Thursday, March 31, 2011

Sancon Resources Recovery (SRRY) FY 2010 results

10-K FY 2010 results

Diluted EPS FY 2010 $0.08 vs FY 2009 $0.09.

It looks like a fading business model.

Guanxi: Business Weakness for US-listed China stocks

In a society based on collectivism, being a member of a close and committed group is vital. Since the Chinese approach relationships with the belief they will develop over time, and admire respect, loyalty, and trust, there is no such thing as a purely business relationship. Building mutually beneficial relationships is the core of Chinese business.

The Chinese prefer to work with those they trust and have personal relationships with. Guanxi is the Chinese term for relationships. Guanxi, in the corporate world, is a network of relationships that support one another. To build Guanxi, it is expected that you treat others with decency, and be a trustworthy and dependable person.

Guanxi is also a sense of mutual obligation and reciprocity. People with Guanxi will do favors for members in their network, such as, acting on another’s behalf and doing whatever is necessary for the other party. When a favor is complete, reciprocity is expected. It doesn’t have to be in like kind, but an effort must be made. If you are unable to meet your obligation, you must find another way to fulfill a favor or request.

Guanxi is also used to ensure mutual obligations are met. Meeting obligations through Guanxi is especially important in China because contracts are not reliably enforced. .

Investors in US-listed China stocks are now facing problems because we don’t understand Guanxi. The trading halts of China Intelligent Lighting (CIL) and NIVS IntelliMedia Technology (NIV) are recent examples of how things can go wrong.

Most of us don’t have Guanxi because we do not know anyone. Since foreign investors’ do not know anyone in the Guanxi network, investments often turn sour because the red flags regarding the trustworthiness of management are not received. If we had been in the Guanxi network, we would have known otherwise.

Investors can become targets to those with dishonest intentions. According to some experts many Chinese RTO and IPO transactions in the U.S. are ego-driven and undertaken only to build the resume of local country management.

I wrote some positive articles about China Intelligent Lighting (CIL) and NIVS IntelliMedia Technology (NIV), because I really thought those were legitimate companies.

The main problem with NIV and CIL is too much Guanxi: they share the same facilities, same auditor, and there are many connections within senior management (founders, directors).

Another article I would recommend about this debacle is called WestPark Capital's RTO Deals on Trading China

Tuesday, March 29, 2011

'Red Capitalism' Review: Evaluating China's Financial Foundation and Extraordinary Rise

Article Seeking Alpha

The Chinese economic growth in the last decade has been the envy of the world. There has not been a serious challenge to the economic power of the United States since the 1980’s, when Japan’s economic strength was at its apex. China, since then has taken over Japan in 2011 as the world’s second largest economy and now widely noted to pose a serious challenge to the United State to be the world’s largest economy. While to some, China’s economic super power status is a foregone conclusion. Carl Walter and Fraser Howie examine the intricate mechanics beneath the façade and enlighten the intricate a web of political and financial entanglements that exists between the Communist Part of China (CPC) and the financial institutions that forms the economies foundation.

Carl Walter and Fraser Howie have extensive knowledge of the Chinese economy based on their long professional experience working in the middle kingdom. This is seen throughout the book as it is littered with facts on the history of the financial reforms, beginning with Zhu Rongji in the 1908s to the current personalities that lead the giant state owned financial behemoths. The view they show is that of a façade that was made to impress and imprint the view to outsiders, that China is an unstoppable force in the 21st Century.

Underneath the cover, the authors shows the flaws of the institutions which serve as the pillars of the system. From the lack of supervision and capital cushion in the major state banks which are crucial to the wider economy, to their conflicting governance goal of sustain the will of the CPC rather than its shareholders.

They also present a view of the stock market which replicates the Wild West of America in the 1900s where transparency and accountability is at best minimal. In addition to the stock market, the authors examine the stalling of reforms in central bank interest rate mechanism, exchange liberalization, and buildup of restrictions on foreign investment. The very lifeblood of what made China great today.

While economic liberalization since the 1990s and China’s entry to the WTO in 2001 has enabled its economy to growth at a phenomenal rate. Financial liberalization has been stalling and in some instances reverting to the planned economic philosophies of the 1960 and 1970s. The issue with policy stagflation under a fragile financial system is it could be a hidden risk that will eventually pose a systematic risk to the whole economy. One could argue that financial liberalization is an important area to be examined as the author shows, the current financial regime is simply infantile. The over reliance on the large state banks for funding, which themselves are thinly capitalized could be a liability under crises conditions.

Under an unforeseeable crisis, the opaqueness of the institution and its relationship with each other and the government would result in similar issue during the height of the GFC, where no one knows their true exposure to Lehman Brothers. The system would simply freeze. This is more acute in the Chinese system as the OTC bond market is in its infancy and a significant proportion of state company funding is delivered by the banks itself. If anything happen to these thinly capitalized banks, it would pose a sever risk to the wider economy.

Red Capitalism contains numerous stories of internal political maneuvering within the CPC for power. While the book is well researched and detailed explanation of the largest financial institutions and their relationships with each other. Beginner readers without background could have difficulty in track of the development of the financial system into the present form. But the complexity would also confuse market professionals as the picture is bordering to the detail and complexity of CDO’s. Except in this instance, the mind numbing complexity prevails throughout the whole system.

From reading the book, the reader forms an idea that there are essentially two economics in China, one is the private and the other the state owned institutions in which the CPC controls. The CPC uses all the tools it has over the private sector to ensure that its own monopolies in banking, telecommunications and transport will not be encroached by the private sector. This notion is similar to the viewpoint forwarded by Ian Bremmer in ‘The End of the Free Market'. The primary difference between the two economies is that one controls the arteries of the economic systems while the other is at its mercy. The reader’s final impression is that the strength in the goliath is more vulnerable than you realise.

Lotus Pharmaceuticals (LTUS) Announces Fiscal 2010 Financial Results

FY 2010 results

Fiscal Year 2010 Financial Highlights

Revenues for the 2010 fiscal year increased by 28.7% year-over-year to $72.7 million, up from $56.5 million in 2009.

-- Wholesale revenue was $51.4 million, or 70.7% of total revenues.-- Retail revenues were $21.3 million, or 29.3% of total revenues.

Gross profit for the year was $39.8 million, an increase of 26.6% compared to $31.4 million in 2009. Gross margin was 54.7% and 55.6% in 2010 and 2009, respectively.

Adjusted* net income increased 16.7% to $21.2 million, compared to $18.2 million in 2009

GAAP net income decreased 12.2% year-over-year to $14.4 million, compared to $16.4 million in the previous year

Earnings per diluted share were $0.54 for the year, compared with diluted EPS of $0.66 achieved in the previous year

*2010 net income adjusted for one-time impairment loss of $6.8 million ($0.25 on a diluted EPS basis) on construction in progress in Inner Mongolia. 2009 net income adjusted for one-time property and equipment impairment loss of $1.7 million ($0.07 on a diluted EPS basis) to recognize the removal of a portion of a Beijing En Ze Jia Shi building in order to construct the new Beijing facility.

Mr. Zhongyi Liu, Chairman and CEO of Lotus, stated, "We continued to expand our business in 2010 and saw especially strong growth of 83% in our retail sales segment. We entered the market for direct sales to over-the-counter drugstores in Beijing in 2010 and have already experienced tremendous success, serving more than 1,000 OTC drugstores in addition to our own 10 stores. We expect this channel to continue being a major sales growth driver in the coming year. Construction of our Beijing facility continues to progress, and we anticipate significant efficiency improvements and additional capacity for growth once we move into the new building."

Mr. Liu continued, "We plan to focus our capital expenditures in the foreseeable future on the completion of our Beijing facility and our core business in Beijing; as a result, we recognized a one-time, non-cash impairment loss for construction expenditures on our property in Inner Mongolia in 2010. Lotus has a well-established nationwide sales and distribution network, strong product development capabilities, and access to capital. Due to the trends of consolidation and increasing regulatory oversight in China's pharmaceuticals industry, we believe these characteristics position Lotus to emerge as an industry leader."

Business Outlook for 2011

Management anticipates that 2011 will be a transitional year for Lotus Pharmaceuticals, as the Company will be completing and moving into its new headquarters and shifting its focus to the wholesale business in Beijing and the surrounding areas. After the completion of the headquarters, the Company expects strong growth driven by the wholesale business in Beijing and surrounding areas starting in 2012.

The Company expects total revenue and profitability to be flat or slightly down in fiscal 2011 compared to 2010. Specifically, management anticipates continued growth in Lotus' retail business in 2011, driven primarily by strong growth in the OTC sales division. However, revenue from the wholesale business is expected to decrease in 2011, as the Company will lose revenue from one of its self-branded products, Muxin (an eye drop), due to the termination of its outsourcing agreement and inability to stock the product. In addition, the Company will undertake a strategic shift as management prepares to enter the wholesale market in Beijing.

Monday, March 28, 2011

Friday, March 25, 2011

China Intelligent Lighting (CIL) and NIVS IntelliMedia Technology (NIV) crooks?

The response of Rodman & Renshaw on NIV/CIL drama:

Trading was halted on China Intelligent Lighting (CIL) on Thursday. It is our belief that the SEC has opened a formal investigation. We believe the basis of this inquiry rests on the Company not providing adequate supporting documentation for its bank transactions to its auditors Malone Bailey LLP. The bank transactions were related to Company's operational accounts, accounts receivable, payables and bank deposits, etc. We are revising our rating on CIL from Market Outperform to Under Review. We are removing our financial projections pending resolution of the outstanding issues.

Related Party Transactions: We also note that there is also a trading halt on NIVS IntelliMedia Technology Group Inc (NIV, Market Outperform) which is controlled by CIL's Chairman and CEO Li Xuemei. We note that CIL has a facility leasing arrangement with NIV's controlling subsidiary, NIVS (HZ) Audio & Video Tech Co. Ltd.

Also Malone Bailey LLP independent auditor submitted its resignation


Thursday, March 24, 2011

I think we all have to read the book below

It is just amazing what's happening right now in the China space, this book is required to prepare yourself better for fraud and other financial gimmicks.

China Intelligent Lighting (CIL) and NIVS IntelliMedia Technology (NIV) trading halts

A Shotgun Wedding?

CRAP..............What's going on?

Maybe it had to do something with their 8-K

Conflict of interest???????

Change in Directors or Principal Officers

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

On March 1, 2011, Su Yang resigned as a director of China Intelligent Lighting and Electronics, Inc. (the "Company"), including Su Yang's positions on the Company's Audit Committee, Compensation Committee and Nominating Committee, effective immediately. Su Yang's resignation was for personal reasons and was not due to any disagreement with the Company. On March 1, 2011, the Company's board of directors (the "Board") appointed Ruxiang Niu to serve as an independent director of the Company. The Board determined that Ruxiang Niu is independent in accordance with the applicable rules of the NYSE Amex LLC. The Board also appointed Ruxiang Niu as a member of the Company's Audit Committee, as Chair to the Company's Compensation Committee and as a member of the Company's Nominating Committee.

Ruxiang Niu, age 48, served as a director of NIVS IntelliMedia Technology Group, Inc. from December 2008 to April 2010. From January 2007 to October 2008, Mr. Niu served as the Vice General Manager of Shanghai Pudong Real Estate Trust Investment Company Limited, a real estate investment company, and was responsible for real estate investments. From December 2005 to December 2006, Mr. Niu served as the Chief Executive Officer of Beijing Bangsheng Investment Company Limited, a financial investment company, and was responsible for investments, mergers and acquisitions and company financing, and also served as the Chief Capital Consultant of Shirong (Shenzhen) International Financial Group, a financial investment company, and was responsible for investments, mergers and acquisitions and company financing. From March 2003 to Novemb er 2005, Mr. Niu served as the Chief Executive Officer of Beijing Dovon Net Company Limited, a financial investment company, and was responsible for financing and investment communications. From March 2000 to December 2002, Mr. Niu served as the Assistant to the Chief Executive Officer of Shidean (Shenzhen) Technologies Company Limited, an electronic intelligent security company, and was responsible for managing the company's Electronic Research Center and building intelligent electronic systems. From September 1999 to July 2000, Mr. Niu served as an Associate Professor at Macau University. From March 1995 to August 1996, Mr. Niu served as the Vice General Manager of China Golden Net Investment Company Limited, a financial investment company, and was responsible for website operation and investment. Mr. Niu received a PhD in international finance from the Hong Kong Polytechnic University in 2008.

There are no arrangements or understandings between Mr. Niu and any other persons pursuant to which Mr. Niu was selected as a director. Mr. Niu has not been a party to any transaction requiring disclosure pursuant to Item 404(a) of Regulation S-K.

POSITION: Both Long, so don't let me down!!!!!!!!!!!!!

Tuesday, March 22, 2011

Weikang Bio-Technology Announces Fiscal 2010 Financial Results

-- Revenue Rises 57.0% to $74.6 Million

-- Adjusted Operating Income Climbs to $37.6 Million

-- Adjusted* Net Income Hits $28.3 Million or $0.95 Per Share

-- GAAP Net Income Up 56.5% to $24.4 Million or $0.87 Per Share

"Our business strategy was very successful this year, as evidenced by strong double-digit annual growth in both our top and bottom lines and an especially strong fourth quarter," commented Mr. Yin Wang, Chairman and CEO of Weikang. "Our market share continues to improve with our successful new product launches and expanded sales channels. The five new products we launched during 2010 contributed roughly $11 million to our total sales, and we plan to launch four new products during 2011, three of which we expect to roll out during the first quarter."

Mr. Wang continued, "We are committed to implementing improved marketing and promotional strategies as well as aggressive R&D, both of which contributed to our strong performance this year. Furthermore, we have streamlined our cost structure in order to provide the highest quality product at the best value, and we look forward to continued growth of this nature as we continue to pursue additional US investor support and interaction in 2011."

FY 2010 results

Monday, March 21, 2011

Shareholder Starr sues China MediaExpress (CCME)


Man Shing Agricultural Holdings (MSAH) Update on Operations in Japan

Press release

When will we see one buck?

China Marine's 'Hi-Power' Becomes the Exclusive Algae-Based Beverage of the National Sports Training Center

Press release

Positive attention to their brand could lead to new distribution channels countrywide.

Friday, March 18, 2011

China Organic Agriculture (CNOA) people come and go, what's happening?

8-K filing SEC

Last December they appointed Chunyan Liu as Chairman and Mr. Zang as CFO. Today both men resigned. Something fishy is going on at China Organic Agriculture (CNOA).

8-K filing SEC December 2010

"Both Liu's vision and solid experience in agricultural planning and decision making and Zhang’s relationships and extensive background in the financial markets will help the Company accelerate its growth and move to the next level”, said Mr. Qi Qian, CEO of China Organic Agriculture, Inc. “I’m glad to have them join us as Chairman and CFO of the Company. I look forward to working closely with both of them.”

China Stocks That Could Benefit From the Japan Earthquake

Article Seeking Alpha

Thursday, March 17, 2011

Details about resignation of Deloitte regarding China MediaExpress (CCME)

SEE 8-K filing SEC


- Why don’t we get on this bus?

- Something is wrong. Let’s wait for the next one.

China Botanic Pharmaceutical (CBP) Reports First Quarter Fiscal Year 2011 Results

First Quarter 2011 Highlights and Recent Events

Net sales increased 32.1% year-over-year to $22.6 million

Gross profit increased 45.8% to $13.8 million from $9.5 million in the first quarter of fiscal year 2010

Gross margin increased to 61.1% from 55.3% a year ago

Net income rose 48.3% to $10.9 million or $0.29 per diluted share

New products, including Qing Re Jie Du Oral Liquid, Compound Schisandra Tablets, Ginseng and Deer Antler Extract and Badger Fat accounted for 15.0% of gross sales in the first quarter of fiscal 2011

The Company passed the annual assessment for the High-Technology Enterprise certificate and will continue to enjoy a preferential tax rate in fiscal 2011. This rate of 15%, commencing on January 1, 2011, is notably lower than the statutory income tax rate of 25 percent, but higher than the zero percent rate the company enjoyed in fiscal 2010

Q1 results

10-K filing

Good Q1 results 

Wednesday, March 16, 2011

Tuesday, March 15, 2011

China MediaExpress debacle, Due Diligence another set required

Short sellers have won the case, congratulations!

In the case of China MediaExpress the human mind can deceive itself, everything was just to good to be true. The longs were unjustifiably optimistic. Maybe we subconsciosly overlooked important information and were so overconfident with the story that we fail to recognize how biases can distort the investment thesis.

The headline China MediaExpress CFO Resigns, Auditor Calls for Investigation

will have a major impact on the US-listed Chinese space. A lot of long investors will get burned, but that belongs to investing. Don't put all your eggs in one basket.

The question remains how can we minimize the risk of another fraud. Due diligence is much needed, so Pinkerton and Kroll will see their business flourish if institutional investors want to be 99.9% sure that their potential investment is not a fraud.

What lessons can be learned?

First I would recommend the book Best Practices for Equity Research Analysts from James. J. Valentine to the analysts who covered China MediaExpress.

In a perfect world, equity analysts would be omnisciently aware of every aspect of a company's inner workings, including the level of conservatism or aggressiveness in its treatment of accounting issues. As much as the general media expects analysts see through walls and use clairvoyance to read management's minds, this is beyond the ability of most equity analysts. Very often when financial fraud occurs, the company has fooled even its own auditors, but this gets lost in the press, which point the blame at Wall Street analysts for missing the problem.

This isn't to say that analysts should just ignore accounting but, rather they should set expectations for what it is: an opportunity to see early warning signs that problems are developing; red flags.

Discovering these problems can require plenty of time and in some cases, specialized resources. Spotting red flags requires that the analyst understand the underlying economic transactions that generate each important financial statement item. Understanding how values are measured using the applicable accounting rules will enable you to identify items where management can take advantage of flexibility in accounting rules to achieve its financial reporting objectives.

A lot of private and professional investor are fooled so I hope someone could come with a red flag score system that would be helpful to the investment public at large.

Sunday, March 13, 2011

China Organic Agriculture (CNOA) what's happening?

Since some weeks on my Red Flag list.

For me it is a red flag if a company doesn't make the effort to reply an email requesting for an interview.

It seems that the company doesn't take shareholders serious.

Thursday, March 10, 2011

Tuesday, March 8, 2011

Chinese IPOs in US to surge by 50% in 2011

SHANGHAI - The number of Chinese companies listing in the United States will surge by 50 percent this year after hitting a record high in 2010, said a senior partner of Ernst & Young on Monday.

He Zhaofeng, partner and Greater China IPO Leader with Ernst & Young, said approximately 60 Chinese companies will list in the US this year, from 41 in 2010.
"Actually, we are currently doing preparation work for about 20 companies to list in the US this year," said He.

The rise will be triggered by the expected appreciation of the yuan, China's projected economic growth and the successful number of IPOs last year, He said.

The successful US listing by in 2010 - when Ernst & Young was the accounting firm for the IPO - will encourage more Internet and high-tech companies to seek IPOs in the country this year, He said. Youku, China's leading online video content provider, more than doubled its IPO price on the New York Stock Exchange on Dec 8, opening at $27 and closing at $33.44.

"Similar companies will believe that if their peers can do it, they can too. They will also seek funding through the IPOs to keep up with their competitors, who have already listed in the US," said He.

Meanwhile, the strong expectation that the yuan will appreciate in 2011 will also encourage US investors to buy shares in Chinese companies, He added.

Companies listed in the US, but whose main business is usually based in China, use the yuan to calculate their revenue and profit. Therefore an appreciation of the currency will make companies' dollar-denominated financial statements look better, and help to maintain the share price.

The yuan has appreciated about 4 percent against the dollar since mid-June 2010. An economist at UBS, Wang Tao, predicted in January that the currency will appreciate another 6 percent this year.

Ernst and Young's He said China's expected economic growth of 8 percent this year also make more US listings a "natural progression".

"The global IPO market has rebounded in the wake of the financial crisis. With the burgeoning recovery and China's economy maintaining its headlong charge, it's a sure thing that more Chinese companies will seek IPOs globally, and especially in the US," said He.

Among the 60 companies to be listed in the US this year, most will be small and medium-sized Internet or high-tech companies that have great growth potential, but have yet to post a profit, said He.

"Those companies usually find it hard to list here in China, where companies have to post a stable profit before they can file for an IPO," said He. "But in the US, all you have to do to get listed is to obey the information disclosure rules and the investors will decide whether you survive or not."

He expects that as China's stock market matures, IPO rules will change and become similar to those in the US, where the climate is better for "protecting investors and nurturing start-ups that show potential".

(China Daily 03/08/2011 page 15)

China at 60% Risk of Banking Crisis, Fitch Gauge Signals

Article Bloomberg

March 8 (Bloomberg) -- China faces a 60 percent risk of a banking crisis by mid-2013 in the aftermath of record lending and surging property prices, according to a Fitch Ratings gauge.

Fitch sees the risk of “holes in bank balance sheets” should a property bubble burst, Richard Fox, a London-based senior director, said in a phone interview on March 4. The risk assessment is from a macro-prudential monitor used by the ratings company.

Chinese banks fueled record property-price gains by extending a record 17.5 trillion yuan ($2.7 trillion) of loans over 2009 and 2010 under the stimulus program that propelled the nation through the financial crisis. Regulators’ efforts to contain the risks for lenders have included stress tests for declines in house prices and a crackdown on lending to local- government financing vehicles.

China’s risk of a systemic crisis is based on the nation’s MPI3 classification, the highest of three risk categories, in a Fitch monitor begun in 2005. The indicator signaled crises in Iceland and Ireland and has been tested back to the 1980s, Fox said.

In contrast with Fitch’s concern, the Hang Seng Finance Index, which includes five Chinese banks traded in Hong Kong, advanced 1.5 percent as of 3:34 p.m. local time.

Depleted Capital

Fitch follows an International Monetary Fund definition of a systemic financial crisis, Fox said. Such crises exhaust “all or most of the aggregate banking system capital,” cause a “large number of defaults” and “financial institutions and corporations face great difficulties repaying contracts on time,” according to a November 2008 IMF working paper.

“We’re talking about systemic crises here, affecting most of the major banks,” Fox said. “A crisis is something which technically de-capitalizes the banking system.”

Sixty percent of emerging-market countries downgraded to MPI3 face banking crises within three years, he said. China entered that classification in June. The indicator’s failures have included not sounding an alarm about the banking system in Spain, he added.

Banking systems in emerging markets are vulnerable to systemic stress when credit growth exceeds 15 percent annually over two years with real property prices rising more than 5 percent, according to Fitch.

Wen’s Pledge

Credit growth in China averaged 18.6 percent annually over 2008 and 2009 as house prices jumped, according to the ratings company. Chinese Premier Wen Jiabao pledged more efforts to cool the property market on March 5, telling lawmakers that “exorbitant” increases in housing prices in some cities are a top public concern.

The fallout from China’s lending spree may be bad loans totaling $400 billion, according to Hong Kong-based advisory firm Asianomics Ltd.

China is seeking to avoid a repeat of its last banking crisis, when the government spent more than $650 billion over a decade to bail out banks after years of state-directed lending.

Fitch’s concern contrasts with gains in banks’ profits and capital adequacy ratios and declines in non-performing loan ratios, according to data released by the China Banking Regulatory Commission.

The industry’s “capitalization has been noticeably strengthened throughout 2010, with capital ratios of major banks being well supportive of their standalone credit profiles,” Liao Qiang, a director of financial institutions ratings for Standard and Poor’s in Beijing said today.

‘Strong Liquidity’

“With reasonable loan loss reserves at present, good pre- provisioning profitability and strong liquidity, Chinese banks are likely to gradually absorb potential spikes in credit costs caused by looming bad loans, particularly from China’s property sector and local government financing platforms,” Qiang said.

Chinese banks listed in Hong Kong will likely report “strong” 2010 earnings when they report at the end of the month, BNP Paribas SA said in a report today.

In November, Moody’s Investors Service said that it had “concerns over the intrinsic, stand-alone strength of China’s banking system.” At the same time, the largest lenders weren’t materially damaged by the global financial crisis and aren’t likely to pose any significant contingent liability risk to the government balance sheet, the ratings company said.

Absorbing Losses

“Furthermore, we expect that future credit losses -- arising from the surge in lending in 2009, from exposures to the property market, from risky loans to local government financing vehicles, and from off-balance sheet operations in the ‘shadow’ banking system -- will be mostly absorbed by the banks themselves, either from capital, or from future earnings,” Moody’s said in a statement.

To limit risks for banks, China has increased oversight of lending to the local-government vehicles, which surged during the nation’s two-year stimulus program. In a March 5 speech to lawmakers, Wen pledged a “comprehensive audit” of local- government debt, while the Ministry of Finance said separately that “local governments face debt risks that can’t be overlooked.”

Banks have also been told to assign a higher risk rating to local-government loans.

The country’s “systemically important” lenders may be subject to an overall capital adequacy ratio of as high as 14 percent when their credit growth is judged excessive, a person with knowledge of the matter said on Jan. 28. Other lenders would need to meet a 13 percent threshold, the person said. The minimum ratio, used to gauge banks’ ability to withstand financial stress, is currently 11.5 percent for big banks.

Lenders including China Minsheng Banking Corp. and Agricultural Bank of China Ltd. have announced plans to sell more than 80 billion yuan ($12 billion) of shares and 70 billion yuan of subordinated bonds this year.

Thursday, March 3, 2011


Man Shing Increases Net Income Guidance to $8.8 Million, or $0.18 EPS, for Fiscal Year 2011

HONG KONG, March 3, 2011 (GLOBE NEWSWIRE) -- Man Shing Agricultural Holdings, Inc. (OTCBB:MSAH - News) ("Man Shing" the "Company," "we," "us," or "our"), located in the Shandong Province and one of the largest Chinese exporters of fresh ginger to Japan, the United Kingdom, and the Netherlands, today announced net income guidance of $8.8 million, or earnings per share of $0.18 based on 50 million fully diluted shares, for the fiscal year ending June 30, 2011, up from previous guidance of $8 million for the same period.

"It is with great pleasure that we are able to announce the increase in our net income guidance for the 2011 fiscal year to $8.8 million," stated Mr. Shili Liu, Chairman and Chief Executive Officer of Man Shing. "Over the last year it has been our priority to improve our capital structure and corporate governance including auditors, legal counsel and board of directors, while preparing ourselves for continued growth from operations both domestically and internationally."

Mr. Shili Liu continued, "Several strategic initiatives have already been set in motion for 2011. In December we entered into an agreement to produce ginger in Japan on 70,186 square meters of land. We believe that our presence in Japan will present us with several important advantages, including a higher price point for our ginger. Additionally, due to the high quality and safety standards enforced in Japan, we anticipate increased customer confidence. We will continue to evaluate opportunities to broaden our production capabilities and markets to sell our product."

Business Update

Capital Structure: As a result of the cancellation of 3,358,250 preferred shares (which were convertible into a total of 33,582,500 shares of common stock), the Company's fully diluted shares outstanding were reduced by approximately 33 million shares from approximately 72.4 million diluted shares reported immediately prior to the cancellation. Additionally, the Company issued 10 million shares of common stock in the previously announced $4 million financing. As of February 1, 2011, Man Shing had approximately 48 million basic and 50 million fully diluted shares of common stock outstanding.

Corporate Governance: In October 2010, Man Shing engaged BDO Limited ("BDO") as new principal independent auditor. In addition to BDO, Man Shing engaged Loeb & Loeb LLP as outside legal counsel.

Board of Directors: Man Shing strengthened the Board of Directors by recruiting Mr. Xuguang Qiao and Mr. Kun Xu, who both have extensive experience within the agricultural industry. Mr. Qiao's and Mr. Xu's agricultural industry perspectives and extensive network will be valuable assets to Man Shing as we continue to execute on our business strategy of being a leader in producing the highest quality fresh ginger. Additionally, both Mr. Qiao and Mr. Xu have done extensive research mainly focused on the genetic makeup of ginger and garlic, as well as the safety and quality control of vegetables.

Local Government Support / Brand & Media Awareness: During the second half of the 2010, Man Shing received positive industry and local government recognition. In early December Man Shing was awarded a top honor at an event co-sponsored by China New Village Online (, China New Village Management Council and Shandong Province New Village Development Selection Committee for its leadership in farming development in the Shandong Province and the Company contribution to local Anqiu community by creating jobs opportunities. Later that month members of Man Shing's management team appeared on CCTV 7's Science Garden show to demonstrate ginger production, storage and pest-control methods with minimal chemical usage.

Growth Initiatives: In September 2010, Man Shing entered into a securities purchase agreement with a group of strategic investors for $4 million. The financing was completed to lease additional farmland and expand warehouse capacity. Currently Man Shing leases over 5.3 million square meters of farmland. The Company plans to lease additional farmland to further execute the strategy to become one of China's largest ginger producers and to meet the increasing demand of high quality ginger in markets such as Japan and the European Union.

Production in Japan: In December 2010, Man Shing announced an agreement with Mr. Nagada Koumonn, a farmland owner in the town of Yinayityou within the Simane County of Japan to lease a ginger farm which sits on 70,186 square meters of land. This agreement is expected to provide Man Shing with several advantages including helping establish the Company's international farming presence, a higher price point for our ginger, and increased customer confidence due to the high quality and safety standards enforced in Japan.

Outlook for 2011: In 2011, Man Shing will continue its effort to improve the corporate governance and public awareness of the Company. It is the Company's intention to focus resources on high quality ginger products and selling ginger products to customers with high food safety standards. The Company is in the process of leasing more farmland, increasing production and storage capacity and modernizing its production cycle to satisfy current customers' demand and further expand its customer base.

About Man Shing Agricultural Holdings, Inc.

Man Shing Agricultural Holdings, Inc., through its operating subsidiary in Shandong of China, is focused on the production and processing of fresh ginger and other select vegetables such as onion and garlic. The Company produces high quality ginger which meets the requirements of the British Retail Consortium Global Food Standard. The Company focuses on customers located in countries such as Japan and the European Union which are food safety oriented. For further information about Man Shing Agricultural Holdings, Inc, please visit the Company's website at

LED Will Lead the Way for China Intelligent Lighting

Article SeekingAlpha