S&P cuts Chaoda to 'CCC', keeps rtg on watch neg

6 months from end of financial year and no annual report yet... setting off a vicious cycle of illiquidity

"-- We believe payment acceleration of Chaoda's convertible bond is imminent, and we have insufficient information on the company's current offshore cash balance and other potential sources of liquidity.

-- We believe the company has limited financial flexibility and limited ability to access capital markets.

-- We are therefore lowering the corporate credit rating on Chaoda to 'CCC' from 'B-'. We are also lowering our Greater China credit scale rating on Chaoda to 'cnCCC' from 'cnB'.

-- The ratings remain on CreditWatch with negative implications."

Chaoda dumping Asian Citrus shares

Selling out 100 million shares @ $4.66 because ...

"In view of the market volatility, the Directors consider that it is in the best interests of the

shareholders of the Company to carry out the disposal of the Placing Shares. The maximum

gross proceeds from the Placing will be approximately HK$466 million and the net proceeds

from the Placing will be approximately HK$461 million, which will be used for general

working capital of the Group.

The Company estimates to recognise a loss of approximately HK$91 million in the accounts

of the Company taking into account the net proceeds to be received immediately upon

completion of the Placing. "

The reason for selling is because of "market volatility"??!! Selling out at near all time lows?

Chaoda reported (end 2010) having ~$2b in cash and supposedly generates ~$3.5b cash from operations is raising cash for general working capital? They have another ~66m shares of Asian Citrus left at $4.66/share (will be much less after tomorrow) is worth another ~$300m.

$2b in cash + $750m in Asian Citrus shares = $2.75b

Market Cap of Chaoda is $3.62b and not much debt.

Smells like desperate cash raising to fill in some holes..

O Chaoda, where art thou?

Annual report 6 weeks overdue.

Why would a few anonymous, disparaged reports of fraud drive one of largest agricultural companies into a lengthy suspension of trading? No idea where Mr Kwok Ho would be but a high probability that when trading restarts, along with the release of earnings, shorts will be burnt.

Why? The time in suspension would be spent on a cash gathering exercise to reassure the auditors that cash is really there. Borrowing on the underground, moving cash around, producing 'books' showing revenues and calling on favors. Weak shorts will be burnt, good time for longs to exit, stronger shorts will survive.

Wouldn't surprise if the chairman conveniently disappears.

Asian Citrus abandons supplier

With the spotlights well and truly on Mr Ho, Chaoda and his nefarious fertilizer company, Asian Citrus hopes to slink into the shadows...

From the SCMP:

"Asian Citrus said it "decided not to renew the fertiliser supply agreement with Fujian Chaoda Group", a private company that is 95 per cent owned by Kwok, when it expires next June.

The orange grower, which is 13 per cent owned by Chaoda, said: "Sufficient organic fertilisers can readily be sourced from other independent suppliers at competitive prices.""

Expect Asian Citrus to go down with Chaoda.

Chaoda Down 26%. Suspended

Awaiting "price sensitive information".

Considering the drastic crash before the suspension, some bad news has leaked. This will either be permanent or some announcement of a desperate buyback attempt by the management to prop up the sandcastle.

Update... bye bye Chaoda.

"Sept. 26 (Bloomberg) -- Chaoda Modern Agriculture Holdings Ltd. plunged the most in eight-and-a-half years after the Hong Kong government accused it of market misconduct amid allegations the Chinese food producer overstated its land holdings."

Resourcehouse cancelled, Chaoda plumbing depths

As expected Resourcehouse IPO has been pulled.

Chaoda, despite the apologists and the frantic share buybacks by it's management continues to sink. It wouldn't be presumptuous to say ALL public Chinese companies are fraudulent, and US companies would have a certain degree, however the level of fraud in Chinese companies is high. When investing in China, assume there is fraud and check the Margin of Safety:

- Is it a large enough company to garner enough attention from the government?
- Will management fraud, result in bullets to their heads?
- Will the company survive such fraud?

The list of Chinese companies that have been decimated by fraud with the management escaping scott free is long and getting longer... First Natural Holdings, Fuji, China Forestry, Yunan Green-Land, ..

Douche bank reducing Chaoda 0682.hk

	Total number of shares	Percentage figure (%)
Long Position	358,678,707	10.73
Short Position	55,694,469	1.66
Lending Pool	272,916,124	8.16

19. Total shares immediately after the relevant event:

	Total number of shares	Percentage figure (%)
Long Position	90,833,013	2.71
Short Position	55,703,856	1.66
Lending Pool	5,552,550	0.16

Chaoda 0682.hk chart -24%

Yep, that dip corresponds to the company issuing a statement 'clarifying' an article in Next Magazine. The article basically says that land is missing, in it's investigation 5000mu turned out to be 500mu, covered in rubbish and in no condition to grow anything. Weather was unsuitable and land had been untouched for years. Supposedly technologically advanced equipment turned out to be old tractors, and (broken) scythes.

Ho the chairman purchases 1m shares. Chaoda repurchases 2.2m. Files on the same day in an obvious (or desperate) show of confidence.

Chaoda reaping the suckers

Same old story. Waits till there is a pop in the share price then raises more capital ($200m bonds).

If successful, the agricultural giant, which has been criticised by analysts for paying too much money for farmland that remains idle, will have raised US$771 million in share and bond sales during the past two years.


Chaoda, which did not respond to emailed questions, said in mail to potential investors it would spend the proceeds from its planned bond sale on expanding its production base and infrastructure.

The company's shares closed at HK$4.89 - a bargain-basement price of 4.5 times forecast earnings.

On March 31, before Chaoda announced its latest fund-raising, analysts at Macquarie accused the company of spending the money it made from its agricultural operations on an "enormous and growing land bank that does not produce revenues".

Macquarie analysts Jake Lynch and Jamie Zhou said the cash Chaoda had raised from regular stock and bond sales "continues to sit on the balance sheet".

In its last set of annual accounts, Chaoda said it had more than 2 billion yuan (HK$2.38 billion) in net cash.

Macquarie estimated Chaoda used only 24 per cent of its land for growing fruit, vegetables or grains, adding the company had never explained in its annual reports what it did with the rest.

There was "no transparency on 76 per cent of the land on the balance sheet", it said.

"The raw fact is that this land generates no revenues now and management cannot tell us when they expect the revenues to commence."

Chaoda, which was founded in 1997 by Kwok Ho, has regularly been mired in controversy since its Hong Kong flotation in 2000.

The company says it is China's largest vegetable grower. But some investors and analysts say this is impossible to prove because the mainland has no formal registry for agricultural land.

In 2002, big four auditor PricewaterhouseCoopers said it could not endorse Chaoda's annual results, and resigned.

The farming firm replaced PwC with the much-smaller CCIF and Baker Tilly, which both stepped down in 2007. It is now audited by mid-sized BDO.

Since 2002, Kwok has gradually reduced his ownership of the company by arranging regular issues of new shares.

The company's chief financial officer, Andy Chan Chi-po, has now sold all his stock, according to Macquarie.

Chaoda 0682 love granting options to themselves

but the shareholders don't..

resolution 5(B) "To grant a general mandate to the board of directors to allot, issue and deal with shares of the Company"

passes by a narrow 1.5% margin. Only a matter of time before this house of card collapses.

China Green - Another Fujian fubar

Delays annual results announcement - by not showing up for a prearranged meeting with the analysts (Auditors need more time). Follows up with a filing with the HKEX stating they don't know why the stock is crashing and burning.

Questions being raised about them overpaying for land leases in the Fujian province and being compared to Enron about how, except for 2009, overly consistent their past earnings have been. Stock was down 45% at one stage.

Their investors will be staring down the abyss...

Chaoda'd again

Mr Ho never ceases to deliver (USD$350m capital raise)..

Oops, Chaoda (0682) does it again

Pays $450M in stock valued at $7.65 for 70% of a company (Keen Spirit) that has:

- NO REVENUES just losses

- $20M of liabilities

Not clear from the filing but the Keen Spirit group has around $25M of annual loss up to Nov 2009.

It's a considerable leap of faith for anyone to believe this is an intelligent investment made by Chaoda.

What exactly are they buying??...

"The investment in the Target Group will also allow the Company to advance new products by making use of the Patents in organism technologies to develop edible vaccines derived from plants, which are expected to have positive prospects in the agricultural industry."

So not only are they paying $450M for a loss making company with no independently valued asset value, they are moving away from their core competency and into biotech.