China Growth Stocks

[GorillaGorilla]

LLEN Q1's CC - throw that in as well since Xmas is all about giving

Q1 CC

Set Text

Shunda Acquisition
On paper looked perfect MOU added
Alarming Safety issue and not pursuing
Looking at other targets


- PRC wants accelerated coal M&A
- think will benefit L&L
China has 80% coal power

- Confirms previous estimates and emphasizes not involved acquisition

Q&A
Q (Mike Kelly) – Address a sequential drop in gross margins
A - Seasonal adjustments - all revenue increases compared last Q. Rev inc by 20M - a lot coming from coal washing while it increases operational efficiency of vertical it has lower margin.
- Think he said it brought in 21 Million
- Hong Xing coal washing 300K capacity and doubled it to 600K
- Ping Yi Coal washing - "in full swing" full operating revenue - an additional 10M

- following our plan more coal acquisitions will bring up the margins.


Q - Revenue from mining was flat?
A There is internal growth going on – but more in the coming quarter. We are acquiring the new business we are also improving safety and operational efficiencies


Q (CBG Financial) – When decide not go through merger?
A - didn't answer

Q - How much cash at end of q?
A 9M Cash cf 7M

Q - What's happening with met and thermal coal
A Thermal coal Washed $100 - in Southern Yunnan and guax
- not commodity as they give service and sell more than coal price and work Saturday and Sunday and hit the needs.
- Getting a certificate for giving good service

Q - Sold off Coal washing facility?
A – Yup, added to the bottom line as discontinued op
Lean and mean – not any good then they cut them loose

Q - Auditing going on annual basis and new CFO
A CFO – complicated – recruiting a director of accounting. CAO – announce in due time
Hired internal auditors and getting Certified Internal Auditors
Hired CPA with PW experience for M&A

Q - Government Assistance?
A Only NAZ listed in Yunnan and Guizho
Listed 2000 and seen that L&L has kept it's promises
Municipal leaders wanted US management techniques
They think L&L are doers

Q - Tax Rate?
A 15%

Q – Assistance long term with tax?
A – Chinese wanted environmental targets. Months to come we are helping them reduce accident rates and want to benefit from this.

Q Acquisitions – is size range?
A - Guidelines upgraded – don't want small ones – want bigger and be top leader in China
Sq miles (km)
Coal reserves
Safety Records – if bad then they won't be able to operate!
Recruiting experienced mine chief.

Q - Do you think you can do a few acquisition

A - Gross Margin - high for coal mine
- open spaces to allow
- can deliver a specific target in days so users prepared to pay a premium.
- Fedex vs US post office - we are Fedex - we charge service not just coal. We charge more for service - no free lunch

4 Segments in coal
Doing vertical integration
Coal Mining high gross because China has high demand
Washing – lower margins
Moving it around
Coking


S1
Q – S1 filed – part of last Nov raise – for resale not future fund-raising.
A – It's been almost a year what's the deal? SEC have their standards – I don't think there are any major hurdles to overcome – they wanted certain words
We want more experience people to reply to SEC with a better working

Q Auditors?
A Upgrade management, Law Firms & also auditors
Auditors are good but sooner or later, a must almost, to upgrade to get top firm

Q Barrons about tax discrepancies between SEC and SAIC and tax payments – companies in general and with regard to L&L. Are there any discrepancies or differences?
A Differences Between SEC vs SAIC filings – short sellers of differences they exploit them to sell stock short. We should use the same numbers.


Q Ensure that SAIC and SEC agree?
A We will make sure that these numbers are going to be the same – thank you and we will look into this issue

Q EPS of 1.61 seems high compared to guidance?
A 600K Honsen + Ping


Q - How much mining is land and how much underground
A In Southeren China all their mines are underground


Q Accountancy firm upgrade?
A - L&L continuing to upgrade all our management services