To discuss financials at this moment is not relevant. The only thing what matters: Can they sell their subsidiary ZYTX to a potential buyer for a good price? A price that will include the prepayment of electronic products in ZYTX’s balance sheet.
Business restructuring is a tedious and time-consuming task. Some other companies underwent also restructuring and are now succesful. You remember China Digital Communications Group which now operates under the name New Energy Systems Group (NEWN). An entrepreneur that wants to succeed, succeeds. In my opinion this company is ready for a new start and at these prices ($ 0.40) it can be worthy to take a small stake.
After reading their 10-Q filing I am not negative and I believe in a succesful implementation of their new business plans.
Some positive highlights:
As of March 31, 2010, all of our capital is equity capital and we have not made any debt financing with any bank or other financial institutions. We believe our capital is sufficient to satisfy our cash requirements for the next twelve (12) months. As for our business development, the Company may consider raising additional funds for the following future business plans if conditions are suitable:
· To expand our operations in different cities in the PRC;
· To acquire companies which would add value to our business expansion;
· To expand our online insurance sales supermarket; and
· To acquire equipment to continually upgrade the existing network portal hardware environment and to strengthen its network security inputs.
The question I would like to ask to the management of China Insonline Corp (CHIO)would be:
How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price?
If Junjun Xu, is a strong or visionary CEO, he marketings the restructuring to the capital market by explaining the growth targets for the new business plan.
POSITION: LONG (ENTRY: $ 1.50)