I think it is time for some tips. Since I studied these Chinese companies for almost 2 years, and given my backgroud (which I will keep to myself) I think I can be of some help.
1) Be very wary of companies who will do anything to please the shareholders. Like press releases, dividends, the way they talk, matching SAIC/SAT filings!, stock repurchase programs etc. etc. Especially when a company pays to get a good research report.
Obviously this does not apply to SIAF.
2) It's for this reason that the higher valued companies usually turn out to be frauds. Because they know, and are succesful, in playing the masses. So don't be afraid to buy the cheap ones.
Is SIAF cheap? Yes sir, even though it is trading at 27% of book value (which is relatively high for the sector), it is quite meaningless when you consider the exceptional growth rate. And a 2013 P/E of 0.49 is nothing to write home about either. We all know why SIAF is trading at these levels. It's because of the financing shares.
3) Apply logic! Don't use common sense. I didn't invent this, here's a quote from Albert Einstein
"Common sense is the collection of prejudices acquired by age eighteen."
Think about it... because it's true.
4) Do not listen to anyone. No-one! Not even Jordan Fund. Not Solomon Lee. Not the people close to him. Dig in yourself, use your brain that was given to you for a reason. Put yourself in their position. How would you react? How would you run the company? Be empathetic. Understand cultural differences.
5) Be objective, don't generalize. There are good companies out there and bad companies. Most don't mean any harm to their shareholders. But it's easy to commit fraud when there is the opportunity, and when there is a lot of pressure on management to perform.
AI
