Monday, December 29, 2008
Sunday, November 30, 2008
Update: HFGB.OB Replaces CHBT.OB
CHBT.OB is now on NASDAQ and I'm replacing it with Huifeng Bio-Pharmaceutical (HFGB.OB), a Xi'an based company that develops and produces plant extracts and pharmaceutical raw materials for use in pharma and food production. It is a leading Chinese producer of rutin and related plant-derived chemicals in a class called flavonoids.
Monday, October 6, 2008
Update: CDSG Goes Pinksheets
I'm taking out China Dongsheng (CDSG.OB, now CDSG.PK), one of the original members of the C.O.P., and replacing it with pharma company Winner Medical (WMDG.OB). Winner is a leading manufacturer and the largest exporter by volume in the medical dressing industry (medical and wound care products) in China. It is headquartered in Shenzhen. You can check out its website here.
Thursday, September 25, 2008
Update: TYNP.OB Goes Onto AMEX
Tianyin Pharmaceutical Co (TYNP.OB) is to be listed on the AMEX from next week, so congratulations to all its shareholders.
In its place on the C.O.P. Index is Tonji Healthcare Group (TONJ.OB), which operates a hospital in Nanning. It is in discussions to acquire a chain of 27 pharmacies in Guangxi Province. You can look at its website here.
In its place on the C.O.P. Index is Tonji Healthcare Group (TONJ.OB), which operates a hospital in Nanning. It is in discussions to acquire a chain of 27 pharmacies in Guangxi Province. You can look at its website here.
Monday, September 8, 2008
Update: CNOA Gets Even More Drunk
Earlier this year China Organic Agriculture (CNOA.OB) borrowed money from one of its shareholders, Xirong Xu, to the tune of $6.2 million to buy Bellisimo Vineyard in northern California. I have previously looked into the financials of this business and I'm sure no one would dispute that this is a terrible diversification for CNOA. Bellisimo derives no income from wine sales (for Q2 2008 it returned revenue of just $22,800, all from rental income). In my opinion, this transaction amounted to nothing more than the securing of a vacation home for the company insiders.
The $6.2 million comprised a promissory note which has the following characteristics (from CNOA's filings):
"Interest is accrued at a rate of 4% per annum. Both principle and accrued interest are due on February 25, 2013. As at June 30, 2008, accrued and unpaid interest is $82,880."
Now China Organic has decided to pay down this debt by issuing shares to Xirong Xu. Yet, if the note is not due till 2013, why is the company doing this now? Well, I hate to be cynical but it must be that the share price of the company is nearing its 52-week low, and a conversion now would mean that Mr. Xu is able to grab a healthy chunk of CNOA without much effort. For, if God forbids, the valuation of CNOA jumps to the hundreds of millions by 2013, then Mr. Xu's $6.2 million would mean very little. Why accrue $82,880 when you can issue 18,282,353 shares instead?
Of course, this comes with a huge dilution for the rest of us, the minority shareholders. In fact, the purchase of Bellisimo has effectively cost the company 25% of its equity. When was the last time you encountered a company that squandered a quarter of its value to buy something that is essentially earning no revenue and has in fact reported a loss of $343,707 (for Q2 2008)? Am I the only person appalled by this development?
My Position: None.
The $6.2 million comprised a promissory note which has the following characteristics (from CNOA's filings):
"Interest is accrued at a rate of 4% per annum. Both principle and accrued interest are due on February 25, 2013. As at June 30, 2008, accrued and unpaid interest is $82,880."
Now China Organic has decided to pay down this debt by issuing shares to Xirong Xu. Yet, if the note is not due till 2013, why is the company doing this now? Well, I hate to be cynical but it must be that the share price of the company is nearing its 52-week low, and a conversion now would mean that Mr. Xu is able to grab a healthy chunk of CNOA without much effort. For, if God forbids, the valuation of CNOA jumps to the hundreds of millions by 2013, then Mr. Xu's $6.2 million would mean very little. Why accrue $82,880 when you can issue 18,282,353 shares instead?
Of course, this comes with a huge dilution for the rest of us, the minority shareholders. In fact, the purchase of Bellisimo has effectively cost the company 25% of its equity. When was the last time you encountered a company that squandered a quarter of its value to buy something that is essentially earning no revenue and has in fact reported a loss of $343,707 (for Q2 2008)? Am I the only person appalled by this development?
My Position: None.
Tuesday, September 2, 2008
Update: Coca Cola Values Chinese Juice Company at almost 200% Premium
Coca Cola has bid $2.4 billion for HK-listed fruit juice company Huiyuan Juice Group, offering to pay HK$12.20 per share. Compare this to the company's previous closing price of HK$4.14 and you'll realize the amazing premium built into this deal.
This also happens to be the second largest acquisition in Coke's history and the biggest purchase of the control of a Chinese company by a foreign entity. Just goes to show how U.S. big businesses are currently viewing opportunities in China.
So when will one see an M&A transaction involving a Chinese OTC company? Probably sooner than you think.
This also happens to be the second largest acquisition in Coke's history and the biggest purchase of the control of a Chinese company by a foreign entity. Just goes to show how U.S. big businesses are currently viewing opportunities in China.
So when will one see an M&A transaction involving a Chinese OTC company? Probably sooner than you think.
Friday, August 29, 2008
Update: More Online Gains for CHCG
Just over a month ago, China 3C Group's (CHCG.OB) affiliated website 3c800.com was ranked ~3,700 in terms of the most trafficked sites in China. Today when I checked, it was ranked ~1,700. This is a very impressive jump in such a short span of time, as this chart illustrates.
It certainly doesn't hurt that the site prominently features this Korean beauty.
My Position: Long.
It certainly doesn't hurt that the site prominently features this Korean beauty.
My Position: Long.
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