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Is that based on today's price action?
They said they can't rely on representations of management and we should not rely on q1, 2 and 3 figures.
I can't feel comfortable relying on anything management say after that.
Accountants dont act out of spite and is really stretching credibility to believe so.
This investment is now a binary outcome as to who can be trusted, so is way too risky for me because the chances of management having been deceptive or incompetent or whatever far outweigh the chances of the accountants acting out of emotion.
Have sold my position at 26c, good luck to all
I've appreciated your thorough DD posts but you're way off line here. It's the Accountants that have dropped IFSL not the otherway around! IFSL was notified on the 5th and havn't notified us until today, that's a bit of red flag in itself to me but yeah from the 5th they have been looking at other auditors, they have no choice but to.
Maybe IFSL will come out of it OK in the end but the chances of that are much lower than not because auditors don't resign for no reason and they are the only party able to look so deep into the accounts so obviously they know more than us with regard to the accounts
What's clear is the Accountants dont trust what the company says to precis their letter. I'm sure the accountants would be only to happy to have done the work and get paid for it but they have to put their name to the accounts and they obviously dont trust the company and what they are presenting. This is really serious action for sccountants to do and shouldn't be just brushed aside as crap accountants etc. This really speaks to whether management of the company is trustworthy,no one should try and minimise this by being in love with the stock and their hopes for it.
Why should we believe them? This was supposed to happen long ago and they have not kept investors informed at all on progress.
Du must know that he has to show credibility after all the rip offs i.e. open, informing communication
Not to be trusted after all that has gone down with these corrupt chinese scammers.
Don't make excuses for them.
A gamble not an investment.
I've been trying to discern the EPS trend over the years but it's been very choppy and inconsistent.
Does someone more clued up on the Co have an idea of roughly what EPS we can expect for Q3 and Q4 or FY?
Is it more appropriate to use the stated EPS or adjusted EPS number i.e. which number will the market go by?
Hi,
I'm just newly researching so forgive my lack of insight here.
I'm surprised you're suggesting they can refinance at a lower rate than the 7%? now.
Since the best offer so far was around 11 - 12% as far as I can tell, what makes you think they could do even better than 7?
Please don’t try and read my mind in your typically over analytic way.
You’re making assumptions of outcomes based on no better information than anyone else’s
i.e. the news must be bad.
And assuming your opinion is the realistic and sober one?
Buddy it’s just another opinion
You're such a hysterical flip flopper you don't know a spade from a spade.
Let's be realistic and say yours is just another opinion of the 100's posted today, since you know nothing more than anyone else.
I feel disrespected that they halt and say nothing about it.
I really hope there is a good reason.
Hope = bad investing.
If they couldn't co ordinate moving from one IR firm to the other without leaving themselves in a position of having no IR representation at the time of a crucial 10K release, then they would be a lot less savvy than I know them to be.
In terms of the future of the company, the 10K has become a binary event, thanks to the massive shorting and hit piece attacks.
In this case halting trading for the pending release of the 10K alone seems justified.
Try as they did shorts found no smoking gun.
The only way the 10k could be compromised is by some unintentional error/s, oversights, mis statements etc.
At worst - temporary price drop but longer term greater credibility.
The halt may last until 16th.
This waiting, watching the ticker not knowing is tiresome.
One assumes that if they planned a halt they would also have ready the news release to explain it.
Why we must wait so long is beyond me.
Over 2 hours is plenty of time for the halt to be noticed.
Since nothing has been released, then maybe something unexpected came up and they are working on a PR now.
I assume the length of this halt is to allow everyone time to be ready for the news?
With everything known, can't see how it can be materially bad news.
This looks like a very good investment.
With plenty of production capacity, diversified product range, healthy pipeline and no need to dilute save for an immediately accretive acquisition, plus 40% EPS growth into 2011 but a forward PE of 2.5, PEG of less than .1 - this is very undervalued for a company returning over 50% ROE.
Management are communicative and seem competent, qualified and respected. Auditor is top 10, so fraud/accounting issues should be out of the picture.
Should see some PE expansion on up list/higher visibility in 2011 but I think maybe not so much, maybe to 4-5 forward PE, since it’s still very unknown and the ridiculous undervalued PE’s China RM’s are getting right now, so would still be very undervalued based on growth prospects, on a strongly expanding demand in it's market.
It looks like, with it’s own pipeline supplying continuous new products, expansion of the distributor network, producing it’s own raw materials and also acquisitions, the company could continuing growing for years.
Has no barriers to entry and margin protection, but sells it's own proprietary products and has well established distributor network.
Looks to me, like a higher growth rate/potential and more clearly defined growth path than the likes of LTUS.
With latest financing they must up list within 90-120 days or face penalties, so they can’t wait and hope the SP will go to $4-5, they’ll have to do a reverse split. I’m assuming 2:1
May be a little out, but I get 29.7M diluted shares outstanding for 2011, so that would come down to say 15M. If insiders own 80% that leaves a float of just 3M shares, is this good or bad for the future stock price?
Also has anyone got more insight into the ability of management?
Avant you make a lot of valid points.
I was saying what I thought management see their priorities are and they are not to mollify impatient, fearful small time retail investors.
They are doing a great job growing the business. They are not responsible for the emotion driven knee jerks of this crazy marketplace and should not compromise their growth plans just to keep our fear and greed temporarily at bay.
This is an exceptional business that investors should buy and hold long term – most don’t. It’s the weak longs fault here, not the shorts or management or Jacky.
Their first priority will continue to be growth, until the business matures into a steady earning cash cow. With so much potential opportunity in outdoor advertising/advertising/China, the end of growth phase seems like a long way away to me, so I’m surprised so many expect a dividend any time soon.
The fact that they have not spent their cash on ‘anything’ yet, just means to me they are being prudent about potential acquisition or business venture justifying itself by adding sufficient value, as they showed by questioning their own previous plan to upgrade to wireless technology in the buses - they are careful with the money - but I certainly believe they are looking at adding value with the cash pile obviously and believe in balance of their record they’ll invest wisely in high yielding venture/s quickly accretive to earnings.
I just don’t think they want to pay a dividend at all and I’d be surprised if they actually buy back any shares.
I’m just trying to see it as I think management may do and I could be wrong, hope I am. I’d like to see a divi for most of the reasons you and others make but I think that’s coming mostly from impatience, greed and fear.
No one knows if a dividend is coming.
I’d feel more comfortable and less frustrated if the share price was less volatile but my interests are not managements thus I’ve never really been able to believe that a growth company in China would likely pay a dividend.
Dividend is usually not done in a high growth phase of a company’s development and it’s usually not done in China. Yes there are a few exceptions and CCME could become one of those but on the odds it’s much more likely not to be a divi payer IMO.
They were very slow to announce a buyback, and then, only until under extreme retail shareholder complaint and didn’t do any buying when the SP was so low. If they havn’t done any in this Q then forget about any promise to pay a divi. The stock price has looked after itself pretty well since then anyway.
They have been talking about a dividend since the SP lows and have had board meetings to discuss it since, now they are waiting for the next meeting to ‘discuss’ it, again.
Jacky is very obliging and responsive to shareholder concerns and when pressured basically fobs off with vague intimations eg. the board will discuss at next meeting, the board is seriously considering etc.
I’d love to be proved wrong but I believe, the company doesn’t want to pay a dividend.
A great accretive acquisition opportunity or similar could come at any time. I think they would rather keep their growth options open than worry about the short term share price.
Short term for management is until their last earn out shares are issued, then they should worry about the stock price and divi.
Zheng Chen built this company and with a moat by virtue of his astute entrepreneurial skills and government connections. He justifiably should put the growth of the company and his own interests before retail shareholders interests.
As value has pointed out, as a devout Buddhist Mr Chen is going to do nothing to reduce his merit and create negative karma. I regard this as important in terms of credibility as having Deloittes as auditor, as his beliefs are hard and fast and non negotiable – if he does harm to others he believes he harms himself - unlike some Christians here who change their views and spin, depending on their own financial self interest, can always repent later! or just let it slide.
I find it hard to believe some of the more visible and respected posters here, as it’s hard to know who is trading. I think there is a certain amount of spin especially at the highs and lows of sentiment – SP could go up 100% in a day – yeah right!
I was think along similar lines, selling on the scare. But Pope selling does concern me, more so than Fidelity, since Pope must know the business very well.
However both could buy back when the company shows production ramping.
Wellington still own a large holding and FWIW D E Shaw at number 4 in the list featured in ‘Stock Market Wizards’ book, secretive and very successful multi billion $ fund over a number of years – though this just one of many positions for them.
Many thanks for the reply Viking, some helpful insight into the company there.
One other question I have is why have Fidelity and Pope sold most of their shares? Presumably Pope know the company very well since they stumped up with the convertible loan, what’s your take on their possible motives for wanting to sell out?
Am doing my DD on CHBT and it looks overall a great prospect but still has to prove it can ramp up that bulk production into a meaningful revenue increase.
I have a few final questions I hope someone with more knowledge of the co can help with please.
Why are Q2 revenues less than Q1?
Q2 revs were 23.6 v’s 24.9 in Q1. In both fiscal 09 and fiscal 10 Q2 revs were higher than Q1.
In fiscal ’11, bulk revs accounted for 41% of sales in Q2 v’s 40% in Q1. Since the co says bulk run rate has increased in Q2 to 75T pa from 60T pa, why was this not reflected in increased bulk revenues as % of sales?
I believe asp’s for bulk decreased from Q1, maybe this goes some way explain it?
Then again, why did asp’s drop and is there any way of knowing if they will stabilize or fall further?
Can we expect asp’s to stay within the 650 -750$/KG range going forward?
I also am questioning why they went from 103 down to 15 retail outlets in the quarter. Although the reason seems sensible and plausible, it’s also quite a coincidence that the ‘downscaling’ has happened during the period of the short attack based around doubt about the existence of many of their retail outlets. Yes, their own retail outlets added only a small percentage to sales but the point here is honesty of management.
What is the quality of this management? The new COO seems highly qualified, what about the rest of management, can any of you longer term holders give an opinion?
http://people.forbes.com/search?ticker=CHBT
Travis Cai’s CV does not say he is GAAP qualified. Would’nt it be better if he was?
There has also been some doubt cast on BDO HK. FWIW I found this quote from their CEO which suggests that CHBT as an SEC registrant, is being audited to PCAOB standards, which effectively means it effectively has a top 5 auditor since it seems to be being audited to BDO international standards and BDO claims to be no 5 in the world based on annual turnover.
Reply from Albert Au, Chairman & CEO, BDO Limited:
BDO Limited is registered with the U.S. Public Company Accounting Oversight Board and cooperates and complies with the rules and standards of that body to the fullest extent possible, including that of inspection.
The only exception is where there is a contradiction with the laws of Hong Kong and the People's Republic of China, jurisdictions in which we and some of our clients operate. Such restrictions of course apply to all firms operating in these jurisdictions. However all BDO Limited's audits of the financial statements of our SEC registrant clients are conducted in accordance with the standards of the PCAOB.
http://seekingalpha.com/article/229517-china-biotics-a-questionable-investment?source=qp_article
Value, Global Hunter isn't really one of the big boys I don't see an upgrade by them making waves. Nor has new contracts news done much for the SP in the past.
A divi would make a real difference on the news IMO but just won't happen as the co has so much growth possibilities in China.
I think talk of a buy back and divi was to help support the crushed share price and fob off investor pressure on management, now the stock is doing fine there's no need for either, as far as management thinking is concerned I would think.
Whilst I'd like to see them do something really accretive with the cash, I like that they seem to be careful about what they'll do with it - not just buying up a whole lot of overpriced contracts from their peers for instance.
I just don't think hanging out for 'catalysts' is helpful, this is a stock I'm personally very comfortable to hold long term as it's almost certain to attain a more worthy valuation 'some time' in the future because it's a very solid business right now in a monopolistic position. Just requires patience.
However I fear the shorts are going to have a stronger hand than longs in the short term.
I think you are absolutely correct, moreover IMO there is no 'short squeeze' shorts are simply working the stock to take advantage of the weak longs that have always held this stock - short high cover lower, repeat.
Dissapointing that there is not more institutional interest by now.
Unfortunately there are no short term catalysts until they blow their own ridiculously understated earnings estimate away again (there will be no actual buy back and no dividend IMO and no realistic 2011 forward guidance either for that matter)
So as weak longs become impatient, doubtful and shaken out, it's more likely to settle at a lower level than now but at least much higher than a couple of months ago.
Unfortunately too much doubt and uncertainty in the wider economy and markets for China small caps to outperform doesn't help, even this one, which is best of them all and an outstanding business compared to any other,anywhere IMO.
Ad Spending in China to Surge for Next 5 Years....
http://www.adweek.com/aw/content_display/news/digital/e3ia5b5121032e4be88cbfd6c6ff715e27f
This is absolute drivel and not worth responding to. Why this guy gets so much airtime is astounding and frankly disappointing. Is this what investing has become- profiting from baseless fear?
I don’t think his opinions matter much to the stock price anyway. He’s small fry.
CCME already has a lower TTM PE than all the companies that have had accounting irregularities/ fraud based allegations made against them.
The problem here isn’t with the company, it’s with the stock market and the panic herd mentality.
An investment in CCME is a great lesson on how difficult it is to be contrarian - we are all having similar emotions. Do you believe your DD or get derailed by the fact that shorts are winning right now?
Is this company as audited by Deloittes a fraud?
If not, then "short attack" or not, it’s just a matter of time until the stock price is significantly higher than today. That will take patience.
"The stockmarket is a means to transfer wealth from the impatient to the patient." Warren Buffet
It's an attractive short target because shorting it is working. When it stops working they'll cover and move on.
Don't assume fundamentals come into play here, it's a matter of who is in control now - the shorts.
Yet to show their hand? You talk as if “the shorts” are an organized group working in tandem.
In fact they are just investors shorting because it has been an investment strategy that’s worked for them up to now. They are not focused on fundamentals they are focused on what is working.
I agree, the shorts know nothing more than the longs here, there is no smoking gun - it’s now down to the company’s interest income doesn’t add up so presumably they lied about the cash situation but forgot to lie about the interest income?!!! . All the while pulling the wool over incompetent and naïve little old Deloitte’s – yeah right!
I find it hard to find any other major listed Chinese stock with current and forward PE’s less than CCME, and they have $150M cash and over 30% EPS growth. So it’s hard to see how the SP can go much lower.
But logic seems to have gone out the window, the stock seems to be being flipped and also dumped by piss weak longs and it just seems to have gotten into a bad habit, bad behavior pattern because nobody trusts any sign of strength as sustainable and too easily believe any sign of weakness will mean heavy selling, which becomes self fulfilling as flippers and piss weak longs…..
The longs, through their lack of conviction, are supporting shorts here, so much for DD.
I’m hoping the increased volume over the last month is at least partly from a significant increase in institutional interest and not just an increase in penny flipper day traders. Not much support for the stock price stepping up though?
We hope management will come to the rescue with a share buyback and/or dividend - when their make goods are contingent on meeting net income targets, not EPS and PE multiples.
So they continue to “discuss” and fob retail longs off whilst shorts control their stock.
Maybe they’ll do something about the SP in 2012 after they get the last 7M make good shares and use some of their 250Million cash to pay themselves (oh yeah and us!) a dividend.
Then they can start unloading their shares at higher prices which they obviously can’t do now, after what they saw happen to SP after the “mistakenly overstated” 144 filing.
I certainly wouldn’t want to see a stock buy back.
To be significant, it would need to involve a large amount of cash and right now the market wouldn’t care for long anyway, a spike up in price then maybe a slightly higher low.
I'd like to see management agree to spread the earn out shares over 4 years instead of 2 - at a rate of 3.5M shares PA.
It could still be based on them meeting the NI income targets only for 2010 and ’11 but vested at 3.5M per year x 4.
This would reduce the dilution effect to:
8.6% in 2011 (from 17%)
8% in ‘12
7.4% in ‘13
6.7% in ‘14
Diluted EPS in 2011 would increase 44% YOY v’s the expected 33% - based just on the earn out NI numbers which they seem highly likely to exceed also.
The market would be more secure that the original owners will likely stay with the company longer and not just walk away once the earn outs are granted as happened with some of VISN’s acquisition managers.
Despite this reduced dilution overhang, as stated earlier by others, earn out changes might make little difference to a ‘risk’ averse market which is just ignoring fundamentals right now (but will longer term, when high EPS growth rates are appreciated again)
I believe a dividend is the only relaible way to ensure a higher share price and set a floor.
A dividend using just 10% of annual NI, yielding 2.8% at today’s closing would:
Give a cash return to shareholders
Give credibility to the company
Draw attention the the stock and business
Make shorts pay up or get out
Increase the stock price reliably and sustainably
Set a level for the stock price and decrease volatility
Make the company more attractive to investors
Leave 90% cash available for expansion/acquisition
Pay the CEO a $3.5M annual divi plus another 875K PA cumulative on the earn out shares for 4 years
Through management self interest, a dividend could happen but probably not a change to the earn out deal.
The CEO has every right to claim to have done all that could be expected to grow the company and increase shareholder value. He’s done his job very well and in his mind, shareholders should just be happy with that.
So I think he’d rather take the earn out shares for himself as early as possible and not over 4 years as he probably feels he’s well earned them.
I don’t think he’s going to make decisions based on other shareholders interests, ahead of the business or his own. The short term SP is not his responsibility.
The only way to stop this cycle is to devote a measly 10% of net income to a dividend, $10M = 25c per share and over 2.5% yield at today’s price.
And It looks like they can meet their net income make outs for 2010 and ‘11 with minimal M & A, so it seems plenty of cash available for a small divi. Plus a company growing EPS at 30%+ PA. Income, growth and credibility in one stroke plus the shorts have to pay out.
But management really only need be concerned with making the Net Income targets and since they got around $20M cash from TMI already and they maybe don’t really need to worry about the SP until after they have got all the make out shares for themselves, I wonder where their incentives lie. Hopefully in the interest of all shareholders.
Like I said, choosing to sell is neither wrong or right. It's just what everyone else is doing at the moment which makes a fall in SP a self fulfilling event and since it's happened so often already, probably self perpetuating going forward given all the potential overhead resistance levels.
In that sense all the sellers are weak longs, bearing in mind the strong fundamentals underpinning this investment.
That's not an insult, just a fact.
The point I am making is it has fallen because you and others sell. That’s neither right nor wrong. Just a fact.
When you find an undervalued stock with such great fundamentals, a cash cow with huge returns on equity, a well managed company with a govt. mandated moat on it’s market - this is an investment you want to be contrary on.
Being contrary means having the courage of conviction to hold in the face of the negativity. Unfortunately you and many others don’t have that and can be shaken out.
These are the businesses that the Buffet’s (and Hank Greenburg’s) find – and hold.
"The stockmarket is a means to transfer wealth from the impatient to the patient." Warren Buffet
“When the crowd is fearful we try to be greedy and when greedy we try to be cautious” Warren Buffet
But you are – you sold. Just like all the other band wagon jumpers. For whatever reason you find valid, you joined the sheeple.
Who’s to say you did the right or wrong thing but don’t pretend you aren’t what you say you aren’t!
You are part of the collapse, you make the short thesis valid.
Considering the SSE is 9% higher today than when CCME hit it’s July low, the stock price now, at around 9% higher than then, is comparatively equivalent to the 8.73 closing low back then.
This coming after they made $28M for the last quarter = 6 quarters of Q on Q growth
If the next 2 quarters are only flat, they will do over 100M NI for the year = EPS of $2.5 diluted
Take out the cash per share of approx $4 per share = effective SP of $5.65/ 2.5 EPS = PE of 2.2
For a business growing EPS YOY by 36% = PEG of .06
With 140M cash as audited by Deloitte
70% gross margins
Over 80% ROE
In an economy growing at a minimum 8% PA
In an market growing at 18% PA
The only PRC mandated licensee in it’s market segment
Thus the dominant market player
Grossly undervalued v’s it’s outdoor advertising peers
But wait! This just too good to be true. Therefore we must be very careful in case it’s a scam.
Piss weak longs sell for peanuts and make this an easy short.
CNAM has a 50% tax exemption for 2010 -12 but lost the 100% exemption it had from 2008-09? How will this impact earnings this year?
Hope he's right.
Strugger expects volatility to decline in coming weeks, with the spot VIX sliding through 20 in late August and September to reach the 15 to 18 range.
Maybe more investors will be prepared to take on some 'china risk'
i.e. Invest in an economy that's prudently regulated, succesfully engineered a soft landing, has inflation under control, and is growing at a minimum of 9%,very strong consumer spending, with businesses that have excellent earnings growth Q on Q and YOY.
But why buy a 5PE company with 20%+ growth minimum when you can pay 15PE for a US business in a 3% growth economy!
http://www.reuters.com/article/idCNN0625096520100806?rpc=44
Thanks for the input Realfast and Glen. I’m not looking for an argument, just as much clarification as possible.
I have to give some credence to the negative views of morepaveway as he called it correctly on Wang with NEP. That’s why I’d like to hear from Fernando about his impressions on Cai, if he met LPH management.
It doesn’t say in the PCAOB reports which clients of Child Von Wagoner and Bradshaw had irregularities. I notice the likes of Deloitte , PWC, KPMG are on that PCAOB list, so I don’t know how much weight to place on a PCAOB report finding?
http://pcaobus.org/Inspections/Reports/Documents/2009_Child_Van_Wagoner_Bradshaw.pdf
http://pcaobus.org/Inspections/Reports/Documents/2010_Child_Van_Wagoner_Bradshaw_PLLC.pdf
http://pcaobus.org/Inspections/Reports/Pages/default.aspx
http://www.linkedin.com/in/michaeltoups
Toups gets 120K plus 60K shares.
LPH looks very undervalued based on 65c FD 2011 EPS but the market value is being held depressed by the lack of accumulation. There’s plenty of supply but not enough demand to drive the share price up. This is because the SP is too low to interest many institutions. That’s why they should do a reverse split, reduce the float size and get the SP over the minimum SP that many institutions require plus ultimately make it more marginable and optionable. Then they could look at a NAS listing and have a shot at IBD100. IMO, said it all before.
Well spoken if true but there are some things that bother me about LPH.
I hold a large position, so if you Glen or Fernando have some substantive answers to my doubts I’d really appreciate hearing them. I’m not as knowledgeable as some others here I’m sure.
Fernando, did you visit with LPH management in China?
What bothers me is:
The quality of their auditors.
The quality of the new CFO, coming after another widely disrespected CFO.
The new CFO’s sometimes unimpressive credentials and past record.
The new CFO’s past record of dilutive capital raises
The fact that he is part time and earning 120K and 60,000 shares PA – too much for a part time contractor in my opinion - possible sweetheart deal ?
There are also too many shares out in the float - around 350 x daily volume fully diluted.
Warrants and preffereds overhang depressing stock price indefinitely (because those holders who don’t see this as a high quality investment will be happy to sell early at a possibly smaller, but certain profit)
This overhang is important as it makes it uncertain as to when the stock price will move up appreciably (true for any issue but more relevant for a company that may have potential accounting red flags as far as I’m concerned) I want to see a relatively quick profit then move on.
I have assumed that the figures as presented for this business are correct but it’s not Deloittes auditing them.
I have to respect the opinions of morepaveway who was right about NEP (though he’s intimating possible LPH red flags not necessarily a bad short term investment)
I was holding NEP (at the time, also an underpriced company with very good profit potential after their drilling aquisition) Morepaveway came on board with his strong doubts about the accounting and management veracity – he was called a short and a basher but he was proven correct and no one else saw it coming.
Although there is highly likely to be more upside to LPH the stock over time, it may also be a matter of time until some ‘irregularities’ come to light here also.
It may not happen, but the risk is there and I'm thinking it may be more significant than I first realised.
The PAOCB has found irregularities in the work of their accountants (not regarding LPH) as I posted previously.
NEP was an excellent company and great investment for me I made a lot by being lucky enough to buy and sell in 5 weeks for a double well before the bad news but I was lucky and I don’t want to be taking the unknown risk that NEP actually was, with LPH, if it’s possible to discern red flag/s here.
http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_%28A_to_Z%29/Stocks_C/threadview?bn=96240&tid=14629&mid=14634
Hey Fernando,
I really appreciate you posts as always. Did you visit LPH on your China trip?
What's your veiw on management if you met them?
I'm a little concerned with their accountants - Child Von Wagoner and Bradshaw, small company of 25 partners and staff and got bad raps from the PAOCB for previous Company audits done in both 2009 and 2010.
Does this really mean Child Von Wagoner is not up to it? I notice PAOCB also found fault with Deloitte audits for instance.
What do you think. Should they get a better auditor?
I think they can afford a top 20 auditor now but it seems as if PAOCB look hard enough, they'll find faults in most audits anyway?
http://pcaobus.org/Inspections/Reports/Pages/default.aspx
I just don’t think they will ever do a stock buyback until management self interest in meeting their net income targets are achieved. This will be their priority and Jackie has already said as much, they have plans to increase net income in 2nd half of this year.
They have to grow net income by 56% next year to get their second lot of 7M shares, so the more they increase NI this year above the 83.5M if possible, the easier it makes 130M next year. They will only be spending money on growth and I think they should do that, since this is the time when they can grow to gorilla status in their market.
Shorts are in control of this stock right now. They short it because it has worked reliably for quite some time – rinse repeat. Potential retail longs are scared off by the unreliable price action, apart from the buy and holds who obviously are in the minority.
I can only guess Institutions may not be impressed by the relatively small EPS growth 09 – 10 (14%) plus are waiting to see if Co will make it’s FY09 numbers. Institutions can be followers as much if not more than retail. It’s 2011 when EPS should increase by at least 33% if they get to the make out numbers.
Also CCME already own 33% of the possible total market (65K buses) and big money may want to know where is the future growth going to come from looking a few years out, they won’t ever own 100% of their market so there appears to be a defined limit to how big they grow.
I believe CCME will have real pricing power and the dominance to enforce it, once they have a bigger lock on their market because they can both grow organically and buy their competitors and own a big slice of the market but that’s not proven yet.
If there’s negative reasons insti’s arn’t interested in buying now I’d sure like to hear their logic, just scratching my head trying to find a bear case here and these are the only reasons I can see for the price action and small institutional interest so far.
I don’t see why it should take so long after all these meetings with management for large buyers to come on board. DD doesn’t take this long especially if you are really interested and enthusiastic about the business and believe it’s a bargain.
Maybe it’s because China is a dirty word right now, even after prudent state governance engineered a soft landing, inflation under control and 9 – 10% growth for the rest of 2010.
Really it seems that state economic control on the big picture macro economic things seems to work better than the kind lawless cowboy US greed that crashes markets and destroys infinately more wealth than anyone has ever lost on fraudulant China investments.
That’s the game right now, after a short burst up, stocks get shorted down and/or deserted by the momo’s on up listing as is happening with LPH on AMEX now. Up list AMEX or NAS is no guarantee of a higher SP but PE's are higher on NAS.
http://www.fixyou.co.uk/uplisted.php
With 112M shares out on a still relatively unknown company where’s the buy volume going to come from? Daily volume around 200K and 3-5M prefferds still to sell?
Not from major institutions, with big buys, until this gets to around $10. It could stay stuck in a range until say a 4:1 RS gets the float down to around 17M. Then there may not be enough shares to fill the buying demand.
It‘s an unjustified attitude, but I doubt LPH will get full respect or notice by institutions whilst it sells at such a puny share price,with such a large float, despite the great business that it is.
*NASDAQ-listed stocks……. Sell for *22.8x trailing *and *18.6x *
forward earnings….
....China NYSE AMEX-listed stocks trade at 13.2x trailing and 8.7x forward earnings...
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