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CHBT Stores
Here is an article discussing CHBT stores.
http://seekingalpha.com/instablog/628941-tony-regans/90639-china-biotics-stores
Looking through the link and pictures, the CHBT stores seem to be "store in sore" concept. That is, CHBT has designated counters within Dia store. Dia is part of Carriefour, a big French retailer/supermarket chain with big presence in China. I shopped in bigger Carriefour in Shanghai but not in smaller Dia convenient chain there.
Dia has about 100 stores in China, roughly matches CHBT's claim of 110 retail stores.
YONG - YONG has a very interesting franchise model. All those 20K stores are Yongye branded but owned/operated by individual owners. Sort of like franchise part of McDonald. In Mc's case, however, the company have direct ownership of some stores.
McDonald takes 8% (?) of the revenue from each franchise as license and ad fees. I do not believe that Yongye has any similar license clause. YONG makes money from the supply sold.
Barron's article - Second phase of short attack
Although I disagree with the tone of this article, I find it a great reading. It contains some information that I never knew before.
This article signals the second phase of Wall Street attacks on Chinese small caps. The article has strong biases built in:
Bias 1 - Time after the time, the article quoted that Chinese small caps under-performed. However, much of the statistics quoted failed to mention the spectacular run of Chinese small caps from March 2009 to Jan 2010. It simply quoted the recent down of those stocks.
Bias 2 - Only quotes the bad part of a stock. The ONP fiasco is well documented. The article only quoted "Muddy Waters" stands behind the story, and there are no comments from ONP/IR/Lawyers. It does not say anything from the counter points. It does not even mention that those two MW researchers have no financial background, and recently "moved on" after the taking the profits from the short position.
Bias 3 - Much of the story focuses on the promoters and a few "Wall Street" investment bankers/IR firms. It does not distinguish the dealers from the managers of the company. It assumes that all promoters of the Chinese stocks are bad, and the companies, by association, are therefore bad.
Looks like that we have a Long summer (and a Long fall) before us. Or shall I say that we have a Short summer, and maybe Short fall.
CSKI John Bird - Do you or anyone know the latest status of the lawsuit?
$100m vs. $1m.
It is either massive fraud, or it could be nothing but wrong or incomplete reports. Instead of asking your lawyer friend, who may not have the pertinent information, you should post those two filings publicly and let the "accused" company and its auditor to reconcile the differences.
"Yes for sure... but revenues of $100 mill vs $1 million? this is where I am confused. "
SAIC vs. SEC.
Maj - Interesting read. It is a lot of work and I commend you for your diligence here.
Throughout your article, you have one underlying assumption - that the financial statements attached in SAIC filing should reflect the financial state of the company.
However, the financial state of the company is not a real topic in SAIC's annual review process. I had looked into SAIC's website, and read through the relevant forms of SAIC's annual process. As you can see from the SAIC's checklist (I google translated below), the financial state of the company is not emphasized at all. The core of the annual check is to ensure that company has not made any changes to its title, registration, and scope of the business, etc. Financial state of the company is in section 4 of the annual form and is in highly summarized and condensed format(revenue, profits, taxes).
If you take the view that SAIC is an agency for company's license, and that it is very different than SAT (State Administration of Taxation), or Chinese SEC (China's security regulatory commission, responsible for Shanghai listed companies) or US SEC. Then it is not that important to match SAIC vs. SEC filings. Using an agency to file SAIC documents is also understandable.
On the other hand, I am open to the possibility that some companies in our space are fraud. I just do not believe that all of them are. There are just too many big funds invested too much money (through PIPE etc.) there over last couple of years. They must have done some due diligence.
PS. SAIC's annual review for companies/enterprises:
--- Use google translate---
The main material on the company's annual review of the following:
(A) whether the company [is] in accordance with the requirement [regarding the use of] the company name, [whether] the name change is in accordance with the required change of registration;
(B) whether the company's change of residence registration in accordance with the regulations change;
(C) whether the company changes its legal representative in accordance with the required change of registration;
(D) whether the fase registered capital of the company acts; shareholders, the promoters contribution is paid as prescribed, and whether the flight of investment behavior;
(E) the scope of the pre-registration administrative license in enterprises operating license for the project, whether the document of approval was withdrawn, revoked or expires; whether the registration of business activities within the business;
(Vi) shareholders, the promoters are in accordance with the regulations of transfer of shares and change of registration;
(7) term is due;
(Viii) the company amended its charter to change the directors, supervisors, managers, whether in accordance with the regulations for the record;
(9) set up branch offices are in accordance with the regulations for the record, whether the branch was removed, to order the closure, suspension of business licenses;
(10) companies into liquidation, the liquidation group is in accordance with the regulations for the record;
(11) a natural person who is invested in more than a limited liability company.
SAIC filings
Majority of the article talks with tax filing, not SAIC filing. Tax filing and SAIC filing are very distinct process, and are treated very differently by Chinese companies.
All the recent short attacks (ONP/SKBI) focused on SAIC filings. The shorts deliberately imply that SAIC filings are tax filings. Your article does not clarify this.
BTW, per your article, the SAIC filings do not require audited statements for Chinese owned companies. Almost all of the US listed companies from China are categorized as Chinese-owned companies in China, including ONP/SKBI. The foreign owned companies are those subsidiaries of multi-nationals such as IBM/HP/Dell/GM, or those registered as foreign-own enterprises for tax purposes.
"Confirms that some SAIC documents are infact audited. "
When it comes to CCME, there are no weak longs. We just have strong Longs with a tendency to jump off the bus at each Short commercial.
According to Yahoo Finance, CCME's stock price increased from $7.83 one year ago to 11.19 today.
That's a nice increase of 43% within one year, beating the benchmark S&P (+8.3%) and Shanghai composite (-10%) big time over the same period.
Of course you would say that on August 17, 2009, CCME (or TMI) was a SPAC. Then again, that's exact the point. CCME as a publicly traded company is barely ten months old. During the period, Shanghai composite dropped big time, S&P is negative, and US-listed Chinese stocks are heavily shorted.
While I would like to see CCME perform much better, it does not perform so shabby if you measure it against the market.
"I am a big fan of CCME and want it to go to $100, but when a stock's fundamentals are almost too good to be true and the stock goes nowhere for almost a year it makes you wonder."
CCME - It seems that Jacky answered your questions already. When you ask the rate question, Jacky answered that the charge is per airport.
Question: "DO you charge advertisers based on number of passengers or the length of the ride or both? "
Jacky's answer: Per airport
SGZH - They should send the whole management team to visit PUDA, LLEN, and CHGY, and learn how to make money when market trend is with you.
SGZH -
Really do not understand the company. Revenue, Net Income, and EPS dropped big time from 2009.
They have two mines, and they managed to decrease the revenue from both, despite a rise in coal price and coal demand in China.
According to the company's 10K:
"During the six months ended June 30, 2010, we had sales of $22.52 million compared to $44.94 million for the same period of 2009, a decrease of approximately 50%. The decrease in sales was primarily attributed to decreased production of Tong Gong Mine as a result of changing and rearranging of our annual production plan due to outsourcing the mining work to independent contractors, and decreased production of Xing An Mines as a result of mine maintenance and retrofit projects commenced since the end of fiscal 2009. The Xing An project is expected to take about 12 to 14 months. ..".
Multiple TV screens - When I was visiting China, I rarely rode regular buses. But I did get the chance to ride on charted buses.
On charted bus, all screens showed the same programming (and therefore the same ads). That's why I said more TV screen does not help the viewership.
I am open for correction.
Lost - Gene Finders may be a short. The timing and contents of his first message suggests it strongly.
However, he did raise some good points with his calculations. That's why I am taking the effort to decipher it. As much as I like CCME, I am not a blind defender.
The issue with Gene's math was his assumption of a very low CPM rate (RMB $3). It is true that CCME charges a nominal rate for its regular inter-city buses. But airport buses serve premium routes with very affluent riders. If CCME prices airport routes with a fair CPM rate (RMB 29) that are comparable to its competitors, then the math worked out in CCME's favor.
The calculation also shows the potential of CCME: there are a lot of room for CCME to increase the CPM rate (and thus revenue) for its regular inter-city buses.
More TV sets do not help since most ads are charged per CPM.
A higher CPM rate will help although .
CCME - airport bus ads rate.
I noted from the analyst report (Page 4, See Fernando's link) that Fuzhou's local TV ads rate (at RMB$268 per CPM) is much higher than that of Beijing (RMB$133/CPM).
Some considerations:
1) Ad rate of RMB$29/USD$4.27 per CPM is highly possible for CCME's airport bus route in Beijing, a premium route with affluent riders.
CPM Rate Comparison:
VISN RMB 26,
Beijing TV RMB 133 (USD $19.6),
FMCN USD $3.6,
China Mobile USD $14.4
2) Lower ridership in other airports such as Fuzhou could be compensated by higher CPM rate.
CCME - Interesting math.
1) I would suggest you to send your calculation to Jacky for comment and comparison.
2) Required CPM rate:
I took another approach: What avg CPM rate is required to generate the reported revenue?
I basically took most of your assumptions regarding Beijing Airport, and use a simple 4x for a total of four airports.
I came up an avg CPM rate of 29 RMB to generate USD $13.6m.
This is not too far from VISN's 21 RMB and lower than local TV's 133 RMB (per Fernando).
China - Exactly.
Anyone who are not prejudiced can see and feel the tremendous progress each year in China. It is right now the No 1 wealth creation nation in the world. That's THE reason why I invested a large part of my money in China - to gain a tiny share of the wealth created.
Soon or later, the rest of American investment community would join us, propelling the rise of PPS, and more importantly, expansion of PE ratio for our favorite companies.
"China now No. 2, but still desperately poor"
This is from MarketWatch.com, a web site devoted to US investment community.
You can see the undertone of the Wall Street from the tile. It creatively redirects a hugely positive message to negative one. Lets hope that this is one of the last acts for those hedge funds which short Chinese stocks.
Alternative title could be "China now No 2, while No 1 is broke."
PS. Original link:
http://www.marketwatch.com/story/china-now-no-2-but-still-desperately-poor-2010-08-16
LTUS - Do you know of any plan to uplist to a sr. exchange?
While it may not be good to uplist in short term - which makes it easier for shorts to overwhelm the stock, it will be good for the company long term.
You should compare CCME to BIDU, both in advertising space.
CNAM - I read through the news release. It seems that Crisnic Fund sold the CNAM shares under its "control". How else would a fund be damaged to its business reputation with respect to broker and clearing firm?
Strong behavior. Normally the shares used as collateral will be put into an escrow account and not traded by either party unless the loan is defaulted.
Also, I am wondering if it is possible for the Fund to suit the Company, when the act is done the CEO in private transactions.
From Crisnic Fund's PR:
"Crisnic Fund entered into a loan transaction with Yao secured by 1,300,000 shares of common stock of China Armco. The shares were transferred by DWAC transfer into the account of Crisnic Fund and were purportedly freely tradeable and available for sale. ... Crisnic Fund has been damaged not only with respect to the funds wired, but with respect to business activity at the broker, the clearing firm, the transfer agent and with respect to its business reputation in general. The litigation seeks damages in excess of $5,000,000 for these matters."
UTA - Q2 Earning
SHENZHEN, China -- Universal Travel Group (NYSE: UTA) ("Universal Travel Group" or the "Company"), a leading travel services provider in China offering package tours, air ticketing, and hotel reservation services online and via customer service representatives, today announced financial results for the three and six months ended June 30, 2010.
Second Quarter 2010 Highlights
-- Revenue increased 99.6% year-over-year to $36.7 million
-- Excluding contribution of newly acquired businesses, revenue increased 36.4% year-over-year
-- Gross profit increased 61.6% year-over-year to $10.6 million
-- Gross margin was 28.7%, compared to 35.5% in the prior year period
-- Income from operations increased 42.8% to $7.1 million
-- Adjusted income from operations, which excludes the effect of non-cash charges related to stock-based compensation of $0.3 million, increased 40.4% to $7.4 million(*)
-- GAAP net income from continuing operations was $6.0 million or $0.33 per diluted share, compared to a loss of $1.9 million or $0.13 per diluted share in the prior year period
-- Adjusted net income from continuing operations, which excludes the effect of the non-cash gain on change in fair value of derivative liabilities of $0.8 million and the non-cash charge related to stock-based compensation of $0.3 million, increased 29.3% to $5.5 million, or $0.30 per diluted share(*)
-- Acquired two travel service providers in China
"We are pleased to announce another quarter of strong growth in our business," said Ms. Jiangping Jiang, Chairwoman and Chief Executive Officer. "Our second quarter sales grew both organically and via our recently closed acquisitions. During the quarter, we saw strong demand for our travel services as the Chinese economy continues to expand, providing more and more consumers in China with disposal income for travel and tourism. We continue to see success in cross-marketing and selling our travel related products across our three business segments and increased brand awareness from our online presence and the deployment of our TRIPEASY kiosks."
NEWN - AH block trade
Just wondering about big block trade AH. It was traded at 16:05EDT with a size of 21.5K shares and a price of $6.2311, about 5% discount from the close.
ONP - Muddy Waters, LLC Moving On
... after made a ton of illicit money.
The following is from MW web site:
Barring any unforeseen events, Muddy Waters, LLC is “moving on” from our work on ONP. We are focusing on confidential contract research for institutional investors, and on advising investment committees on their China investments.
Although more could be written on ONP, we do not expect to publish additional research on it (barring any unforeseen circumstances). Given that the internal investigation is underway and other researchers are now focused on ONP, Muddy Waters’ resources are best directed elsewhere.
For institutional investors interested in our research and advisory services, please contact us at:
Email: info@muddywatersresearch.com
Telephone: +852 3757 7702
CELM - Abh3vt: If you back out the merger cost, then you shall also back out the cash using treasury method in order to compare the earnings apple to apple.
Shanghai composite was up 1.44% overnight.
Lead by ag, coals, travel, and brokerage firms, but participated by all the major sectors including banks and energy. Even housing/property stocks showed a little gain.
The SSE obvious shrug off the new stress test ordered by the central bank on Friday.
Apple - I like the $150B price sticker better. Just imaging what a Chinese game developer can do for $150B?
Just listened the video. This guys (Peter N.) is clueless about what he is talking about.
Peter have many books (you can check Amazon.) I did not read his "Coming China War" but judging from the other books he wrote, he probably have no expertise in Chinese economy AND military AND history. One reader in Amazon commented that it is surprising that Peter Navarro, as a professor of management, "had no bibliography; no references; was shoddy in terms of quality" in this book. Even a reader who likes the book commented: "This relentlessly one-sided polemic against China is what it is, without any pretense of objectivity or balance."
WOW -
Met Mr. Lu Li before. A great guy. Very sharp and eloquent. I was very impressed by him. If he succeed Warren Buffet ...
Most likely a short seller trying to cover. 31K on the ASK at $9.8 is normally used to setup a ceiling so shorts can buy it below 9.8.
A real seller will show up as a ASK size 5.
EDGX, the MM, does the same trick frequently on CNAM. It works most of time when market is weak.
CNAM - good post.
I really like the CEO and management, who have the vision and ability, and are in process of transforming the company into a future earning powerhouse at multiple lines of business - ore trading, scrap recycling, and ore mine investment. Need a little patience for the transformation to take hold.
The current PPS reflects only its existing business. In worst case, I am taking comfort with the knowledge that my current cost average ($3.3) is much lower than what the CEO recently paid ($5), and is about 1/2 of what PIPE investors paid at $6.5. In best case, with some good news and proper market condition we can see a 3x to 5x explosion on this stock in no time.
Chinese stocks
There are certainly some strength in this sector comparing to general US small caps (Russel 2000.)
But still, the 215 big board stocks tracked here registered a loss today, for three days in in row:
http://www.chinaplus1.com/content/performance-chinese-stocks
It is down 0.49% around 1pm EST. Lets see if it will be green by the end of day today.
Wall Street Journal article:
"Chinese stocks rally strongly on fresh hope of brisk growth."
http://online.wsj.com/article/SB10001424052748704895004575395081607996788.html
Reality Check: Chinese stocks traded in US continues its slide for three consecutive days.
CNAM - I can understand your other arguments, but not this one:
"... at 3.50 this is a PE of about 5 for a very low margin business company. This is cheap of course but compared to other companies in our space not the cheapest. We have cheaper companies out there with a more reliable business and higher margins as well."
Can you elaborate by listing the good stocks so I can benefit from the trading up.
Isn't PE of 5 taking into account of the margin. So margin should not be the consideration here. If another business is with a higher margin and the same low PE of 5, wouldn't it mean that other valuation parameters such as Price to Sales suck?
CNAM - agree here.
CNAM is always a speculative buy. The risk is real when a company branches into a new business line. The current PPS is priced/discounted to include this risk. The shorts were very successful in utilizing the risk to their best advantage over last two months.
Today's news serves as a reminder of those risks but also confirms that CNAM's growth strategy is marching forward. Since current PPS only reflects CNAM's existing business, the reward will be very high as the company overcomes obstacles and achieve growth in its new business line over the next 6 - 12 months.
ONP - Quick bounce.
Just sold my 4.15 shares at 4.99 pre-market.
ONP - If you have any insight you should definitely publish it. Nobody here is married to the stock or the company.
However, if you have concerns solely because whatever the shorts said rattles you, I would suggest wait until a cool off period or wait for the 3rd party investigation is over.
ONP - YOYO dance again. My "low" bid of 4.15 got filled this morning. Have another bid at 3.5. Thinking about put some 0.5 there just to catch flash dance.
CCLWF - Is this a good offer?
Anybody cares to comment?
It is certainly interesting. I was slowly accumulating and have some CCLWF now.