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On CGPI's Recreational Park

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Rayhuh   Sunday, 01/16/11 07:46:30 AM
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On CGPI's Recreational Park

I posted this on yahoo about CGPI's plans to build a park:

Hi Mustrisa,

according the last 10Q:

"In February 2009, the Company recorded a prepayment related to a contract in the amount of $4,101,970 (7% of the contract), for the construction of entertainment boats. Chongqing Bo Goa Tourism Company (“Bo Goa”), an unrelated third party, and the Company were going to jointly develop the “Liang Jiang Yu” project. In September 2009, the Company took over as the sole developer on this project. This project includes development of a park near the Longqiao Lake as a way to attract more tourism in the Changshou area near the Company’s cemetery site. The scope of the project currently contemplates 10 to 20 entertainment boats, a welcome center, a large sailboat and nine docks. As of September 30, 2010, the Company’s total prepayment for this project is $8,682,600. The cost incurred with the project decreased by approximately $1,439,700 because construction costs was capitalized and moved into inventory. The total price of the contract is approximately $64,000,000."

So until now they have already spent 8,6 Mio out of 64 Mio $ for the total project. I would say that their park's sole intention is to provide long-term attractiveness to their whole area and therefore independent revenues after their cemetaries are at full capacity. So in the long-term, it's not the worst idea. I think, that this was more or less the reason they listed on the OTC, because at some point in the future they will definitely raise capital again.

What I don't like is, that they are already starting in spending all their cash on this project. I would rather see that they acquire other cemetaries and stick to their regular business. Or first collect some cash and then build the park in one go, but with clear plans what revenues and costs they expect, I haven't read anything on that matter.

So I think that they will definitely build that park, I just hope that they do it in an intelligent way, and don't raise capital at this low stock price. It's not the first time that a chinese small-cap has done that, without regards to us shareholders...

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