I am updating my staus.
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Global Seaborne Coal Market: China Imports: 2008 2%, 2010 15% possibly up to 20%.
Right now, we believe that metallurgical coal, which is the type of coal used in steel making, is the area where investors ought to be focusing their time. Companies in my universe with significant exposure to the metallurgical coal side of things should benefit more than those with exposure to thermal coal, which is used in electricity generation. A couple of examples would include companies like Alpha Natural Resources (ANR) and Massey Energy (MEE).
TWST: Please elaborate on why you prefer metallurgical coal to thermal coal.
Mr. Sussman: Right now, we think that global metallurgical is going to be in short supply for the foreseeable future. China has had the biggest impact in terms of patterns of change recently. In 2008 China accounted for just about 2% of the global seaborne coal market in terms of imports. This year, they are on pace to be somewhere in the 15%-plus, maybe 20% range of total seaborne imports. At the same time, there are only four main countries that export this product on the seaborne market. The biggest two, Australia, by far the largest, and the U.S. at number two, believe it or not, account for almost 75% of the exports. So the bottom line is that we don't see infrastructure, particularly in Australia, being able to keep up with the demand that we're seeing from countries like China. They are importing metallurgical coal and as a result, we are seeing Asian countries go directly to the U.S. to import this product, which frankly, logistically is not the easiest thing to do.
rich
CCGY - I've been informed that CCGY are not affected by the consumption tax - the reference is an interview which the CFO did in June.
Zack: Why are taxes killing Gushan Environment Energy Adr (NYSE:GU) right now? Why is CCGY not affected by those taxes? How could that change in the future?
Mr. Chen: While we cannot speak for Gushan, CCGY is not affected by the consumption tax. It only affects companies that sell to state-owned enterprises. CCGY’s bio-diesel clients are in industry, private gas stations, ship fleets, and power generating plants.
http://geoinvesting.com/geowire/211/interview_with_china_clean_energy__ccgy__cfo_william_chen
rich
CCGY China exempts consumption taxes on biodiesel
BEIJING - China exempted consumption taxes on pure biodiesel made from waste animal fats or vegetable oils, according to the Ministry of Finance (MOF) and the State Administration of Taxation.
The new policy is effective from Jan 1, 2009 and taxes already paid will be refunded, the MOF said in an announcement on its website Friday.
The move is aimed at boosting the renewable resources sector, easing demand for petroleum and protecting the ecological environment, the announcement said.
The move is expected to save biodiesel producers about 900 yuan ($135.1) a ton.
It is expected to make the biodiesel producers more competitive in the fuel sector and guard against waste edible oils being reused for human consumption so to ensure food safety, the announcement said.
http://www.chinadaily.com.cn/business/2010-12/25/content_11754864.htm
rich
LLEN Q1's CC - throw that in as well since Xmas is all about giving
Q1 CC
Set Text
Shunda Acquisition
On paper looked perfect MOU added
Alarming Safety issue and not pursuing
Looking at other targets
- PRC wants accelerated coal M&A
- think will benefit L&L
China has 80% coal power
- Confirms previous estimates and emphasizes not involved acquisition
Q&A
Q (Mike Kelly) – Address a sequential drop in gross margins
A - Seasonal adjustments - all revenue increases compared last Q. Rev inc by 20M - a lot coming from coal washing while it increases operational efficiency of vertical it has lower margin.
- Think he said it brought in 21 Million
- Hong Xing coal washing 300K capacity and doubled it to 600K
- Ping Yi Coal washing - "in full swing" full operating revenue - an additional 10M
- following our plan more coal acquisitions will bring up the margins.
Q - Revenue from mining was flat?
A There is internal growth going on – but more in the coming quarter. We are acquiring the new business we are also improving safety and operational efficiencies
Q (CBG Financial) – When decide not go through merger?
A - didn't answer
Q - How much cash at end of q?
A 9M Cash cf 7M
Q - What's happening with met and thermal coal
A Thermal coal Washed $100 - in Southern Yunnan and guax
- not commodity as they give service and sell more than coal price and work Saturday and Sunday and hit the needs.
- Getting a certificate for giving good service
Q - Sold off Coal washing facility?
A – Yup, added to the bottom line as discontinued op
Lean and mean – not any good then they cut them loose
Q - Auditing going on annual basis and new CFO
A CFO – complicated – recruiting a director of accounting. CAO – announce in due time
Hired internal auditors and getting Certified Internal Auditors
Hired CPA with PW experience for M&A
Q - Government Assistance?
A Only NAZ listed in Yunnan and Guizho
Listed 2000 and seen that L&L has kept it's promises
Municipal leaders wanted US management techniques
They think L&L are doers
Q - Tax Rate?
A 15%
Q – Assistance long term with tax?
A – Chinese wanted environmental targets. Months to come we are helping them reduce accident rates and want to benefit from this.
Q Acquisitions – is size range?
A - Guidelines upgraded – don't want small ones – want bigger and be top leader in China
Sq miles (km)
Coal reserves
Safety Records – if bad then they won't be able to operate!
Recruiting experienced mine chief.
Q - Do you think you can do a few acquisition
A - Gross Margin - high for coal mine
- open spaces to allow
- can deliver a specific target in days so users prepared to pay a premium.
- Fedex vs US post office - we are Fedex - we charge service not just coal. We charge more for service - no free lunch
4 Segments in coal
Doing vertical integration
Coal Mining high gross because China has high demand
Washing – lower margins
Moving it around
Coking
S1
Q – S1 filed – part of last Nov raise – for resale not future fund-raising.
A – It's been almost a year what's the deal? SEC have their standards – I don't think there are any major hurdles to overcome – they wanted certain words
We want more experience people to reply to SEC with a better working
Q Auditors?
A Upgrade management, Law Firms & also auditors
Auditors are good but sooner or later, a must almost, to upgrade to get top firm
Q Barrons about tax discrepancies between SEC and SAIC and tax payments – companies in general and with regard to L&L. Are there any discrepancies or differences?
A Differences Between SEC vs SAIC filings – short sellers of differences they exploit them to sell stock short. We should use the same numbers.
Q Ensure that SAIC and SEC agree?
A We will make sure that these numbers are going to be the same – thank you and we will look into this issue
Q EPS of 1.61 seems high compared to guidance?
A 600K Honsen + Ping
Q - How much mining is land and how much underground
A In Southeren China all their mines are underground
Q Accountancy firm upgrade?
A - L&L continuing to upgrade all our management services
LLEN - I've got last quarters, Q2, CC Q/A notes if that's Any help? If the notes don't make any sense I don't mind expanding on them, if I can.
Q2 CC
Q – How much coal in Q2?
A – Talk Offline about that
Q Ping ye – 150, 31M proven coal – when will you be able to mine more?
A Mines understate reserves (only enough to get permit) – they ask for permits for increased capacity. Aim is 300 so mine not shut down. Ping @ 300K
Q Split Mining vs Coal Washing
A Talk Offline about that
Q (T-Squared) – Coal prices Q3 vs Q2
A Last Winter 120s – Summer went to 110. Expecting to reach last Winter but seeing escalation faster we modeled $110 pro-forma and it's above that. All numbers do not include any acquisition
Q You still wholesaling and washing other peoples coal?
A Yes, we have twice capacity ping ye 600 – anticipate growth. But wash own but also washing other peoples for now – low margin but adds to bottom line. KMC, the brokerage business, is still operational. Price wise coal lower in summer but will pick up in Winter. KMC is strategically important is a marketing arm that allows them to talk to all coal miners and get their name known. Allows us to learn about new businesses.
KMC buys in summer and sells in the winter
Q Around 30 – 40% Washing most revenue expansion was washing in last couple of quarters?
A Yes, but acquisition focusing on mining acquisitions vs coal. We want to make sure that they can avoid middle men.
Q Met coal Pricing
A Met more volatile. Last Winter High $200 tonne then under $200/tonne in Summer and back to $200's now. Model on Met coal around $180. Will remain volatile – demand constant in inner china but slower on Coast.
Q Acquire 9% of Bowie and produce 5M. Is that like buying a 450K tonnes mine for L&L?
A Will have nice return on equity and interest. Our interest is in export. Looking at 1M tonnes but could be 2M tonnes or more in later years. On export we could bring higher margin for the mine even now. First step in operating with Bowie Mine owners.
Q How quickly can we take the 9% in Bowie? When exercise?
A Hope for Exercise in 6 months but ongoing talks.
Q How is the acquisition going on by this Calendar year and non dilutive?
A Still expecting that in this calendar year so 4 to 5 Months. Acquisitions highly accreative – 1 to 2 time EBITDA and expecting similar returns.
Q Reckon it's 40 but only 35
A Foreign exchange gains – but not including it.
Q (John Britches JP Morgan) – control over prices in China? Is that likely to effect you and how?
A Controlling cost of coal. Seen so much that it's above their expectations so if they froze it not a problem. L&L would prefer steady rather than volatility/ bubble. Deliberate have half thermal and half met.
A Two countries - more pressure on coast but less of a concern for prices in West. So, less of a concern where L&L is.
Q JPM – LLEN is on the bottom quartile on Chinese cost curve?
A pride themselves on lean and mean. Take mines and add shifts from 1 to 2.
Q Disconnect between price of coal in Guandong – is that transport costs?
A Yunnan and Guizho province have coal – no others in South West. Not aware of any other places.
LLEN get pick and choose the mine. Mining costs are mine specific. They look at the mine geology, the operations, and seam thickness and the grade – all effect the efficiency of extracting the coal.
Good mining knowledge in Dr Sid pang. Top geologists and longwall - look to see which would be the most efficient.
Q Doubling run rate of new acquisition? What number start of year or now?
A Run rate 218 and looking at doubling that with acquisitions. 218 is organic guidance. If successful then we can get 440 ish then – won't happen all this year but we will grow it to be double.
Q Using transfer of technology/knowledge of Bowie formally or just potential? They bringing anything more to the table?
A Bowie has a lot to offer but that's not what LLEN are looking at. LLEN aren't looking so much at technology and more about practices. (Re-edited answer much later on)
Q Bowie – option to acquire up to 9% interest in Bowie mine. Does option vest when they the $3M and what cost of option to get 9% interest?
A Option which we expect to exercise but no exact timing. Vesting price is nominal.
Q committee in auditing issues?
A Finished internal control audit. Completed internal review of internal controls with assistance of outside entity. Hope to complete Internal audit soon.
Q Interest in Mineta played any role in Bowie mine.
A No. But former Transportation having him will be of great benefit for movement of coal from US to China. Strategically unique. Were optimistic on what this beginning means.
Q Regulation in China on forced acquisitions
A Small coal mines looking for partners. Only coal provinces Shannxi, Inner Mongolia in North and L&L in the South
Q Margins. Gross margins gone down?
A From washing plants but verticalalising and avoid washing guys applying margin pressures.
Q Receivables gone down compared to last year any colour?
A Follow up offline.
Q Time in difference in coal and production?
A Follow up offline.
rich
LLEN - looks like a reverse but I know nothing. One company bought another. There wasn't an IPO. Anyone know better?
The Takerover
All docs in the takeover
The first page of SEC files on L&L
rich
China Biologic Appoints KPMG as its Independent Registered Public Accounting Firm
http://finance.yahoo.com/news/China-Biologic-Appoints-KPMG-prnews-3639764579.html?x=0&.v=1
Man, would should have been buying shares in the top4
rich
US WTO case against China over renewables
Apparently they are being subsidized!
http://finance.yahoo.com/news/China-says-wind-solar-apf-105725869.html?x=0&sec=topStories&pos=2&asset=&ccode=
(I hate subsidies but renewables this is one area where someone has to kickstart it - there is too much at steak here - US should shut up and start pumping the cash to their own companies like everyone else )
rich
I think Bob took the moderator position to avoid anyone "stealing the post" and is prepared to relinquish it to whoever the board decides they want.
rich
BSPM - well it's been added to the Regulation Sho Threshold List - so clearly something odd is happening. I don't know how many shares it takes to make something go on the list (anyone?) but clearly something has happened to it.
The next update is 27th Dec - I will be interested to see what the numbers are.
http://www.nasdaqtrader.com/trader.aspx?id=regshothreshold
rich
TechTicker inverviews "The Streets" Scott Eden
China Stock Fraud: SEC Probes "Reverse Merger" Network
TechTicker on Reverse Mergers
rich
Sorry, I don't understand your comment.
Fuel price hikes never once caused a rise in EPS.
If the wholesale price of fuel they just bought was X. The government allows them to sell it at X + 20%, say.
They know that the government is going to up the gasoline price so they store extra up and the cheaper price and then they can sell it at X + 20% + 4% (for the latest change) - how aren't they going to get a bonus?
Seems that Oil price is going to be volatile and there are going to be many of these hiccups for LPH to play in the coming years.
rich
Gasoline Price Adjustments through the year
http://www.chinadaily.com.cn/business/2010-12/22/content_11737563.htm
rich
China electricity consumption to almost double by 2020
http://www.chinadaily.com.cn/business/2010-12/22/content_11737519.htm
They keep trucking on...
rich
LLEN - he made a BIG DEAL about how he could of chosen any Chinese stock but then focused exclusively on LLEN. Sure, any.
I'm just going to laugh it's soooo transparent.
rich
China's Nov oil consumption jumps 15.2% as winter comes
BEIJING - China consumed more oil in November compared with the same period last year as temperatures dropped, China's top economic planner, the National Development and Reform Commission (NDRC), said Tuesday.
China's November apparent oil consumption -- domestic production plus imports minus exports -- jumped 15.2 percent year-on-year to 20.07 million tons.
....
....
http://www.chinadaily.com.cn/business/2010-12/21/content_11735619.htm
rich
China hikes fuel prices, vows no inflationary impact
(Reuters) - China will raise retail gasoline and diesel prices by about 4 percent to record high levels on Wednesday, the third increase this year, a move set to lift refiners' margins amid record Chinese fuel consumption.
http://in.reuters.com/article/idINIndia-53710620101221
rich
(yeah)
LPH - China hikes fuel prices, vows no inflationary impact
(Reuters) - China will raise retail gasoline and diesel prices by about 4 percent to record high levels on Wednesday, the third increase this year, a move set to lift refiners' margins amid record Chinese fuel consumption.
http://in.reuters.com/article/idINIndia-53710620101221
rich
LLEN - I don't think it was anything new. It's just that it was just some meat put in front of the lions.
rich
LLEN - this is the HERB CNBC article causing sell off
http://www.cnbc.com/id/15840232/?video=1705587105&play=1
rich
LLEN - this is the CNBC article
http://www.cnbc.com/id/15840232/?video=1705587105&play=1
rich
LLEN - There was a Yahoo post that talked about CEO having problems in the past.
If that's the case, It might relate to LLEN trying to sell stock over the phone in some states where it's not allowed. I'm not sure if CEO did it or some stock pumper did it on his behalf - I would have thought the latter *shrug*.
rich
I don't think it is. I think they've done everything they can in the last week or so.. and now it will take time to decide what happens next.
The institutions will keep mulling over, the company can make earnings and pay the dividend out and having investing days.
Judging the market reaction on the basis of a few days trading if folly. If we are at $15 this time next year then you could say that it's out of the hands of the company.
rich
SEC case against China Energy
http://www.sec.gov/litigation/admin/2010/33-9166.pdf
rich
Chinese endure power shortages as coal runs short
Looks like coal miners won't more money for their coal.
http://finance.yahoo.com/news/Chinese-endure-power-apf-1387415184.html?x=0&sec=topStories&pos=2&asset=&ccode=
rich
CCME Stansberry - yup, that's what's drawn against him when he makes his picks. However, he does spend time doing DD, that's a positive. They talk about having longer views on the stocks (I don't know if that's true). What certainly is true is they bought one of the stocks I follow, IOC in January '10, and have held all year with the intention of waiting for this story to develop.
Sounds like some stock is going to get locked up for an extended period.
rich
Stansberry's report for IOC from start of year
You can see that they getting stuck into a controversial subject with a long term game plan.
Now, if it goes up today, remember, it was Glen what did it!
rich
http://www.shareholdersunite.com/shareholdersunite/wp-content/uploads/2009/12/201001oil_issue.pdf
Stansberry hurray! Assuming that's correct. They got involved in IOC, which was a controversial stock, at the time, it's still not out the woods but has gone up a lot since they covered it and it seems to be playing out legit.
I'm trying to find the report I read of there's. My recollection:
They sent experts in the field to do their DD. IOC was a gas stock so they sent in the geologists and industry experts with 40 years experience. They liked what they saw.
They recommended it and explained that it can take a long time to play out. Just buy the stock beneath a price target and just let the rest play out.
These guys will be locking up some of the float. IOC is still playing out and they said buy in, think, Sept 09 and their view hasn't changed.
Anyway, few weeks after that MS joined the party. But Stansberry got there first. At the least more Industrial strength DD and some deep pockets added to the fray.
Shorts will complain about some insider dealing or what not that Stansberry were involved in at some point or other. We're not interested in their ethics just that they said yes to CCME...
rich
CELM - I can't disagree a company given capital needs to show they understand it's value and deploy it before asking for more. I can't understand why companies don't understand this.
Being an irritating shareholder I'm going to remind him of a reply he gave to me asking for a buyback.
As far as share buy back is concerned, the company went IPO at $4.5 per share. Buy back share at a price level higher than $4.5 will not be an act welcome by those investors. But we certainly will consider share buy back should share price falls below $4.5.
2 cents before it hits 4.50 - I have confidence we can get there.
rich
CELM - I understand why people are weary. Management's position according to the CC is and time will tell if they live up to this:
Q: 30M in cash do you need capital raises?
A: Identified a few targets. If share price depressed then use cash. If reasonable then use cash and stock. If need cash then working capital pressure. Most companies a good but can't expand because facing working capital constraints.
---------
Personally, I can's see how they avoid a significant cash position or indeed all cash.
rich
BSPM on Nov 30th it was it closed at $2.82 and yesterday it closed at $2.88. It's been pretty flat during this time. All very odd... I was trying to find the failure to deliver website perhaps there was a spike here?
rich
CCME - I'm just doing the calculation (never owned a dividend stock before). There's lots of positives to be taken from this which you and others have covered.
rich
CCME - do you have a reference for that? I'm sure the Yahoo boards would love to read that.
I know nothing about insider trading so I'm very interested.
rich
CCME - Is this how the yield is calculated?
Say it's for 2010 and say they made 100M (to keep maths simple).
They give away 5% - 10% that's 5M. There are 35M shares so that's 14 cents to 28 cents per share.
The stock price is $16 so that's between 0.9% and 1.8% yield (0.14/16)*100 to (0.28/16)*100 ?
rich
Dividend Policy - lets see the results. Then I'm going to mail the IR companies. BSPM is making a hat-full of cash and talking about hiring a top 4 auditor ($1M fees) on an $80 rev company... I think they would be better off with dividend... but we're about to find out
rich
CCME / Insider trading Someone said that he would have to sell to make a profit in the next 6 months? Dunno?
I can't believe that legal council wouldn't have been taken on this matter - god knows they've been discussing it long enough.
rich
I think your being a bit hard on them. This is a cheap company - they don't need to beat estimates they just need to keep showing significant growth - clearly they are doing that.
We would have all liked to have had them beat their estimates but they had to change course in the year. They would have started the year going for growth and ended it with having to conserve cash - which meant a change of sales policy and missing estimates. I have to say knowing this and that the balance sheet now has $16M in cash makes me a very happy investor.
I would have thought that Zushima was about the SFDA giving it the OK? If that's the case I can't blame BSPM. They are more in control of the raw material but it's a first year and sometimes things aren't as expected. I wanted to hear something about that in Q3 CC but can't remember anything. (Perhaps I missed something?)
They are talking of a TOP4 auditor - that is above the call of duty (I'm not sure the market will reward it when it changes? Dunno lets see). They are one of the few companies to suggest that they are expecting significant growth in 2011 (30 - 35%) but that was others putting words into their mouths rather than their considered position.
High quality earning company at P/E 4 wanting TOP4 auditor and expecting to show some growth in 2011. They have done a more credible performance than the stock market would seem, on the face of it, to have rewarded it.
rich
Reads like for the quarter up to 30th Nov. Otherwise you'd say 17M in Nov.
rich
The Growing Problem of Oil Theft in China
-- My point is putting a pipeline into the province sounds like a pain in the butt
China may be leaking more oil and gas from its pipeline network than any country in the world, much of it because of criminal activity. Currently, China has a trunk pipeline network for oil and gas of over 70,000 kilometers, transporting 70 percent of the crude oil and 90 percent of the natural gas. By 2020, the network will reach 200,000 km. Pipeline pressure is usually 100 to 120 atmospheres (1470 to 1764 psi).
The safety and security of the network is now getting critical and three factors are affecting that network.
First is the age of the pipelines. About 60 percent of the trunk lines are more than 20 years old and the pipelines in the east part of the country are over 30 years old.
Accidents happen often due to corrosion, inadequate maintenance and bad quality original materials.
...
...
Although alarm systems are installed along the pipelines, men have to be used to prevent oil theft. In Changqing oilfield alone, thousands of security guards are hired to patrol the pipelines in the oilfield area. However, a lot of pipelines are located in remote areas where no communication exists. To totally prevent oil theft is sometimes mission impossible and the stealing is done by drilling into the pipelines, an almost daily occurrence.
...
rich
[1] http://oilprice.com/Energy/Energy-General/The-Growing-Problem-of-Oil-Theft-in-China.html
Coal Imports: 2010 143M; 2011 230M.
http://www.chinadaily.com.cn/business/2010-12/14/content_11700418.htm
rich