Mainboard-listed Sino Grandness, the manufacturer of canned fruit and vegetables, plans to take its beverage unit public in Hong Kong, as the company plans to be closer to mainland China where surging demand is luring companies to raise capital in the territory.

Sino Grandness Food Industry Group chose Hong Kong because the market for fruit-based drinks made by its unit is in China, chairman Huang Yupeng told reporters. Demand for the products made by Garden Fresh Group Holding is growing fast and accounts for 70 per cent of revenue, he said on Tuesday.

Rising incomes and urbanisation in China have stoked demand for everything from cars to refrigerators and food. The government is shifting the economy away from state investment to a consumption-led model, a move that may further fuel sales.

Sino Grandness shares have jumped 79 per cent in the past year as gross profit rose.

"The context now is very different," Mr Huang said, when asked why the company did not list the unit here. "In 2009, when our business was canned vegetables and fruits, we were exporting to Europe. Singapore, as an open, law-based and transparent exchange, was a great help with overseas business. The product's main consumer is now China and demand is growing fast."

Sino Grandness' loquat juices under the Garden Fresh brand in a supermarket in Chengdu, Sichuan province. PHOTO: SINO GRANDNESS

The SGX has declined in the IPO rankings and had the smallest haul of new share sales among South-east Asia's four largest stock markets in 2015. Listings this year on SGX, the region's biggest, totalled US$34 million (S$46 million), trailing Thailand and Malaysia. In the past four years, at least two companies - China Animal Healthcare and Sound Global - have delisted from Singapore in favour of Hong Kong.

Garden Fresh is known for its loquat fruit juice in China and has a line of drinks that combine juice and milk. Executive director Zeng Ming said the company is banking on a growing preference in China for natural and nutritious drinks.

"Chinese consumers no longer go for the cheapest thing but worry about their health and the environment," Mr Zeng said.

Sino Grandness has a market value of about S$450 million and reported net profit of 207 million yuan (S$43 million) in 2015, a decline of 17 per cent from the previous year. The company has a separate brand of snacks such as cured cuttlefish and shrimp.

BLOOMBERG