New World China Land 0917

Make 200+% profit by being a son-in-law of Cheng Yu-tung, the controlling shareholder of a publicly listed company.

"

A mainland appraiser put the value at 6.6 billion yuan (HK$7.49 billion). Doo is selling it for 5.8 billion yuan.

Doo, who initially held 30 per cent of the project, bought the remaining 70 per cent through two separate deals from New World in December last year and June for a total of 1.3 billion yuan. New World valued the project at about 1.9 billion yuan, although an independent appraiser put the value at 4.5 billion yuan in December and raised it to 5.2 billion yuan six months later. New World did not explain why it had chosen not to price the project according to the independent appraisal.

"

Verdict: avoid even if New World was the only listed stock on the market available for investment - spend your money on beer instead.

Asian Citrus..

People throwing money like rocks, portfolios of glass.

Asian Citrus opened at HK$51.25 ($6.61) in Hong Kong, compared with the closing price of 45.75 British pence (76 cents) yesterday for the London-traded shares. The stock in Hong Kong later fell to HK$19.94 when it was suspended at 11:57 a.m. local time, according to exchange data.

Not Worth HK$50

Asian Citrus is  not a HK$50 stock, South Ocean s McConnell said.

The company s net tangible asset value per share was 37.3 yuan ($5.46) on June 30, according to its listing prospectus. By displaying this figure without noting the stock split, Hong Kong Exchange s computers may have led investors to  think that their investment is backed by 10 times more assets than it really is, Webb said.

Sinotronics 1195, heavy action

219m shares out of the 559m issued transacted.

The reason became apparent with the filing made by Union Day Group Ltd/Sze Ming Yee at close, they have increased their position to just under 400m shares to 71.49%.

The plot thickens.

SINOTRONICS01195.HK ( Electronics and Electrical Product... ) Delayed Quote1 2009-11-25 16:01

News

Last 0.415 MonitorPortfolio Chg 0.140 Bid 0.420 High 0.590 Open 0.450 Volume 219.40M Chg(%) 50.909% Ask 0.425 Low 0.400 Prev Close 0.275 Turnover 107.80M

"But most of the funds have now gone missing and Azedo has disappeared"

Ex Grant Thornton managing partner loots client's funds..

"The company said it launched the investigation into Gabriel Azedo last month after it was alleged he had stolen the money from Angela Gardner.

Gardner, a local businesswoman, filed a lawsuit against the company on Friday alleging Azedo had been taking her money since 1999.

 Grant Thornton has been investigating certain matters concerning Gabriel Azedo s personal conduct and has discovered that he appears to have used the Grant Thornton name in an unauthorised and inappropriate manner, it said in a statement."

Sinotronics 1195 shenanigans webs Webb

Another one of the notorious Fujian based companies (amongst others like First Natural, Chaoda,...) with opaque corporate governance.

Sinotronics is an electronics manufacturing company with has a NAV of over HKD$1/share, cash of ~$1.17/share, total debt of 0.81/share. At the time of writing Sinotronics had a market cap of $154m.

In summary:

The trouble started in Feb/April 2007 when they entered into two interest swap agreements with Douche bank with notational values of $390m and USD$100m. This was a disastrous deal, which while they received upfront payments of HKD$39m and USD$10m from Douche bank, they had to settle semi-annually with some index contrived by the bank ("Douche bank Pan-Asian Forward Rate Bias Index"). The "bias" in the name didn't set off alarm bells.

The controlling shareholder, Lin Wang Qiang, to his credit (or regret) subsequently offered to indemnify Sinotronics against derivative losses on Dec 2007.

The famous crusader of corporate governance in HK, David Webb purchases 880k shares avg 0.88/share giving him a total of 34m shares (6.09%)

Sinotronics decided the terms of the interest swap agreements were onerous and stopped paying interest on Oct 2008 and Douche bank sued and Sinotronics counter sued saying a Douching bank employee allegedly misled them.

Webb sells 600k shares @0.38 (-56% loss) and is below the 5% reporting threshold and has 27.7m shares left. Together with his other vehicle Preferable Situation has 3.4m shares or 6.04%.

Sinotronics and Douche settled on Nov 2009 with Sinotronics agreement to pay "less than US$23.7m" the original demand, the exact amount is not revealed.

To access the funds to pay this (keep in mind they have HKD$648m in cash):

- Lin Wang Qiang under terms of his indemnity agreement was now on the hook for HK$29.2m and to pay this he decided to sell all his shares (230m shares).

- Sinotronics decides to do a open offer of 1 share for 2 at a price of 0.18cents/share.

Friday 20 Nov 2009, Union Day Group files a notice saying they have 169m or 30% of the company.

Tuesday 24 Nov 2009. Stock is suspended from trading and reopened on Wednesday with the announcement that Mr Lin had sold all his shares to Upbest the unbelievable price of 0.18 each and with regulatory requirements will make a general offer for all outstanding shares at the derisory price of 0.18 each.

Stock opens at 0.45 (from the previous closing of 0.275), peaks at 0.59 and at this time trading at 0.44 giving it a market cap of $245m.

Now this is a company that for the last 5 years averaged over $100m/year in FCF. Why are they continuously raising funds when they have so much cash? Is the cash still there?

Walter Schloss at Jim Grant's conference

One of the best investors in many lifetimes. 65 years of investing.

Walter: I had a friend who was a therapist at a mental hospital and he asked me if I would talk to his patients about investments. And I said OK, and he introduced me and so I started to talk about investments. And after a few minutes a big fellow in the front of the audience got up and he said, "Shut up, you idiot and sit down!" I looked at my friend and I said, "What do I do?" He said, "Sit down. That's the most intelligent thing that fellow's said in months."

China Strategic 0235

Hires ex government minister (Secretary for Financial Services) Frederick Ma for $3.5m. Also hires Raymond Or Ching Fai for $9.24m salary. Granted options worth $462m. Total: $475m.

Has 131 staff and trades in 'battery products'. Had revenues of $18m in 2008 and has an average loss of $100m for the last 5 years. Had a capitalization of $100m.

Gets cash by issuing shares and notes June to "capture suitable investment opportunities when when they are identified"

In 10th November they announce acquisition of Nan Shan resulting in a 80% pop in share price.

Incredibly intuitive of the individuals back in June to invest in a money losing battery products company which is looking for acquisitions. Highly unlikely that they had prior knowledge about China Strategy diversifying into a totally completely different business line by buying a life insurance company.

Mud like transparency.

Endwave (ENWV) hubris

.. or greed?

Entrenched management with hands in cookie jar - salaried helpers who just can't release that tit. The Endwave (ENWV) management really needs to end it all and liquidate. Trading at $2.40, no debt and $7/share in cash.

Fu Ji Food (1175) bonds

The faint gurgling shriek we hear... the sound of the fat lady sliding around the s-bend.

"Fu Ji's convertible bonds, of which HK$2.2 billion are outstanding, were being offered for sale yesterday at just six cents on the dollar, while potential buyers were offering four cents, two holders of the securities and an independent broker confirmed.

The bonds traded at 25 cents in the dollar the day after Fu Ji fell into provisional liquidation. But bondholders have turned gloomy after learning that business at the beleaguered caterer has deteriorated drastically since it last met financial reporting obligations nearly a year ago."

An insidious trap sprung by insiders on investors. A glance at their published numbers would have sprung some interest, little do investors know the enterprise was hollowed from within by fraud and a paper facade held up with string and wire. A market cap of $4B (USD$500m) disappears into the pockets of thieves.

There are a lot more out there. Beware.

01175 FU JI Catering - Company Summary

Index Constituent : NA Price (2009/07/28) HKD 7.600 (Suspended) 52W High/Low (HKD) 7.620 / 2.270 Issued Cap (mn shs) 541 Auth Cap (mn shs) 2,000 Market Cap (HKDmn) 4,114 Par Value HKD 0.01 Last Dividend Nil (2009I) Ex Dividend NA Dividend Payable NA Change Price Sector Market Avg Dly Vol 1 Month +0.0% -1.3% -5.1% NA 3 Months +0.0% -9.2% -4.8% NA 1 Year +102.1% +25.6% +57.4% 1,701K Key Financial Ratio (Fiscal Year : 03/2008) Current 2.18X Oper Margin 24.8% LT Debt/Equity 71.3% Net Margin 21.5% Total Debt/Equity 81.2% Return on Equity 15.3% Price/Book 1.38X Return on Assets 7.2%

Year End (MM/YYYY) Earnings (HKDmn) YOY Chg (%) EPS (HKD) YOY Chg (%) DPS (HKD) PER (X) Yield (%) Dividend Payout(%) Book NAV (HKD) 03/2004 77.94 +127.3 0.260 +127.2 NA 29.26 NA NA NA 03/2005 156.05 +100.2 0.470 +80.8 0.038 16.18 0.50 8.09 1.546 03/2006 243.12 +55.8 0.546 +16.3 0.153 13.92 2.01 28.02 2.783 03/2007 351.81 +44.7 0.697 +27.6 0.206 10.91 2.71 29.56 3.550 03/2008 456.16 +29.7 0.857 +22.9 0.241 8.87 3.17 28.14 5.526

Naked options and advisors

Meanwhile down under, advisors trading naked options on behalf of clients. I guess the 'helper' was so successful trading his own account and being a kind soul he wanted to spread the loot by helping his clients.

Unfortunately the market doesn't respect visualizations..

From the SMH:

But in the winter of 2004 it all turned sour. Within a year many Ord Minett clients had lost all their money - millions of dollars wiped out in increasingly risky options trading.

ASIC has investigated the claims against Ord Minnett and said in July last year that it would ''not take any further action & at this time''.

Ben Leeden continues to work as a private client adviser in Ord Minnett's Gold Coast office. His former clients say they are still "very hopeful" of recouping some of their losses from Ord Minnett.

"I visualise it every day," Tyson says. "I do a lot of visualisation."

Why you don't talk, from the inside.

An experienced police officer tells you why you should never agree to be interviewed by the police.

Don't talk to the cops

US specific, but good advice. Mr. James Duane, a professor at Regent Law School and a former defense attorney, tells you why you should never agree to be interviewed by the police.

Chinese IPOs, China Zhongwang Holdings

IPOs are generally a scam perpetuated by the founders and their investment bank backers. The Chinese IPOs are hot steaming dumplings served with fillings of faeces to the public:

"Mainland aluminium producer China Zhongwang Holdings has instructed accounting firm Ernst & Young to independently review its initial public offering prospectus following allegations that the firm falsified information about its customer base in the share-offer document.

Zhongwang raised HK$9.8 billion in its May flotation, becoming the first company to obtain over US$1 billion from investors on any global stock market for nine months. The fund-raising propelled Liu Zhongtian , the Liaoning-based firm's founder and chairman, to 10th place on the Hurun rich list, which estimated his personal wealth at 28 billion yuan (HK$31.8 billion).

But on September 14, the mainland newspaper China Economic Observer claimed to have found that some customers named in Zhongwang's IPO prospectus did not buy from the company last year.
"

But hold on!! We have the fox counting the chickens... the documentation will be in a suitably altered state. Nothing to see here. Move on.

"The aluminium firm yesterday told the Hong Kong stock exchange it had appointed a "big four" accountant "to conduct [an] independent review on the group's sales transactions with the major 10 customers during the period from 1 January 2008 to 30 June 2009 and documentations of income taxes for the financial year ended 31 December 2008".

People close to the company with knowledge of the matter confirmed the auditor was Ernst & Young. They said Zhongwang had not decided whether to make the findings public."