Value Microcaps Motherboard

[jtomm]

CHID - Some good news? (sort of, but not really?)

As I mentioned previously, I searched all three company names mentioned in the change-of-business press release, and could find nothing on any of them.

But then I had the thought that the holding company might be the last name of the owner, as is sometimes the case with a lot of these Chinese companies.

So I searched google with three keywords in the same search: Guoxi wood carving

And it turns out that there is a chinese entrepreneur by that name who does appear to be into the businesses mentioned by chid. Awhile back forbes listed him as one of the top 100 business guys in china:

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24. Zhang Guoxi

Age: 48.

Birthplace: Yujiang, Jiangxi Province.

Education: Left school at 18.

Main company: Jiangxi Guoxi Industrial Group.

Main industry: Wood carving.

Wealth: $120 million, based on the group's 1999 net assets.

In 1979 Zhang learned his trade in the wood-carving business, setting up the first private enterprise in Jiangxi Province. Since then he has diversified into real estate and the manufacture of automobile parts. He is reported to have donated $2 million of his private wealth to charity. Zhang is a delegate to the National People's Congress and has a star named after him.

http://www.forbes.com/global/2000/1127/0324150a_print.html

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If nothing else, it's at least interesting. But here's my take, both positive and negative.

First the negative, because the company deserves to be treated with a huge amount of suspicion -- they've earned it.

The negative take would be that the whole thing is a scam and they worded the press release carefully, hoping that people would infer a connection to this Zhang Guoxi guy, even though the company never said it. In other words, maybe they were hoping the press release would boost the stock price (if so, it failed miserably). This would also explain the unwillingness to disclose the company websites -- because they wouldn't want shareholders writing to these companies for confirmation, at which point Zhang Guoxi would tell everyone CHID is making this stuff up and he is not swapping companies with them.

The positive take (which is still negative because it would show management is trying to manipulate the price) would be that CHID really does have a deal with this guy, he really is a bigwig with a great business that's growing, and CHID mngmt purposely made the press release sound bogus so that the price would be driven down and they could buy on the cheap. CHID mngmt and Zhang Guoxi could be the ones buying all the shares that are being sold today. They buy all the low-priced shares they can until the merger is completed, at which point they do a full-blown pr blitz about the new legitimate company, and of course the share price goes back up (probably double or triples in very short order). If they do it right, they could personally make tens of millions in very short period of time, and claim it was all just because of language translation confusion.

The third possibility is that the PR was innocently misworded and innocently poorly written. Personally, I don't think this possibility should be given any credence because CHID has never had trouble naming names and bragging about things before. If they have a deal with a bigwig, they know how to write about it.

They are being coy about the specifics on purpose. I don't see how one can come to any other conclusion. No mention of the selling shareholder, no websites, no mention of number of employees of the new company -- no info at all.

The question is, are they being coy because there is no deal and they were trying to manipulate the price higher, . . . . . or are they being coy because there is a good deal and they are trying to manipulate the price lower (so they can buy). Either way, it seems to me that mngmt is trying to enrich themselves at the expense of shareholders.

Here's the link to the search results for: guoxi wood carving

http://www.google.com/search?q=guoxi+wood+carving

And here are the results for "Zhang Guoxi"

http://www.google.com/search?hl=en&lr=&q=%22Zhang+Guoxi%22&btnG=Search