This is just my take on what may be happening at this time.
Back earlier this year the U.S. and China came to an agreement on how the financial reporting will be done on U.S. listed Chinese stocks and agreeing to PAC guidelines, and the fact China will allow for foreign audits was a huge breakthrough for this sector of stocks. As this was the biggest obstacle for confirming any earning reports previously submitted by companies in this sector. Which lead to perceived or actual fraudulent activities in this sector?
Now companies like FEPG will be able to submit financial reports that will be accepted both in China and the U.S. with little or no modifications. This will be a positive for this stock and this sector. This will be particularly positive for FCPG because of the future projected growth rates of earnings of this company.
Getting all this right the first time is difficult, because this will be one of the first, is very important. Setting a president because that is what is actually occurring here is always a difficult act. This would explain the E not being placed at the end of FCPG. It appears FCPG has been in communication with the SEC and also appears to be in close negotiations with regards to this new reporting method. Other Wise an E designation would have been placed at the end of FCPG a long time ago as it is out of compliance for the SEC reporting time frame at this moment. Again this is speculation on my part and it is my explanation as to what is happening here.
You ask how does this affect a future stock price of FCPG in the near future. Again in my opinion it will be a positive as this company is growing the top line at around 20% and has finally stabilized its margins to reflect the new business model, of a national provider of medicines on the internet. Remember this company is one of the few with a national license to sell medicines nationwide in China and will have access to a more profitable international inventory as time goes on.
They have completed their expansion plans of moving into their new facility and the expansion of the labor force to accommodate this new business model. FCPG is in the process of obtaining financing for inventory expansion, which if you are a Chinese based company is important, because of how their financial requirements are regarding inventory and sales. With the new financial reporting format it will make it a lot easier for FCPG to secure this inventory expansive financing. This will be another positive for this share price as this will be a none dilutive method of financing. Along with the fact the plan is to have simultaneous listings in HK and the U.S. is another positive. The simultaneous listing will allow the local Chinese investor to participate in what will be a fast growing sector of their economy.
As it is now this stock is already undervalued but the market has punished this sector for various reasons ranging from actual fraud to uncertainty of actual reported earnings. Whatever the reason for not liking this sector in the past it will start to dissipate. With this new reporting structure in place it will start to create a more accommodative investment environment.
So with the clearing up of the uncertainties in this sector with the new agreed to financial reporting methods and the ability to confirm earnings reporting with audits, and the simultaneous listing, will all contribute to this company realizing its real potential value. Thus the potential for large upside movement is becoming more and more likely. The risk for this stock is defiantly to the upside at his time.
The next couple of weeks will be the telling story for this stock. Hopefully by the end of this month we will have the newly reported financials, along with an announcement of their new financing for inventory expansion and the time frame for simultaneous listing on the HK
Again invest wisely and do your own DD, good luck to all.
AI
