Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
why the market didn't like the CC:
1) dilution, don't care why and don't care about the terms. The word dilution is toxic in this space
2) uplisting delay, obviously short-term flippers (3-6 months) were looking for an early catalyst in uplisting and not willing to wait it out
Everything else was positive relative to my expectations. The explanation for selling the dairy business was sound and I liked that he was able to site another sale on less generous terms. Despite my own concerns after reading through the 10-K, Solomon impressed.
Thanks for sharing. Though adj EPS fell short a few cents, it's nice to hear audit issues were behind the miss. One resounding question in the space is how these companies *always* make their numbers. The implication being that when you cook the books you shouldn't ever miss. So despite the miss, it is indicative to me that the numbers are sound.
Big picture...impressive YoY growth and multiple catalysts ahead.
No, you have a good point there. My only grievance is with the PR itself. I don't care when it's released; morning, afternoon, night just get the presentation right, especially in this environment.
As Rames mentioned on the CGS board, it's nitpicky for sure, but savvy PR is one of the many reasons I like this company. Today's release was lacking in presentation, especially considering the extension.
Though if we open tomorrow at the 1.10 level, I'll end up making lemonade out of this...
Good point, and no doubt a catalyst for the EOD selloff. Even without adjusting as you suggest, making the release AH would have provided interested parties time to digest the entirety of the report rather than trading the headlines.
On the flipside, it did provide a good opp to add on the panic sells.
SIAF- "10 cents per year would say something"
uh, that they have no need for cash now or ever again? 33% of profits as a divi given their business and future cash needs qualifies as a headscratcher/red flag/too good to be true/horrible fiscal mgmt move.
Though the prior divi was just a penny, it conforms to the stated policy of paying 8% of earnings out annually. (13 cents for 2009 earnings) With 2010 earnings coming in around 30 cents one can expect 2-2.5 cents paid out this year. At current levels that's a touch under 2% yield, which seems appropriate for a young, growing company. (frankly, no dividend is appropriate for a company with SIAF's growth metrics in a *typical* sector, but there's obviously nothing typical about this space)
Anyway, SIAF may tap the markets sometime in the next few years if/when their biz model gains traction; expansion opps should be plentiful. But I don't anticipate it happening before they get a dual-list on the OMX in Sweden to decouple themselves from this taint and *earn* a proper multiple.
Interesting how most are so fixated on the fishery business. Yes, it is a tremendous part of the SIAF growth story moving forward and makes SIAF a potentially lucrative investment...
However, the fishery JVs nor Capital Award has contributed anything material to the bottom line and yet we still have a growing, profitable and IMO a significantly undervalued business here.
Hey Steve, not an expert on this matter and am interested in Strindberg's reply, but if I recall correctly, it is requisite only that the company be an SEC reporting entity.
Though an uplist is requisite, a dual-list in Sweden is even more important to support the share price. The further the shares are removed from the US-listed Chinese microcap malaise and into steady hands, the better. That's one of the reasons that SIAF is one of the very few CGS names up YTD, as the majority of shares are tightly held by long-term investors, not short-sighted flippers. (the liquidity is just not there anyway)
Ironically, I expect PPS volatility to increase on an uplisting as liquidity increases. Of course, this doesn't affect the intrinsic value of SIAF, just day-to-day swings.
I'd prefer to see the company reach price thresholds organically as opposed to reverse splits, although at some point further down the road it might be considered. As silly as it seems, PPS does matter to institutions, with $5 or $10 often being the barrier for purchase.
With that said, I'll be in this one for much longer than two years. Provided they execute on the biz plan, I don't think double digits is far fetched by then, so put me down for 100,000 shares.
And I think any of the ideas previously floated on the board are fine candidates for "anticipated" announcements, though I hesitate to "expect" much more than a decent beat on .29 for 2010 and perhaps slightly revised upward guidance for 2011. All else will fall in place in due time. Patience and conviction should be handsomely rewarded here.
All IMO, of course..
CHOP- trading @ discount to warrant exercise, decent entry IMO
China Gerui Advanced Materials Group Limited (Nasdaq: CHOP) ("China Gerui" or the "Company"), a leading high precision, ultra-thin, cold-rolled strip steel producer in China, today announced that, as of March 21, 2011, of the 16,066,667 warrants originally issued by the Company in March 2009, 15,514,334 warrants were exercised for proceeds of $77.6 million and 552,333 warrants expired unexercised. The Company has approximately 59.4 million ordinary shares outstanding.
The Company's aforementioned warrants traded under the symbol "CHOPW" and had a $5.00 strike price. The warrants' original expiration date of March 19, 2011 was extended by the Company to March 21, 2011 with a three-day broker protection period. Each properly exercised warrant entitled the warrant holder to one ordinary share of the Company. As previously disclosed, from March 2009 to November 2009, 76,600 of the Company's warrants were exercised. Between November 2009 and the warrants' expiration on March 21, 2011, 15,437,734 warrants were exercised.
Mr. Mingwang Lu, Chairman and Chief Executive Officer, commented, "We believe the expiration and exercise of these warrants removes a level of uncertainty of future dilution that investors faced prior to the expiry and improves our overall capital structure. We plan to use the proceeds received from the warrant exercise for working capital to support our previously announced capacity expansion plans. Our business continues to grow as our high margin, niche precision steel products see increased demand in China. This increase is driven by the rise of the Chinese middle class and their related purchasing power and appetite for products that use our precision steel inputs, such as household appliances, food and beverage packaging (cans, beer bottle caps, etc.), wire and cable, construction decoration and automobile parts, among others."
About China Gerui Advanced Materials Group Limited
China Gerui Advanced Materials Group Limited is a leading niche and high value-added steel processing company in China. The Company produces high-end, high-precision, ultra-thin, high- strength, cold-rolled steel products that are characterized by stringent performance and specification requirements that mandate a high degree of manufacturing and engineering expertise. China Gerui's products are not standardized commodity products. Instead, they are tailored to customers' requirements and subsequently incorporated into products manufactured for various applications. The Company sells its products to domestic Chinese customers in a diverse range of industries, including the food packaging, telecommunication, electrical appliance, and construction materials industries.
SIHI- thanks for sharing this, would you mind posting the email exchange in its entirety?
KEYP- yup, not good fiscal management at best. I never got much into the story, and have no interest in the stock. Haven't really been interested in any of the pharmas at all.
Just to clarify, are you implying KEYP is garbage?
CCME only announced a dividend, much different from paying one.
Dividends...aside from SIAF and KEYP are there any others in the space paying a divi?
CHOP- yup, I was waiting for some $5 buys today, but no big deal..got em at the same price I would have a month ago when I got serious about the co. Who knows, maybe Monday brings us a gift..
agreed..shouldn't have gotten involved myself. investor, not a meteorologist
right, it's an easterly wind that blows from the east
God Bless, you've seen the bottom and you're still alive with a fresh outlook on life. I admire that.
YONG, CCCL, SIHI (light), NEP (very light) and, like Rames, a few micro OTCs...SRRY, CSOL, GHII which, as he said, will be dead money for some time..stuck in some CCME too.
I'm currently looking to add to my ag, energy and mining plays on weakness..investable companies primarily outside of CGS, not trades. I value my portfolio in gold, so that's my "risk-free" asset.
I empathize with others who are throwing in the towel on CGS..the space is really a mess, but I believe there are some names that will blossom after the shakeout..who knows, when folks are folding up and going home that's indicative a bottom is near, though I'm certainly not calling one.
There's one other CGS name I'd rather not talk up, (still adding for clients) but it's my #1, non-CGS included. 5-10 yr hold, IMO.
roughly 60% of the nuclear fallout from the Chernobyl disaster fell in Belarus, only a few hundred miles away. We're talking thousands of miles here.
before anything gets to China it has to first cross the East China Sea...which is home to many fish...see where I'm going with this?
http://en.wikipedia.org/wiki/Chernobyl_disaster
good point..I attribute this to the dividend policy and the Jordan Fund's involvement. Return cash to shareholders, articulate a long-term vision and sticky money will follow.
Interesting that a PINK is one of the least volatile and most attractive plays in the space. All IMO, of course.
OT- Nikkei +6%
SIHI- cc link:
http://viavid.net/dce.aspx?sid=000082F3
YONG- agreed, if you can't get behind YONG given the recent 10-K and guidance, there's no use in touching this sector at all..what more do you want? free money?
same can be said for a few other names as well...SIHI and CCCL come to mind, not to say there aren't others too
Basically, I view the deflated multiple valuation as both downside protection and upside potential.
This is exactly right. PPS = earnings * P/E multiple
SIAF has an asymmetric risk/reward profile because the multiple is incredibly depressed and visibility on earnings suggest 2010 profits will be dwarfed in coming years if operations produce as anticipated. So even holding the multiple constant suggests material appreciation to the upside. But if earnings do grow as forecast and consequently prove the validity of SIAF's biz plan, the multiple will naturally expand with earnings and the PPS will uncoil like a loaded spring.
FWIW, a 15-20 P/E is absolutely not pie in the sky talk, though I would not invest on the premise of such a valuation, rather I'd consider it a free call option on Chinese ag mania in a few years time. JMO
Of course, there are risks, but those risks are what allow us the opportunity to invest in the first place. GLTA
ZSTN- that's how I understand it, the device is likely leased with the service similar to the way cable cos lease out set-top boxes as part of their services.
I'm leaving this one alone. I didn't like the way management handled the recent shelf and still don't know what they need that cash for when they have (claim) over $30MM in the bank...
YONG- look, anytime someone is "expecting" a P/E of 50 to 100, there is a great chance they will be sorely disappointed. Especially when said stock currently trades at 5. I agree 25 is doable if the stars align, but I think you would also agree 25 is a lot different than 50 or 100, which was my original point.
I'm keenly aware of the reasons behind the depressed multiple and the state of the Chinese RTO space. The reason YONG trades at a forward P/E of 5 instead of 50 is more complex than simply being a Chinese RTO. Dilution, outstanding warrants, product acceptance, execution and margin sustainability are just a few concerns particular to the co. But again, I'm long the name, so you're preaching to the choir man.
FWIW, I prefer to use a conservative DCF estimate of valuation, so multiples are just a crude BOE technique for me anyway.
What makes you so sure YONG is different from CCME anyway? I think they're both tier ones and if I'm not mistaken you thought the same three weeks ago, though you claimed to be long only CCME. I certainly don't mean to incite you, but since you're so vocal with your opinions I thought I'd ask.
YONG- "Normally, this stock would be trading at something like 50 to 100 times trailing earnings."
What kind of stock universe does this guy follow?? I'm Longye too but this is just ridiculous. Perhaps he should omit or revise his valuation analysis to retain some semblance of authority on the matter.
The rest of the article is worth the read though, just hits ya with a big WTF at the finish.
Texas is pretty bad between the big cities. The route between Houston and Austin (which I've made more times than I can count) on 290 is littered with many small towns where they will drop the speed from 70 to 55, and in some cases even lower. Needless to say, the five-ohs love to sit a few hundred feet in front of the limit change to nab anyone not hard enough on their brakes. I learned the hard way..tap em early and tap em hard.
Cameras? Try Fremont, CA, a small industrial town bordering Silicon Valley, which has em all over the city. I got hit by the robot for running a red and was sent a packet that included three color photos of me (literally..one of them was a blown up picture of my face) running the light, and finally a link where I could download an AVI file of my misdeed. Of course, being CA, it wasn't cheap..$381. Though I did have it knocked down to a right on red and got off for $100 instead. (yippee..*sigh*)
There's also a skirmish in Houston over the legality of the cameras after voters (surprise) deemed them illegal in a recent ballot referendum. The company responsible for the lights is now suing the city for breach of contract. I believe the case is still in limbo, though even if the city (or voters) win I doubt it will really be the end of red-light cameras in Houston. (or anywhere else for that matter) It's just too easy money for cities to ignore.
I echo your sentiments regarding the wear of hunting for new investments. I too would rather own shares in well-managed, profitable, undervalued companies for years than making short-term trades based on charts, macro events or any other number of trade signals.
Alas, these opportunities are difficult to find given the amount of DD necessary to inspire the requisite conviction to execute such a strategy. I believe this a central tenet to Buffett's philosophy of owning good businesses for "a very long time".
BTW, my comment referring to there being no material revelations in the Form 10 was relative to my own knowledge prior to reading the form. Of course, I cannot speak to your complete knowledge, so this may not be your experience. I believe Chad is correct in encouraging all current and prospective investors to read the form for themselves. There are quite a few "nuggets" of info similar to what Hyperboy recently referenced regarding fish farm competitors.
Great hunting,
Matt
every last page of it Steve. There's some worthwhile historical info on the company (i.e. Volcanic Gold roots) though I found the breakout info on the formal holding structure/business units most helpful in understanding the collective earning power of the company going forward.
I certainly recommend taking a look, if not every last page, certainly the biz unit breakouts. Frankly, with all the discussion on the board over the past year and my own DD, I found few, if any material revelations.
Like everyone else, I'm waiting for the quiet period to end so we can get forward guidance past 2011. My own estimates suggest that while 2012 may be an impressive year, the most substantial growth is likely 2-4 years off once they get momentum behind the fisheries and revenue sharing begins to swing in their favor.
BTW, I enjoy reading your posts.
NEP- still have most of the 4.20s I grabbed after the halt...I was actually looking at those exact calls last week, but ended up just buying the common. I don't have much more than gambling money in the trade given the complete disrespect to shareholders, but honestly how much cheaper can this thing get when oil's flirting w $100/brl?? NM, don't answer...I don't want to know lol
the impatient seller who pushed it back into the 1.20's on low volume appears to be gone as of about a week and a half ago. We may see the price spike in coming weeks on any substantial buying, though I don't expect fireworks until we get movement on the uplist and successful sales out of the fish farm.
One never knows though, which is why I'm long today...don't care about tomorrow, next month, or next year's price. If this company executes on the business plan laid out by Solomon Lee, this is a 5-10 year rainmaker.
GLTA
CHOP- I've been waiting for the endgame with these warrants. You make a great point regarding price pressure from warrant expiry. No position yet, but like you said, very interesting at 5. Thanks for the insight, not just this reply but your other posts as well.
CHOP- anybody playing this name? If I recall correctly, the warrant overhang from the initial SPAC offering expires next month. CAPEX is up due to plant expansion and additional capability (chromium plating, higher margins), but should come down substantially going forward. I've personally met some large investors, including SPAC founder Harry Edelson, who are all very enthused with the company's prospects (what shareholder isn't though, right?)
Biz model looks sound (cost plus pricing mitigates supply chain inflation) and management appears competent. It's definitely a pure play on cold-rolled steel in China.
The shares have been a bore to watch, so I doubt many trade it, but any thoughts on the company? Long, short, neutral, I'm interested. TIA
The Economist, how firms should fight rumors:
http://www.economist.com/node/18114835?story_id=18114835
SIAF- shhhhhhh...not too loud
YONG- thanks GNG, I know the long case well considering my own DD, but haven't found anything that would give me significant doubt or reason to go short here.
I'm guessing the short interest is largely a macro bet on the CGS sector as YONG does sport one of the higher multiples (trailing mid 6's, forward under 6...what kind of world is this? lol) And, yes, I'm well aware of the increasing institutional buyers too.
I'll be on the bid.
YONG- with 17% of the float short, what's the short case? Valuation, fraud, dilution concerns, business model, growth prospects?? Thanks to anyone who can provide some insight.
BTW, I'm long.
Though some may want to get back in at cheaper prices, I think most are legitimately scared and want to feel vindicated about their decision to bail. Path of least resistance, see red, sell, talk it down...