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JGB's been getting butchered over the past week on fiscal sustainability and downgrade worries, as well as the failed German auction .... remains to be seen if this is the start of something sinister or not.
Bass's reply would be that given the demographics in Japan, the supply of potential purchasers of the debt is dwindling and given the Japanese govt's level of debt servicing, it can't afford any increase in interest rates. At some point, the BOJ will have to monetize in order to support the market which would be negative for the Yen and therefore also the JGB. I agree the trade has been a widowmaker over the years, but that doesn't mean it won't eventually break down spectacularly when it hits the tipping point. The timing of which is certainly problematic, though.
"People like J. Kyle Bass have been calling for a short on JGB for years, and they've been getting their faces ripped off."
I'm not sure if that makes it a bad trade necessarily.
Agreed that the easy fixed income shorts in Europe are getting harder to come by, but how do you feel about shorting JGB's?
Rosenberg on WealthTrack
Kyle Bass getting bullish on housing ... via Zero Hedge:
http://www.zerohedge.com/news/did-kyle-bass-turn-bullish-housing-and-does-it-mean-substantial-upside-mortgage-insurers
LIWA - which is exactly what they've done
Announce they have had their quarterly results AUDITED, that any cash balance they claim has been verified by the auditor, and that they welcome unannounced visits by institutional and individual investors.
If I were CEO, that's the direction I'd take right now to add another layer of transparency and trust.
LIWA - Nice move today on news of third-party verification of cash balances.
OGX - At what point do you go all in? Seriously.
Is the market worried here about future financing needs? Global slowdown ... plunge in oil prices? The size of their probable reserves or their ability to balance exploration versus production?
Any opinions here would be welcome. Why should we not be going heavily overweight here?
CCCL - Where did GEO say that?
"In the meantime we are circling back on some of our DD. It looks like the company does want to cooperate with us."
http://geoinvesting.com/forums/SingleMessageView.aspx?mid=11444&view=T#singleMsg
I'm not pleased that Geo says CCCL is now not cooperating with them
Interesting article in today's Journal about disclosure lapses from Cayman domiciled Chinese ADR issuers:
http://professional.wsj.com/article/SB10001424053111904888304576472360707616634.html
Thanks, Will. Great job on the website, btw!
How's Chengdu treating you?
I agree that this seems to be an attractive gift from the market, but you can't apply the PBN dividend payments towards the value of PBG in excess of the PBN valuation. That would be double counting.
MNHVF - Great, thanks for the confirm. I thought it was odd that it was not appearing.
MNHVF - Are holders of the pink sheet shares entitled to the dividend payments? I only ask because I cannot find a record of the last divi being paid to it.
Does anyone have access to a Bloomberg terminal?
It would be nice to get the output from a few screens for various markets on a regular basis. Maybe post them as a .csv file where everyone can access? The Bloomberg market screening function (I believe it's QSRC) is pretty good as long as you have access to the underlying market data in question.
I'm going to throw DELL and SNDK into the mix with MSFT and CSCO as far as big tech value names go.
MSFT - Has anyone mentioned this yet? Agree that they make head-scratching acquisitions, but you can't deny their cashflow.
Wow, how did I miss this board?! Great stuff here
NEP - These are the shares issued in relation to their recent oil field acquisition.
CCCLW - Considering the liquidity in the warrants, it looks like that was probably a fat finger trade
LIWA - update from GH ... at least this appears to have been a fairly thorough site visit that the company was not given a great deal of time to prepare for.
"Summary: Given the current environment surrounding the US-listed China space we felt that it was imperative to share, in detail, our recent diligence efforts. Going forward we intend to conduct incremental and ongoing diligence with all of our companies and to communicate that in a more direct and factual based manner, akin to a standard diligence report rather than the technical writing style of traditional equity research. Our efforts will be focused on helping investors get a better understanding of the day to day operations at the facilities of the companies that we are currently covering in order to help investors to sift through rumor and innuendo and to be able to focus on the fundamentals of a business. We conducted a 24-hour site visit on March 10, 2011; having given the company less than 24 hours prior notice. The following summary is a description of what we saw, who we spoke with and how we have trued up production capacity. Additionally, we wanted to highlight the fact that LIWA filed its 10-K without any glitches or delays on March 14, eliminated all material weaknesses from its annual report and became SOX compliant. Given the current valuation of only 3.3x FY2011 on a cash adjusted P/E basis (LIWA has ~$3.00 in net cash as of year-end 2010) and 2.4x FY2011 on an EV/EBITDA basis and a number of near-term catalysts to drive share price, LIWA remains our top pick in the US-listed China space.
Highlights
In order to verify LIWA’s stated copper smelting capacity and utilization rates from both an input and output basis, we spent 24 hours at its facility observing operations as well as following its delivery trucks to clients’ facilities in order to verify customer and tonnage shipped. We arrived at LIWA’s facility in the morning on March 10, 2011, giving the company less than 24 hours notice prior to our arrival. During our time at Lihua’s facility, we witnessed the delivery and unloading of copper scrap, the pressing and bundling of scrap into rectangular blocks, loading of these blocks into the smelter, the actual smelting process and the extraction of melted copper into either rod or anode form. Being there for 24 hours allowed us to observe the whole operating cycle and to time the process in order to be able to true up Lihua’s daily smelting capacity, which can be extrapolated into an annual capacity. We have also followed three of Lihua’s trucks to the customers' facilities to verify the deliveries. Additionally, we approached and spoke with Lihua’s workers, truck drivers and people unloading trucks at customers' facilities.
We believe the recent pullback in share price offers an excellent entry point. Lihua’s share price has declined about 20% from the recent highs of ~$11.90 during the last week, while the company reported strong Q4 and FY2010 results, filed its 10-K without any glitches or delays, eliminated all material weaknesses from its annual report and became SOX compliant. In addition, during the last few weeks the company hosted a number of investor meetings and facility tours at its Danyang facility, all of which went very well (to our knowledge). We believe that the recent pullback in share price was attributable to the growing negative sentiment towards the overall US-listed China space, as well as the recent macroeconomic events and nothing related to company specific business or fundamentals. At yesterday’s closing price of $9.46, the stock is trading at only 3.3x FY2011 cash adjusted P/E basis (LIWA has ~$3.00 in net cash as of year-end 2010) and 2.4x FY2011 EV/EBITDA basis.
Several near-term catalysts should create value for investors.
· Awarding of the license for import of 100k MT of scrap copper in Q2 2011.
· Auditor upgrade to a Big 4 firm in Q2 or early Q3.
· Additional sell-side coverage.
· Doubling existing copper smelting capacity to 100k MT in 2H 2011.
· Announcement of further capex plans following the installation of the two new smelters.
Reiterate Buy and $20 price target. Our $20 price target is predicated on 10.3x FY2011 P/E and 6.4x EV/EBITDA multiples. In our opinion a target price of $20 is justified by Lihua’s impressive margins and profitability, strong operating cash flows, positive demand trends for copper consumption and pricing and the robust capital expenditure plans that are expected to double existing capacity by Q3 2011. Lihua also has a solid balance sheet with a net cash level of $88MM, (or almost $3 per share), a current ratio of 5.6x, a cash conversion cycle of under 40 days and has generated ttm ROE and ROA of 35% and 29%."
https://ghsecurities.bluematrix.com/docs/pdf/30725391-b672-4028-a78f-a6778264d5cd.pdf?co=Ghsecurities&id=ghsresearch@ghsecurities.com&source=mail
CCCL - The company has started posting their SAIC filings on their website ... wish more companies would start doing this.
http://www.cceramics.com/SAIC-Reports.html
LIWA - From their website:
2009 SAIC Annual Report:
On May 14, 2010, the Company filed the 2009 annual reports of its two Chinese operating subsidiaries (Lihua Electron and Lihua Copper) with the State Administration for Industry & Commerce (SAIC) in the People’s Republic of China. The SAIC is the Chinese government agency responsible for issuing and renewing companies’ business licenses. The SAIC reports were prepared in accordance with Chinese accounting rules and policies, and reflect financial information relating to Lihua Electron and Lihua Copper on an unconsolidated basis. By giving effect to reconciliation adjustments, the results contained in these reports are consistent with results reported in the Company’s audited financial statements as filed with the U.S. Securities and Exchange Commission. The original filing documents are available on Company’s website: at www.lihuaintl.com.
http://www.lihuaintl.com/Investor_Relations/Financial_Information.html
I believe that a 10K must be audited by definition, but from page F-2 of the 10K:
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders of:
China North East Petroleum Holdings Limited
We have audited the accompanying consolidated balance sheets of China North East Petroleum Holdings Limited and its subsidiaries (collectively referred to as the “Company”) as of December 31, 2010 and 2009, and the related consolidated statements of operations and comprehensive income, stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
We have also audited the adjustments as described in Note 1 to the consolidated financial statements that were applied to restate the 2008 financial statements to correct the errors. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review or apply any procedures to the 2008 financial statements of the Company other than with respect to the adjustments and accordingly, we do not express an opinion or any other form of assurance on the 2008 financial statements taken as a whole.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the Company's internal control over financial reporting as of December 31, 2010, based on the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 16, 2011 expressed an adverse opinion on the effectiveness of the Company's internal control over financial reporting.
/s/Baker Tilly Hong Kong Limited
BAKER TILLY HONG KONG LIMITED
Certified Public Accountants
Hong Kong SAR
March 16, 2011
http://www.sec.gov/Archives/edgar/data/787251/000121465911000875/m31211010k.htm
NEP - Where do you get $19.98M Q4 revenue?
Revenue for the fourth quarter of 2010 totaled $23.0 million from $20.0 million in the 2010 third quarter and $30.0 million in the prior year fourth quarter period
http://finance.yahoo.com/news/China-North-East-Petroleum-prnews-3888544853.html?x=0&.v=1
CCCL - Grant Thornton audit
CGPI - letter from CEO responding to allegations
http://finance.yahoo.com/news/China-Redstone-Releases-prnews-3077533998.html?x=0&.v=1
Thank you for posting that ... that truly made my day!
GS China Economic data update from today --
Asia Economics Data Flash: China: February money and credit growth slowing, cools the economy down
Commercial banks extended Rmb535.6 billion in loans in February, down from Rmb1.04 trillion in January (our forecast: Rmb700 billion, market consensus: Rmb650 billion). Outstanding CNY loans grew by 17.7% yoy in February, down from 18.5% yoy in January (our forecast: 18.2% yoy, market consensus: 18.0% yoy). The mom; s.a. ann. growth fell to 17.1%, down from 22.6% in January.
M2 growth came in at 15.7% yoy, down from 17.2% yoy in January (our forecast: 17.0% yoy, market consensus: 17.0% yoy). The mom; s.a. ann. growth rose to 12.6%, up from 1.5% in January.
Key takeaways:
Recent monetary data continue to be subject to potential distortions from several factors: 1) financial products such as wealth management products do not show up as normal deposits and are recorded as deposits made by financial institutions and hence excluded from M2; 2) measures to bring back off-balance-sheet lending tends to overstate the amount of lending.
With that said, we still believe the money supply and credit growth has decelerated. The main driver of this has been the quantitative control measures the People’s Bank of China (PBOC) has been implementing. These measures include implicit credit control via the Dynamic Differentiated RRR System as well as more explicit window guidance to keep loan growth in check.
Sector specific policies such as the restrictions on property purchases probably only impacted the structure of lending but not the level of overall lending. This is because given the demand for loans remain strong, lower loan supply in the property space will just be replaced by higher loan supply in other areas if there had been no overall credit control measures. However, these policies probably helped to cool aggregate demand growth because purchases of properties are at least as dependent on saving as loans.
The downside surprise in M2 was again more dramatic than the fall in the loan growth rate which was likely to be affected by the following factors (apart from the distortions mentioned above):
The trade balance turned into negative territory unexpectedly. There was a swing of US$14 billion or close to Rmb100 billion.
The level of fiscal deposits increased significantly. While in February 2010, the level of fiscal deposits fell, it increased by Rmb338 billion in February 2011. This represented a tightening in the effective fiscal policy stance despite various official comments about keeping it “proactive”. The difference between the two is typically in terms of the collection of government revenue. In practice “proactive fiscal policy” can often mean high expenditure and high revenue (hence proactively but not “loose”). The Ministry of Finance has only released January-February fiscal revenue data which showed a 36% yoy growth (sequential growth was even higher at 161% and 48% mom s.a. ann. respectively). Fiscal expenditure data has not been released (the margin of error to estimate this from the change in fiscal deposit and fiscal revenue is too large as there are other factors which can influence the level of fiscal deposits).
Overall, we believe monetary conditions have been tightened though the magnitude of the tightening was probably not quite as large as the M2 data would suggest. We believe this monetary tightening, together with other fiscal and administrative measures, was behind the slowdown in sequential activity growth (from a very high level to a high level so far) and lower-than-expected inflation since the start of the year. Our channel checks with commercial banks suggest lending in March is not significantly higher than it was in February which means financial conditions are still being kept relatively tight and there is no sign of any relaxation. This is clearly good news as the risks of a serious overheating is minimal. Although there are some who are starting to be concerned about a potential over-tightening, it is likely to be quickly reversed if it does occur and we are still some way off from there.
I'm sure there's nothing else I can add that has not already been speculated about ad nauseum.
Certainly does look like him.
http://legalwritingshanghai.com/about/
Lol, that might be a bit too ironic to be a believable response from a PR firm? =P
"We don't comment on clients..."
CCCL - they raised $25MM in November through Roth and Maxim at $7.75
Doesn't that email actually confirm a relationship exists?
Otherwise, why would they point you to a company email address? Also, why would they then not state that they have no relationship with the company?
Last year's NT 10K was on the 16th, though.
Thank you
Good point, very nice post
Sounds plausible, but why would the MM need to create more shares in order to maintain liquidity? ... in general, it seems as though supply of shares has not been a problem recently.
If the MM created this short as a result of his efforts to "maintain liquidity"
Does anyone have a basic explanation that they can share for how the Volkswagen squeeze went down? I know that it involved a lot of work by the company in the options markets (OTC I believe) ... I'm curious if we are seeing traces of similar behind the scenes groundwork being laid.
It definitely was not as bad as a Hong Kong accent ... possibly Guangdonger, I was leaning towards Taiwan as well. I did notice that he did seem to say "Okay" a lot, though, which doesn't seem to jibe with the speech patterns of a native Chinese speaker.