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Are they not just looking for a 'late filing' form here?
Its interesting to take a look at dyp to understand what might have to happen with ccme. After DTT was fired from DYP, DYP attempted to hire a few auditors and they all REFUSED to sign on until their internal investigation and forensic accounting was completed.
So I would expect a late filing form here, announcement of an internal investigation. After a forensic account has been completed, and a new cfo hired, then ccme can get a new auditor and proceed to be compliant. This could take many many months, and its likely a sec investigation will slow it down more (dyp only informed investors recently even though sec started in nov!).
I am going in with very low expectations with this process but i don't think ccme gets delisted anytime soon. All assumptions and guesses here
If their is fraud here, which we still can't prove, In addition to ccme/dtt surely we must consider involving global hunter. I think many of us decided to purchase after their analyst 'verified' advertisers, contracts, bank statements and revenues. Essentially they removed the 'cloud' of hit pieces and said everything is good here. It was also very very strange they removed their reports from public download off their website and where it was posted (seeking alpha). Its as if they lost confidence in what they wrote, before the halt happened, yet did not bother to inform anyone.
hypothetical question re buyback
If a company does not file its 10k, eventually files a nt, and resumes trading... are they able to start buying back shares, even though they have not reported audited numbers, or are they considered to be in a quiet period?
I don't see much happening here as we are foreign investors. If you mess over Chinese citizens then yeah maybe its a diff story
Some more questions come to mind now.
I can understand why the management and ceo did not bother responding to muddy waters and other hit pieces in early march, they had bigger issues with DTT.
But why did Global Hunter pull their report and make it inaccessible to download off their site? In the past reports were freely available, and suddenly boom it was gone. Maybe they got wind of what was happening, DTT's requests/suspicions...
Rato argued earlier that switow/divy announcements could have been made so that Lin could dump shares. Why not have global hunter announce they verified bank accounts, contracts, and half the revenues to dump some more? Both are conspiracies but anything seems plausible right now
I think someone leaked something. Puts premiums sky rocketed. One could argue shorts were being as risky as longs were, making large bets on the outcome, but this seems to be beyond that. If you were shorting sept puts you were willing to buy ccme at 7-8$ a share. A short would have to be pretty confident for the company to drop more than 50% before they even start making money.
It seems very plausible that STARR or even CCME insiders leaked/colluded to make downside profit.
I believe there are restrictions to stop that sort of behavior. Roughly along the lines of no purchases in first hour or last hour of trading. *I think*
I think ccme would be allowed to buy back at a maximum rate of 10% of average trading volume ~3mil). So they could buy 300k shares a day, lets say at $5-10 that would take them 10-20 days to complete the 'current' 30 mil buy back and then announce another one. They could probably complete a buyback before a dividend arrives in your account
thanks for clarification!
Ah... does the up to '13 million passengers' not seem quite underwhelming? I hope they mean unique passengers or there is a translation error.
Even from a low ball count of multiplying buses x seats x days one should get a far higher number than this.
10,000 buses x 15 seats x 340 days = 51 million
Didn't you buyback into ccme after the global hunter report?
I don't think ccme needs to prove they have contracts for 27,000+ buses I think they need to give us an installed base. First they need to pass a forensic audit, get a new auditor, and restate if necessary. If the cash is real, and even if the company is only earning half their revenues and net income, they should spend every penny they can on a buyback. A dividend can be talked about later but really not necessary unless the stock is selling for a lofty price (not worth buying back shares) and ccme is really generating so much excess cash beyond their business needs. A share buyback for as much as possible far exceeds the benefits of a dividend.
The share based incentives for yearly net income targets definitely does not jive with common sense long term investing. As far as someone in management is concerned it would likely feel like those shares are theirs and the shares would be taken away from them if they did not hit the target. Investor/management interests are temporarily misaligned. Its short term profitability over long term sustainable profitability. Perhaps from as little as signing up buses now and promising bus operators lofty concession fees in the future to out right fraud. 14 million shares, given ccme's prior trading range is a very large sum.
I personally let it slide as an exception/justification for ccme selling at such a low price in the spac. Which made the deal far less cheap if you factored in future dilution. And if ccme can prove its legit and get a new top 4 auditor I guess its reasonable that the ceo gets a payday for his own company.
They would at least need to post DTT resignation letter before resuming trading. I personally hope they do a full forensic audit, find a new cfo/auditor so we have a full view of the company.
A halt in this case would make sense, as investors don't have an accurate way to asses the company with no audited 2010 and questionable accuracy of the past.
options expiration
http://www.theocc.com/components/docs/market-data/infomemos/2011/mar/28559.pdf
In case any of you have in the money march calls and you were wondering how to not execute them, it appears all calls this month will automatically expire worthless regardless of how deep in the money they are.
I had a friend in hong kong check switow web site, it did not load
The difference is that AUTC has an auditor. But I agree there is probably some value here depending on where it opens.
Maybe what happened here is a result of the incentive problem. Give management a net income target and a HUGE payout if that target gets hit then there is a very big incentive for dishonesty.
I think there is no doubt they operate a real business, now the question though is what do they really generate in revenues/earnings.
I guess there a few scenarios which are all plausible.
A) The company has planned this from the start where they operated a real business that was not that profitable. They partnered with various entities to boost ad revenues/profits on paper and then fake the bank accounts in order to sell their shares. Selling to starr would support this and reverse merger at low valuation. impressive they could fool dtt and starr if they did.
B) The company is somewhat legit. They operate far fewer buses than implied, (12,000) or so, but do have the contracts for 27,000 which they are slowly installing. They generate real income, perhaps even with good margins. They were not going to hit net income so maybe they did some fudging somewhere to get it. Airport buses is probably where they would do it as they are most profitable.
In this case hopefully cash is real and there is a profitable business. Earn outs would be canceled due to not hitting targets and potentially something is salvaged. If Starr didnt exit perhaps they could help facilitate a sale of the company/assets or maybe even get another auditor to think about trusting them after some new management is put in place.
C) DTT really didnt find anything significant but no longer trusts management due to cultural differences (dyp??). ccme is really a cash generating machine and a fantastic business that continues to grow. They get a new cfo and a new auditor and all is fine and dandy
D)...E)... combinations of the above, who know this is a mess.
I doubt its C with dtt leaving. Don't think its A on the other extreme and hopeful its a B type situation.
Good post. We definitely are in wait mode, I wouldn't necessarily say its 'fear mongering' but more people wasting energy on discussions that don't really go anywhere.
Now what I do find funny is even the risk level some are taking on this stock. Why would someone pay $8 for a sept $15 put. Ignoring the time value, this stock would have to be below $7 to make any profit. Shorts seem to be looking for this to go to $0 which is crazy. Even if there was something wrong there would probably be still some value in the business.
If they were an elaborate fraud that had enough cash to pay for a DTT audit, a public relations hire would be no problem...
I agree it would be nice to have anything pro-active coming from management. I just dont think we get a concrete confirmation on this sort of thing until after a earnings/cc.
If they even did hire them maybe its something they would never have disclosed and just use them for consulting advice on certain matters. Perhaps like how many executives hire life coaches for advice and support, i doubt they announce their existence to coworkers.
Anyways, does it really matter if they hired these guys or not? Its been a nice distraction thinking ccme might be doing something proactive but as it stands its not something really material at this stage.
No hit pieces to refute and no news from ccme, our minds try find something to talk about....I wonder what speculation and nonsense tomorrow will bring?
Don't they usually have to give a reason for the delay and if there are any material changes?
It still appears somewhat binary to me. If we don't get an earnings announcement soon we get a filing for a delay.
In the delay filing it either says nothing material has caused the delay and we geta rough net income and that would probably cause a big buying frenzy. Or it says something material has caused it, we get no net income and we get creamed.
Press release and Earnings...
Reading over the ceo letter, we are given the impression they could not respond quickly to the accusations as the 'hit pieces' were released over the chinese new year. It is also stated that they expect the attacks to continue and that they will take appropriate countermeasures. Since then the attacks did continue, yet the company stayed silent while clearly aware. Perhaps GH was thought to be enough, or letting other bloggers like wctbills deal with the blog attackers like muddy waters. Although this certainly could not be called 'counter measures'... maybe they reverted back to their original attitude.
Looking at ccme's response to citrons initial attack they essentially dismissed it, without a rebuttal. More importantly they stated:
"investors should rely on the Company's public reports filed with Securities and Exchange Commission. The Company expects to announce its audited financial results for the year ended 12/31/10 on schedule and will host an earnings call during which management will answer investor questions."
I could take the lack of recent communication as not wanting to give a blogger like muddy water more spotlight, however it is a bit unsettling that we have had no 'earnings/cc' date set. Most companies have the courtesy to give a few weeks notice on an earnings and conference call date. Although it was nice to hear it was 'on schedule' Feb 1st.
I do not see any benefit to not announcing an earnings/conference call date if it is indeed still on schedule.
Maybe DTT is being extra cautious here and using every day they can. A late filing would not bother me either provided nothing material changed and it was just a result of extra scrutiny due to the attacks. Has anyone experienced delays in the past? Do companies typically file the form on the last day possible?
i suspect it will look better as time progresses
great buy... congrats
i bought some also for 4.44
I don't know why someone would be dumping here. 8 mil shares, 9.78 net income, $1.225 per share ... p.e of 3.6
Premier Wen: Brace for More Property Regs
http://www.jlmpacificepoch.com/newsstories?id=1624726_0_5_0_M
Posted on May 17, 2010 | 17:05
Chinese Premier Wen Jiabao said China must continue to try to curb fast-rising property prices in certain cities despite the downside pressure of government policies being put on Chinese markets, China Business News reported May 17.
The National Development and Reform Commission (NDRC) is drafting long-term policies to regulate the real estate market, Xinhua's Economic Information Daily reported May 17.
well done, i bought the warrants for $1.0 yesterday also, seems like a steal to me.
On low volume does not mean all that much. Troubling how little exposure this stock has though. Bid appears above 5 now.
http://sec.gov/Archives/edgar/data/1413263/000115752310002727/a6275856ex99_2.htm
link to presentation, includes shares from latest offering. (total 13.5 mil oustanding, with 500k more in june)
net income growth was quite large year over year. Is anyone else concerned that those high profit sales might evaporate? I assume they come from the integrated launching carrier where they have little competition.
are the ceramics primarily for outdoor sales? Would be interesting if housing prices came down and people actually started moving into the 'empty' houses and furnished them with tiles in their bathrooms etc!
The scare of a housing bubble probably is keeping this stock down. It even makes me second guess it. links like this don't help: http://www.beersteak.com/breaking-news/ordos-china-empty-city/
however I think even even mortgages on 2nd homes have to be 40% paid down. Chinese are using the housing as a way to save, instead of investing in financial markets which are not well developed yet.
Things probably will cool down, and hopefully will not collapse. In which case china ceramics will do just fine.
any thoughts?
Good point about the cash from the warrants I was to focused on the dilution!.. thanks adam
- saltvine
I am looking at the warrants, risk reward seems quite decent at this stage but the common seems to have a heavy ceiling on it.
so lets say we get to $14.50 this year, that would put us at around 25.5 million shares outstanding with net income of 23.8 million. or around .93 per share for 2010
give that a pe of 10-15 and price is $9.30-13.95
going forward to 2011, 29.6 mil shares and net income 31.4 around 1.06 eps, pe of 10-15 is $10.6-$15.9
is this a reasonable expectation? I guess the real upside would come if people gave this a pe of 20 etc, but the shares dilute out the upside pretty well once warrants are redeemed and shares are released
It makes perfect sense to me to buy the warrants for $1.60 and sell them for $4.0-5 when this is in the 12-13 range.
Any thoughts?