purchase land. The CCP controls 100% of the land and leases it out, you never own the land and you have to form a special committee to complete construction of the project, which is another layer of red tape, and another layer added to time. So for SPU to come out with a detailed timeline would be problematic if they can't commit to those timelines and they would be punished even more by shareholders when things get delayed, even though it wouldn't be their fault. Everything has to get rubber stamped 1000 times in China and if 1 rubber stamp is missing, it takes a lot of time to get things approved and re-approved.

    It's not easy to evince from an analysis of their cash flow statement either, which is all we really have to go by. They announced the kiwi project in 4Q 2012. They have spent approximately $30 million since then on CapEx. The Kiwi project is expected to cost $72 million but they have announced that they will start a trial production in H1 2015 meaning if the majority of that $30 million spent has gone mostly to the kiwi project in Mei county, they probably have approximately another 40-45 million to spend. With expected costs coming down in 2015 and their devotion to funding their projects through cash flow from operations, they'll likely get some sort of production going by June. I'd expect to see major production numbers of kiwi by 4Q 2015.
    Apr 6, 2015. 10:39 PM | 1 Like Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]

    Thanks again for commenting and giving your insight. I agree that it's difficult to tell from just internet sources alone in a small market like fruit juices.

    Another source of information would be a research survey sent out to a 1000 likely would-be drinkers of fruit juice and then ask them if they have heard of Skypeople's juice products, if they had tasted it, their opinion, etc.

    Their brand image will likely improve once they further their ad campaigns like the weibo chat ads. Right now they are doing unconventional measures for advertising that they think has the biggest impact without spending too much, as they are trying to allocate everything to capex.

    The reputation and brand should increase this year, as they will likely have more free cash flow available after they are finished with the 2 projects this year for advertising, and as they enter a new market, orange juice.
    Apr 5, 2015. 01:43 PM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]
    Hi China,

    Thank you for your kind comments.

    When they start exporting their HeDeTang brands in the US or under some other label that could be in a joint partnership or a royalty streaming deal with distributors or some other major label would be another way of proving to shareholders Skypeople is real.

    I'll look more deeply into the projects but it appears SPU should have the kiwi project finished and running sometime in 1H 2015.
    Apr 4, 2015. 02:33 PM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]
    Anytime MastPi.
    Apr 2, 2015. 08:57 PM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]
    Hi MastPi,

    They do.

    You can see the brands on their main page here:

    Or you can look at them individually here:

    Hope that helps.
    Apr 2, 2015. 01:40 PM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]
    Puyuan you have to remember this is a multi-billion dollar market and SPU sold $14.9 million in the 4th quarter. SPU is essentially a drop in a bucket the size of the Atlantic Ocean.

    Think about it for a second. The buyer on Alibaba isn't a local consumer like you and I, it is a huge retailer or distributor that is buying on alibaba. I would assume they earn a fraction of sales from individual private purchases on Baidu or Alibaba. The retailer or distributor that buys on alibaba then sells the product in their store, and the end-consumer buys it.... Do you think that someone is really going to go online and rate it on some site they didn't purchase it from in the first place? It would be like me rating coca cola on Ebay when I bought it at my local Tom Thumb or CVS. That just doesn't make any sense. I think understanding how most people are buying the product is important to understand in SPU's case.

    I've actually had the product and can tell you first hand that it is high quality. This corroborates with the top of the line manufacturing equipment they have bought from Italy, Germany, and the US. The quality is reflected in the high end machines they have purchased. I'm also an american consumer that is privy to the best fruit juice brands produced in the world, so I am comparing this to the best companies in the world where 100% fruit juice products are of the highest quality.... SPU's product is right up there with the greats from my experience. The typical Chinese consumer doesn't have this same advantage as me. There are only a few fruit juice companies in China and manufacturing processing at most of them aren't anything to boast about, which are made on 2nd rate machines. SPU took the opposite approach, they bought high-end machines and adhere to the highest CGMP standards.
    Apr 2, 2015. 10:38 AM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]
    They are too small at the moment. Coke already attempted to buy the largest fruit juice maker in China, Huiyuan.... Coke wants companies with large infrastructural investments already that are easily synergistic and scalable.

    Just look at their past acquisitions or stakes.... they are all in multibillion dollar companies. That's not to say that SPU could be $500 million market cap in a couple years.

    If it was trading at the beverage competitor average P/E of 20, it would be worth $160 million right now. With the 2 new major projects and a third project coming online at a total investment of $125 million, earnings this year is going to be pretty amazing.

    Remember, all SPU has to do is beat last year's less than stellar earnings, which won't be hard to do... combine that with steady top line growth and institutions could bid this up to comparable company market multiples and this could easily trade at $6-$10 by the end of the year after the aforementioned investments reap rewards for bottom line earnings.

    The important thing to keep in mind is that Coke has already tried to buy a company in the fruit juice beverage industry and they are diversifying away from carbonated drinks to where the future will be, which is healthy juices and all natural products, etc. Coke can't really buy them out down here as they would want SPU to expand its operations and infrastructure a little more.

    It really makes no difference what price coke buys them out at either. Let's say we have a bonanza year in 2015 and SPU announces a few other strategic investments and a booming international export market due to USD, GBP, and other currencies strengthening against the yuan and it is trading at $20 a share sometime in 2016. That's only a little more than $500 million market cap. At a 40% premium paid, SPU could be bought for less than $750 million, and coke wouldn't care b/c it isn't remitting the earnings it makes overseas in Asia anyways. It has a $20 billion war chest in Asia alone, which it announced it was keeping there for strategic acquisitions. It's only a matter of time.

    By the way, I will release a future article detailing exactly why Coca Cola will eventually buy SPU... I just don't want to get ahead of myself right now.
    Apr 1, 2015. 09:50 PM | 1 Like Like |Link to Comment
  • SkyPeople Fruit Juice: Parsing The Earnings Report [View article]
    Hi Renmy,

    You are certainly right that SPU is partly discounted because of this reason, but rest assured there are quality projects near productions stage that will enable SPU to export its drinks directly to the US as stated on their chinese website.

    These 2 capital projects are major investments and in total at $125 million are about 4.5 times market cap. Can you imagine Apple spending almost $4 trillion to expand its operations?

    This all means ROE will be extraordinarily abnormal this coming year and beyond.
    Apr 1, 2015. 05:00 PM | Likes Like |Link to Comment
  • SkyPeople Fruit Juice Trading At A Significant Discount To Peers And Intrinsic Value [View article]
    Hi Jeld,

    The problem with that thinking is that YONG was a much larger company than SPU. The deal reached with Yongye International was a $260 million dollar deal. This was also during a time when private buyouts for U.S. listed Chinese firms was hot b/c of all the accounting scandals related to Muddy Waters.

    This is different. SPU is a teeny tiny $33 million market cap company. There is way more downside of SPU going private. The most notable of which is lack of access to capital and public markets.

    They are operating in China afterall and if they go private, their funding to high quality capital deteriorates significantly. If they stay listed on the U.S. exchange and when the market realizes the value of SPU, the benefits extremely outweigh the costs of staying publicly listed.

    As of now there is a less than 1% chance of going private. It just wouldn't make economic sense for anyone at the moment. As I hinted at earlier, the only strategic buyer would be Coca Cola; an LBO deal to take it private would be unlikely as this is such a small company with a small asset base.

    Coca Cola would be a wonderful strategic buyer for many reasons. They attempted to buy the largest health drink maker, HuiYuan a few years back. Coca Cola is looking to pivot a huge portion of capital into the healthy drink space as they see this is where the future will take the drink space. SPU is 100% health drinks, and therefore this would give Coca Cola access into the largest health conscious market in the world.
    Mar 30, 2015. 03:59 PM | Likes Like |Link to Comment