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Joe:
Can you shed a bit more light on exactly what Markscheid said in his eMail. That is a potentially devastating assumption on his part unless he has something very specific to back it up. It is quite clear that all the independent directors were asked to resign by Ding. Was any reason given? There are a couple of reasons that I don't believe CHGY is going dark. I've learned via a Chinese friend who is also a CHGY shareholder, and follows them closely in the Chinese business press, that Ding formed a strategic partnership with Jizhong Energy Group, a very large state owned company in Hebei Province (just south of Inner Mongolia) on april 11 of this year to help fund Ding's acquisition ambitions. Also the Inner Mongolian government and the Ordos government officials have been putting pressure on the larger coal companies to complete their mergers and acquisitions by June 30, 2012. These two facts, coupled with the forced resignations of all the outside directors in early July leads me to believe that they were forced to resign to make room for new directors from either Jizhong or the acquired coal mines. Of course there is no communication from the company, but Ding has operated in an honorable manner thus far and I tend to believe in his integrity unless Markscheid has some very specific information which has yet to be shared with shareholders. Please let us know more specifically what he said. Thanks very much.
You can't use TA on a stock that is as thinly traded and unknown as this one. Good news moves the stock briskly but then lack of news drags the price back down. The fundamentals on CHGY are simply outstanding. If they made even a modest effort to toot their own horn we would have a five dollar stock in a heartbeat. You can snicker all you want and continue to stay on the sidelines but when they announce their first acquisition or perhaps a modest dividend you are going to be left in the dust.
Nothing new that I am aware of. Still waiting for acquisition news.
Amigos. CHGY, FEEC, LPH
CHGY. See post 2724 on IV. No plans to go private.
CHGY. Thanks Joe. That clears things up. I thought that all of their current directors were Chinese and was not aware that they were English speaking. Their web site is ceccec.com....hopelessly out of date and has not been changed much since it was first put up. No one wants to see their stock price go up more than I do but I would be very surprised if you were able to find someone to participate in a live discussion. That has simply not been their style. We do have a couple of native born Chinese on both the IV board and Yahoo who have spoken to the company from time to time but current information is hard to come by. The emphasis this year will be on making one or more major accretive acquisitions. I believe they are well postioned to do this with their strong political connections in Inner Mongolia. As a publicly traded subsidiary of the much larger Tehong Coal Group (also presided over by Mr. Ding, Chairman and CEO of CHGY), I believe they will be selected as one of the consolidators and not get gobbled up by another coal mine in the consolidation process. The best informed discussion of CHGY's prospects has been on the IV Board in the past.
Sorry to be so dense but I can'tt find an active web site called "stocktalklive". I own a whole bunch of CHGY and follow it closely and this is the first that I have heard this rumor. The CEO/Chairman owns better than 2/3's of the outstanding shares and has never shown the least interest in getting the price up, which I think could be easily done if he had any desire to do so. My assumption was that once CHGY makes one or more accretive acquisitions (almost certainly within the next 12 months) and upgrades to a more senior exchange that management would take steps to more aggressively promote the stock and boost the price. Is there a record of this discussion on Stocktalklive somewhere? I would be very interested in who was discussing this as I know most of the major shareholders and none of us have heard a whisper of this rumor.
CHGY Absolutely the best buy in the China space today.
CHGY in 2012
Microwzy, a Chinese PhD engineer, and I have been reviewing China’s 12th Five Year Plan (available in English on the Internet) to see how it might impact the future of CHGY. We focused on the coal industry for the next five years and our conclusion is that significant changes are just over the horizon for CHGY. Inner Mongolia, where CHGY is located, was singled out as a focus for development in the plan, and is already China’s top coal producing region, producing almost 25% of the domestic coal supply. That amounts to about 800 million tons a year with better than 700 billion tons yet in reserve.
A focus of the Five Year Plan is to dramatically increase China’s energy supply with an emphasis on coal production in the short term and green energy alternatives longer term. Inner Mongolia, while the largest coal-producing region, has a large number of small inefficient mines. A government focus for some time has been to consolidate and modernize the mines in the region and has reduced the number of mines from over 1,500 in 2005 to fewer than 500 today. The Five Year Plan calls for a further drastic reduction, consolidation, and modernization, in the mining process. Inner Mongolia will form twenty large-scale coal companies by the end of 2013, each with a production capacity of more than 10 million tons and with projected profits of ten billion Yuan (1.5 billion dollars). Additionally, the government plans to establish one or two giant coal companies, each with more than 100 million tons of production capacity. Smaller coal companies currently operating in the region with less than 1.2 million ton capacity will be eliminated.
Inner Mongolia is strategically located between the northeastern and western provinces in China, and both areas are a focus of the government’s plan for increased industrial and manufacturing capacity over the next five years. To serve these markets a two fold approach is proposed. First a dramatic emphasis on railroad infrastructure that will result in over a 50% increase in the shipments of coal by rail by 2015, and an increase in electrical power generation capabilities within Inner Mongolia. The government projects that it is less expensive to build the coal powered electric generating plants locally in Inner Mongolia and transport the resulting power, than it is to move large quantities of coal long distances.
What does all this mean for CHGY? 2011 production numbers are not yet available, but based upon the recent earnings announcement I would judge them to be at or slightly above the 1.2 million ton cut-off point. Whether CHGY gets swallowed in the planned coal mine consolidation or emerges as a much larger player depends on two main factors in my opinion: past performance and political connections. To my way of thinking CHGY has done everything right. They invested millions of dollars a couple of years ago to fully modernize their mining operations to long wall mining, at the same time putting in place the latest safety equipment and procedures. They have met or exceeded every quota the government granted them for increased production, coal trading and the expansion of rail allotments. They have never experienced a fatal accident and have ramped up production recently to meet the governments’ 1.2 million ton threshold. Most importantly however are WenXiang Ding’s political connections. As the former Chief Accountant and Operations Director of Inner Mongolia Coal of the Peoples Republic of China General Political Department Mr. Ding is exceptionally well connected with the Inner Mongolian officials who will be calling the shots on the consolidation process.
If CHGY is chosen to become a consolidator for several of the smaller mining operations with a total production capacity exceeding 10 million tons they will become a very different company all together. Of course there will be share dilution and additional debt as a result of the merger and acquisition process but the end result will be hugely accretive to CHGY. The mines being consolidated are being combined under government mandate and have little bargaining power to control the outcome. I would expect the merger and acquisition process to accelerate rapidly this year and be pretty much completed by early next year. If the government forecasts are anywhere near accurate let’s assume that CHGY would benefit directly after share dilution and debt burden by just 10% of the government’s forecast for net income of the consolidated mines. That is a staggering 150 million dollars or more than five times last year’s stellar earnings. In the event that CHGY is itself a victim of consolidation, I have to think that they would be treated fairly, once again because of Mr. Ding’s strong political ties to the Inner Mongolian government bureaucrats. All in all 2012 should be a very exciting year to be a stockholder.
As we all know very well one of CHGY’s glaring shortcomings is shareholder communications. Microwzy, who speaks fluent Mandarin, has graciously agreed to call the company from time to time as issues arise that require clarification or further exploration. If you have concerns or questions that you believe the company can legitimately respond to post them here and when we have sufficient inquiries we will make a direct attempt to speak with management.
.63 EPS and CFO on Board
Re CHGY Now up 26% on news. This will see $1.00 very soon. Currently trading at about .6 of trailing annual earnings. Results are significantly better than my best projections.
OK, I can certainly accept that. However, if the rules have changed to suit the current nature of the Board then I believe the portion I quoted from should be deleted and your current Board philosophy inserted to replace it. Just my 2 cents. I won't bug you again.
No, I wouldn't ban them, but I would start deleting the type of mindless posts that have been repeated time and again about EGT just to give them a message. If they persisted, perhaps I would ban them for a short period, again to emphasize that you are serious about the rules. We need all the participation we can get but this type of contribution does no one any good. Your rules state:
However, mindless pumping ("this is an easy three-bagger") or bashing ("this is a worthless fraud") of individual stocks will not be tolerated. If you have an extreme opinion on a certain name, please state your reasoning, back it up with some facts, a link, a news release, a chart, a theory, anything of substance that supports your call.
Where Are The Moderators
I used to enjoy the dialogue on this board. Lots of pro and con opinions on different China stocks, usually supported by strong arguments on each side. Lately you seem to be giving free rein to the blattant pumpers. The number of posts on EGT that are nothing but outright promotion with no supporting narative are driving readers away. If you are going to have rules for the Board, how about enforcing them?
CHGY is Overlooked and Underrated In My Opinion
CHGY has all the faults that have been mentioned, and then some. On the other hand they have steadily grown their business with NO dilution from .11 PPS in 09 to an estimated .60 PPS in 11. They have done this without any of the hype of the more widely traded China micros. Their coal mine only has an active life of seven or eight more years at full production and they have been on the hunt for an accretive acquisition for over a year. With this years earnings, a solid reputation with local banks and the Inner Mongolian government, I'm confident that they will acquire one or more mines this year. Trading currently at about half of trailing earnings, with an accretive acquistion on the horizon, a record of zero shareholder dilution, a very small float (about nine million shares out of 45 million), and never a whiff of scandal, I believe it is one of the best buys in China small caps.
Northen:
I still hold 98,100 shares. You have my permission to negotiate for best offer on these shares.
Al
CHGY is finally starting to move on significant volume. There are a whole bunch of catalysts that are going to make this take off like a rocket as the potential becomes better understood:
1. The float is less than 10 million shares.
2. They have recently significantly increased production in the mine they operate.
3. The government has granted them a large increase in their allotment of coal that they resell from other mining operations.
4. They are actively looking for accretive acquisitions and are favorably positioned with the local government to pick up additional mining resources.
5. I believe that they will be receiving about a 6.5 million dollar subsidy from the local government in Q-4 which flows directly to the bottom line (+.14 per share). The government sets the rates that Heat and Power can charge to it's local customers (which is below their operating costs). Once a year the government pays a subsidy to compensate CHGY for the lower rates charged. Last year the subsidy was received in Q-3...in all previous years it was received in Q-4. Based upon the amount of last years subsidy and the increase in customers served by Heat and Power the subsidy should come in at about 6.5 million.
6. Additionally, CHGY has been positioning itself to upgrade to a higher exchange. The general distrust of all things Chinese and their depressed share price has prevented this from happening to date. Once the share price starts to run, which seems like pretty much a sure thing, they will be looking to upgrade.
Given all of the above factors I believe CHGY is going to be the next TSTC, LPH, LLEN, etc. etc. The last time it ran up, it did so in a very big hurry. I don't expect this time to be any different.
Time Frame for Action
It seems to me that ENHD will not let this situation go on too much longer. If they decide to either list on another exchange or go private they will need to deal with existing shareholders. At the current stock price on the pink sheets their interest in the company has little to no value. The only way they are going to be able to recify this is to deal with current shareholders. I have no idea how long the current situation can continue but it would seem that they would not want to be tied up like this for many more months. Anyone think of a rationale where they would just choose to remain on the pink sheets with no regard for the stock price reflecting the true value and potential of the company?
Glenn:
I'm not clear why you ignore the distinct possibility that they delisted to go private. Management already controls the vast majority of the stock. Why not simply screw the U.S. stockholders and go private for five or six years and then after we are long forgotten list on the Hong Kong or Shanghai Exchange. They don't have to deal with any burdensome exchange regulations this way, walk away with free money, and can continue to grow their business (remember they have 40 million in the bank) while waiting for a more opportune time to re-enter the public markets. To me this option is a distinct possibility, followed by the possibility of a $2.00 or less buyout, with the possibility of existing shareholders having the opportunity to exchange our current shares for a new Hong Kong listing a very distant third. Sure hope I am wrong.
Playing the Odds
It seems that there is general agreement among the major shareholders who have met with the company, or spoken with them extensively, that the business is legitimate and highly profitable. I believe that there is also general agreement in this group that there is no really viable way to bring effective pressure on Mr. Shi. to force him to act in a manner favorable to existing minority shareholders. I believe most of us are also in agreement that Mr. Shi had less than honorable intentions toward U.S. shareholders given the manner that he chose to go dark.
Given the above, the question seems to be what to do with our existing shares? We could sell them today for .30 (or perhaps two weeks from now for much less) or we can hang onto them and await a final resolution which could be many months in the future. I believe our saving grace (if there is one) is that Mr. Shi must buy the majority of us out if he wants to list on another exchange. If we allow the majority of our shares to dribble away at firesale prices he may be able to get what he needs on the cheap. If we hang tight, at some point he has to deal with us. I like the odds of receiving 10 to 15 times the current price today against an additional loss of .30 a share. I hope most agree and will hold their shares forcing a reasonable settlement somewhere down the road.
Capitulation??
Tick tock, tick tock. Time moves on and the PPS continues to drop and no one seems the least bit concerned. There is no coherent effort to do anything.....well guess what if we stay on our current path the stock is going to be trading for a thin dime or less when the Chinese New Year holiday is over. More importantly, as shareholders see that there is no coordinated effort being made to bring pressure to bear on Mr. Shi they are going to cash in their shares believing it is better to receive pennies than nothing. The only saving grace that I can see in this whole mess is that the trading has been very thin after the initial huge drop in the share price telling me that the remaining shareholders are hanging on to their shares. But how long is this going to last if we don't have an organized effort to take action? I'd like to see the major shareholders step up and take some leadership in this regard. My understanding is that Glen Bradford, Jim Bickel, and Northen control a significant portion of the free float. I think that the vast majority of us would be willing to participate we just need a coordinated effort. I have personally filed a complaint with the SEC. I have also written both my congressman and senator and asked them for assistance in following up with the SEC. If I were able to speak Mandarin I would be happy to write letters to the Chinese media. I've heard discussions about taking our shares out of street name and distributing a portion of our shares to friends and relatives in order to disprove the claim of less than 300 shareholders. I'm happy to do this as well although I will have to move my shares from Ameritrade to do so. All my efforts will simply be whistling in the wind however if we don't jointly mount a cohesive, coordinated effort to create some pressure for positive action.
If there has been credible assurance that this is going to turn out all right I wish someone would share that good news with me. Otherwise, I am simply dumbfounded by the seeming lack of interest by members of the Board in preserving our investment. If you all believe it is truly hopeless then please share that with me as well so that I can move on to other things and lick my wounds in private and stop my pestering.
Agreed....Far Too Long
I think your idea of presenting our case to the local media where Energroup has headquarters and Mr. Shi has offices, is excellent. I believe a strong case can be made for not only how unfair Energroup's actions are to U.S. shareholders but more importantly locally, how this puts all U.S. listed Chinese companies in a bad light. If we can get the local media interested enough to start calling on Mr. Shi for a response we may get some movement. Northen is out of town for another week traveling but I will personally appeal to him to write an eMail or letter. Are there others who are fluent in Chinese that could help with this? If you have not already submitted a complaint to the SEC I would urge you to do so. Does someone else have another idea that would add a bit of fuel to the fire??
My complaint to the SEC may very well not carry much weight but I felt it important to get their attention regarding what could be a major, and avoidable, loss for U. S. Shareholders. I talked about the fact that there was very heavy selling by Pinnacle and others prior to the announcement causing suspicion that they had advance notice by ENHD of their intentions to delist. I talked about the loss of over 65% to existing shareholders in a single trading session and that ENHD has repeatedly refused to issue a tender offer or provide a timetable for doing so. And, most importantly in my mind at least, the fact that if the SEC allows these actions to go uninvestigated it is an open invitation to other unscupulous Chinese companies to take similar actions at the expense of U.S shareholders. My hope would be that if the SEC sees enough complaints coming in with ENHD's name on them that they will open an investigation. I may be completely wrong in this I believe however that if we let ENHD continue along their current path unchallenged that we will end up with nothing.
Beyond Silly!!
Since Mr. Shi filed the Form 15 on January 3 at least four different shareholders have spoken to either him, his attorney, or both of them by telephone or in person. One individual, Jim Bickel, had a four hour face-to-face meeting with Mr. Shi on Tuesday. Mr. Shi's response to his future plans has been consistent throughout. Yes, I plan to buy out the U.S. shareholders (he even went so far as to tell Jim Bickel that a plan was in place to do so) but no timetable or buyout price has been established. (which seems to contradict what he told Jim in their face to face meeting...hard to imagine having a plan without a proposed buyout price). It would seem at this point we have gotten all the information we are going to get from Mr. Shi. He would have us believe that he never gave much thought to what actions would be required following the filing of the Form 15. In other words that the Board made the decision to file without knowing where, or if they would list on another exchange, and how they would treat existing shareholders. In some of the conversations he blamed "bad legal advice" for not being better prepared. What he did not disclose was that he himself is trained in the law with a degree from Beijing Renwen University in corporate law. Does it make sense to anyone at all that a highly successful CEO, trained in the law, could possibly make such poor business decisions?
Other than the concerns expressed by all those who have spoken with him there has been absolutely no pressure brought upon Mr. Shi to do anything differently than what he has been doing. Is the collective wisdom here to continue to sit and wait for Mr. Shi to divulge what his plans are for us? If so, do we wait another week? A month? What is the timeframe where others begin to feel the same frustration I do that no positive actions are going to take place until Mr. Shi begins to feel some pressure to act responsibly?
I have filed a complaint with the SEC. I have no idea whether it will do any good, but I have to believe that if they receive fifty or one hundred complaints from concerned shareholders it would catch their attention. I have suggested that articles in "The Street" or "Seeking Alpha" might further call attention to the situation. I don't have any magic solution to exerting pressure on ENHD to treat shareholders responsibly but I think it is way past time to sit passively while we get the same old answers.
If ENHD is successful in so easily sluffing off their responsibilities to existing shareholders what is to prevent the next unscupulous Chinese CEO from doing the same thing? If I appear frustrated than you have correctly interpreted my message. We have a lot of smart folks here let's find some ways to make Mr. Shi's life decidedly unpleasent!! End of rant.
"if they don't do anything, that's fine with me... we'll get to own a company that is increasing in value."
Please help me understand how you believe this is going to happen. It's hard for me to imagine that this is going to happen via the pink sheet listing. If they list on a China exchange I am under the impression our shares will not transfer. Surely the ENHD Board gave a great deal of thought to their delisting decision including the role that existing shareholders would play. The fact that they are mum on the subject now does not make me sleep well at night. Of course if we really are going to be part owner in "a company that is increasing in value" AND we can profit from that experience then I would certainly appreciate you sharing how you envision that will occur.
Sit and Wait??
The prevailing attitude of the large holders seems to be "sit and wait" until we get some face-time with Mr. Shi and we see what he has to say. My understanding is that Jim Bickel hopes to meet with Mr. Shi this week and get a more personal sense of his intentions. Several on the Board have already spoken to him by telephone or to his attorney however (who I understand is a member of a top-ten law firm in China), and been told that no decision has been made, and that there is no estimate at this time when a decision regarding a buyout/alternative listing will be made.
I don't own as many shares as Northen, Glen, or Jim, but I do own about 100,000 shares and I am not comfortable with the way this situation is unfolding. I find the concept that the company has not yet decided on a buyout/listing strategy to be a bit much to swallow. Mr. Shi would have us believe that he delisted the stock on January 3 with no idea of how he would treat existing shareholders or where he would seek to list his company. I'm certain that the decision to delist was not made on December 31 and that months of planning went into taking such a major step including what to do about existing shareholders and where to seek an alternative listing. That being the case, the only explanation for his current reaction to shareholders is to stall, hoping that many/most will sell in disgust and he can negotiate with a new group of shareholders several months down the pike whose cost basis in the stock is in the pennies.
It would be wonderful if Jim were to report on his meeting that Mr. Shi will be offering a premium buyout offer on our existing shares. I don't expect that to happen and I would like to see a discussion started now on actions that we can take as a group to best represent our interests. From what I have read it appears that just between, Northen, Glen, Jim and myself we own more than 18% of the free float. I'm certain that between this Board, IV, Value Forum and Yahoo we could identify shareholders representing as much as 50% or more of the free float. If we act as a cohesive group I believe our bargaining power will be substantially increased.
I have filed a complaint with the SEC and I believe that the more of us that take this action the better our chances of putting a bit of pressure on ENHD. It would also seem to me that the Chinese government would not want to see a Chinese company abandon the U.S. market without fairly compensating it's shareholders. A couple articles by Glen in "The Street" to the effect of how this sort of experience poisons U.S. investors view of the entire Chinese smallcap space might help in this regard.
I don't have a magic bullet that is going to salvage our investments, but I believe it is long past time for us to put our heads together and focus on ways that we can bring pressure to bear on Mr. Shi so that a fair and equitable settlement with existing shareholders is in his best interest as well as our own.
Talked to Ameritrade
Ameritrade tells me that it is no longer possible (from about two years ago) to take physical possession of your shares. I asked if there was any other way to identify individual shareholders and not have them grouped under the Street Name....I was told no. What am I missing here?
CHGY. CSP. We were all disappointed in the way the company failed to report the shutdown of the mine last year. That was inexcusable, and it has taken some time for most of us to regain our confidence going forward. I believe that with steady production since August they will be able to bolster their balance sheet in fairly short order. The loans were made by the CEO who controls a vast majority of the stock. If you are considering getting back in I honestly believe that the time to do so is prior to their next report. When they show steady production since August and one projects earnings going forward it is hard to see how the stock will not take a considerable pop. By the way, congratulations on your creation of this discussion forum. It is has provided a virtual avalanche of Chinese smallcap investment ideas. With the different perspectives of traders and investors it provides sufficient give and take for all to benefit. The only problem is keeping up with all the dialogues. Very nice work from a regular reader!!
CHGY. You, Jasont and I may be the only ones who see the potential of CHGY here. I think the probability of CHGY achieving a triple from here over the next year is far greater than PUDA. As you point out there is virtually no downside. The production rate is known and the only real variable is coal pricing going forward. Northen has proven himself to have the utmost integrity and the fact that CSP keeps questioning the information that he is receiving directly from the CEO is laughable. CSP got out of CHGY very early and missed the big move to .80. Ever since he has had nothing but derogatory comments to make about the stock. I own both PUDA and CHGY but feel much more comfortable about the future of CHGY. Time will tell who is correct.
I like CHGY as well in fact it is my largest position. They will report .14--.15 earnings for Q-4. This is the best quarter for their coal heating unit. I expect .45-.50 for he entire year. Of the 45 million shares issued the CEO and his son control about 37.5 million shares. A few of us who regularly communicate on the IV Board control almost 50% of the rest so shares will be very scarce after they report earnings.Like FEEC this is almost a sure thing to be $2.00 by the end of the year.
INHI Presentation At JMP Securities Conference October 5
The presentation is now up on the INHI web site under the "Investors" section. Look under "Calendar of Events". I spoke with Asher Dewhurst, the new IR representative who was present at the presentation this afternoon. He said that there were about 15 in attendance and lots of discussion following the presentation. I think they did a good job on the slides. Asher said that they are in the provcess of lining up additional investor conferences for INHI to present at. Hopefully this will start to lighht a fire under the stock price.