The war between China Green Ag mgt vs. the shorties is really heating up. The only analyst following the stock (CGA) has now issued a SELL warning, but management wrote a lengthy letter to shareholders that was very convincing except that they referred to the shorties as "Terrorist" for illegally video taping their operations. I don't think that argument holds water with western investors. Most of the attention is being focused around a $113M investment in "marketing-related deferred assets".
From the shorties:
The analyst appears to now share our negative view of CGA's highly doubtful $113 million investment in marketing-related deferred assets.
The appearance of misconduct casts a different light on other corporate actions, namely the significant investment in a marketing program that has required over $100 million dollars in cash investment over the past three years. Granted the number of participating retail store has increased dramatically to over 26,000 at the end of the last fiscal year. Yet the expenditure is significant on a per store basis given costs of signage and displays in China. If the investment leads to higher sales in the long term, then it is easily justified. However, the lack of transparency around the program and the change in accounting treatment now look deceptive. The marketing program is organized in such a way that it could be easily compromised by fraudulent retailers or unethical employees.
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Stay tuned!!!
