Saturday, April 30, 2011

China TechFaith Wireless Communications Technology Ltd. (CNTF) Hot Stuff

I am long CNTF because I really think this company will hit a homerun with their gaming business.

Presentation March 2011

A look at CNTF's 17vee motion gaming

CGS forum

Friday, April 29, 2011

Trading China's Fraud / Corporate Governance Risk Model

I appreciate the work Rames from the website Trading China does regarding US-listed China stocks.

The latest tool he contibuted to his models is a Fraud/Corporate Governance Risk Model.

The model is based on about 20 different metrics, but it is NOT meant to be the ultimate truth.

Here are the results for about 100 Chinese stocks Rames already researched:
 CTRP International         120% 
 VISN VisionChina Media               107% 
 XIN Xinyuan Real Estate               99% 
 AMBO Ambow Education Holding          96% 
 CNTF China TechFaith Wireless         95% 
 DANG China Dangdang                  89% 
 AOB American Oriental Bioengineering 87% 
 YOKU                       80% 
 HOGS Zhongpin                        80% 
 CIIC China Infrastructure Investment 75% 
 CHRM Charm Communications            73% 
 YONG Yongye International            72% 
 CPSL China Precision Steel           70% 
 CCCL China Ceramics                  68% 
 CAST ChinaCast Education             64% 
 CHLN China Housing and Land Dev      63% 
 CNIT China Information Technology    62% 
 CSGH China Sun Group                 60% 
 CHOP China Gerui Advanced Materials  60% 
 CBAK China BAK Battery               59% 
 SKBI Skystar Bio-Pharmaceutical      58% 
 GSI General Steel Holdings           58% 
 AKRK Asia Cork                       57% 
 XNY China Xiniya Fashion             56% 
 WATG Wonder Auto Technology          56% 
 LIWA Lihua International             56% 
 EMDY Emerald Dairy                   56% 
 CIHD Changda International           56% 
 CTFO China TransInfo Technology      55% 
 ADY Feihe International              55% 
 XNYH Xinyinhai Technology            54% 
 SCEI Sino Clean Energy               54% 
 HPJ Highpower International          54% 
 GHNA GHN Agrispan Holding            54% 
 CCGY China Clean Energy              52% 
 CBPO China Biologic Products         51% 
 BEST Shiner International            50% 
 FSIN Fushi Copperweld                48% 
 CPQQ China Power Equipment           47% 
 CGYV China Energy Recovery           47% 
 FEED Agfeed Industries               46% 
 CHGI China Carbon Graphite           46% 
 AMCF Andatee China Marine Fuel       45% 
 WKBT Weikang Bio-Technology          44% 
 SPU SkyPeople Fruit Juice            44% 
 GFRE Gulf Resources                  44% 
 LNDT LianDi Clean Technology         43% 
 SOKF SOKO Fitness and Spa            42% 
 SIAF Sino Agro Food                  42% 
 EESC Eastern Environment Solutions   42% 
 CRUI China RuiTai International      42% 
 CRJI China Runji Cement              42% 
 CFSG China Fire and Security         42% 
 CAAS China Automotive Systems        42% 
 ALN American Lorain                  42% 
 GCHT GC China Turbine                41% 
 CFMI China Pharmaceuticals           41% 
 BEER Tsingyuan Brewery               41% 
 GHII Gold Horse International        40% 
 CXDC China XD Plastics               40% 
 CWS China Wind Systems               40% 
 SNBP Sinobiopharma                   39% 
 ONP Orient Paper                     39% 
 CNYD China Yida Holding              39% 
 BORN China New Borun                 39% 
 TRIT Tri-Tech Holding                38% 
 LPH Longwei Petroleum                38% 
 CNET ChinaNet Online                 38% 
 BWOW Wowjoint Holdings               38% 
 HFGB Huifeng Bio-Pharma              37% 
 CHHE China Health Industries         36% 
 SGTI Shengtai Pharmaceutical         34% 
 KNDI Kandi Technologies              34% 
 CNAM China Armco Metals              34% 
 LLEN L and L Energy                  33% 
 CSKI China Sky One Medical           33% 
 CADC China ACM                       33% 
 CBEH China Integrated Energy         32% 
 CMFO China Marine Food               31% 
 ZSTN ZST Digital Networks            30% 
 VALV Shengkai Innovations            30% 
 ORS Orsus Xelent Technologies        30% 
 CHBT China-Biotics                   30% 
 CBP China Botanic Pharmaceutical     30% 
 CGA China Green Agriculture          29% 
 KGJI Kingold Jewelry                 28% 
 CSOL China Solar and Clean Energy    28% 
 SCOK SinoCoking Coal                 27% 
 PUDA Puda Coal                       27% 
 DGW Duoyuan Global Water             27% 
 CHGY China Energy Corporation        27% 
 NEP China North East Petroleum       24% 
 CEU China Education Alliance         24% 
 BSPM Biostar Pharmaceuticals         24% 
 HRBN Harbin Electric                 22% 
 LTUS Lotus Pharmaceuticals           21% 
 CHNC China Infrastructure Construction 21% 
 ABAT Advanced Battery Technology     17% 
 JGBO Jiangbo Pharmaceuticals         16% 
 CGPI China Redstone Group            16% 
 CELM China Electric Motors           13% 
 NEWN New Energy Systems              12% 
 CAGC China Agritech                   7% 
 CHNG China Natural Gas                5% 
 TSTC Telestone Technologies           2% 
 CCME China MediaExpress               2% 
 SBAY Subaye                           1% 
 UTA Universal Travel Group            0%

For more information about his model(s) you can visit Trading China

Thursday, April 28, 2011 article about China Tech Faith Wireless (CNTF)

I don't have a crystal ball, but I guess some folks agree with me!

Article Seeking

Online Gaming in China is Going To Be Hot The Coming Years

Niko Partners, the market research firm, has reported this week that they expect the Chinese video game industry to grow to $9.2 billion USD by 2014, over a double from 2010.

The market was $3.57 billion in 2009, and expected to grow to $4.5 billion this year.

"While the global economic downturn hurt videogame publishers in much of the world, China's online game industry reflected no pain in 2009 and gamers continued to embrace online games as the best inexpensive source of social entertainment available," says Lisa Cosmas Hanson, managing partner of Niko Partners. "While the era of online gaming is generating lots of interest and growth opportunity in the West, China is one of the countries where online gaming is a well established market segment that extends its reach to more and more Chinese consumers every year."

Overall, 63 percent of gamers have increased their game playing time in the past year.

I am looking for Chinese companies that can benifit from this trend. Of course there are the big ones such as Giant Interactive (GA), Shanda Games (GAME) and some other big players.  One company that is expanding their game business and came out with some important news today is:

China Techfaith Wireless Communication Technology Limited (CNTF)

This one is on my radar screen and will need some close attention.

Chinese companies to boost overseas investment

Article China Daily

Some highlights
Companies investing overseas traditionally favored the machinery and textile sectors, but recently investments in agriculture, mining and energy have surged, the survey said.

Other sectors are also attracting interest, an analyst said.

"High-tech and clean energy technology companies are becoming hot targets for overseas mergers and acquisitions," said Xu Weiqing, an analyst with Zero2IPO Group, a capital market research company.

In 2010, Chinese firms invested in 3,125 overseas companies in 129 countries and regions and total foreign direct investment in non-financial sectors rose 36 percent to $59 billion, according to the Ministry of Commerce.

Tuesday, April 26, 2011

Baby Heading Down with Bathwater? Nasdaq Requests Delay in “Re-IPO” Transactions

Interesting story today that the Nasdaq, in a filing with the SEC, is requesting that post-reverse merged companies that wish to uplist to Nasdaq have at least 6 months of trading over the counter before being allowed to move up.
Article from David Feldman on

JP Morgan AM adds China equities, sees rising EM debt

JP Morgan Asset Management is overweighting Chinese equities on the understanding that the nation’s core inflation is contained and its policymakers are poised to end their tightening cycle.

Geoff Lewis, the firm’s head of investment services, says financials, commodities, infrastructure and consumers are the asset manager’s favoured sectors. The company has been buying into consumer stocks and is looking at commodity names in the copper and aluminium segments.

Full article

Hit Peace from Citron on LongTop Financial (NYSE:LFT)

“Money made through dishonest practices will not last long”…Chinese Proverb

Article Citron Research

Soaring Food Prices Again Threaten to Push Millions of Asians into Poverty

Resurgent global food prices, which posted record increases in the first two months of 2011, are again threatening to push millions of people in developing Asia into extreme poverty, says a new report from the Asian Development Bank (ADB) titled Global Food Price Inflation and Developing Asia

Food prices had been expected to continue a gradual ascent in the wake of the sharp spike in 2008. The report says that fast and persistent increases in the cost of many Asian food staples since the middle of last year, coupled with crude oil reaching a 31-month high in March, are a serious setback for the region which has rebounded rapidly and strongly from the global economic crisis.

Domestic food inflation in many regional economies in Asia has averaged 10% in early 2011. The ADB study finds that a 10% rise in domestic food prices in developing Asia, home to 3.3 billion people, could push an additional 64 million people into extreme poverty based on the $1.25 a day poverty line.

"For poor families in developing Asia, who already spend more than 60% of their income on food, higher food prices further reduce their ability to pay for medical care and their children's education," said ADB Chief Economist Changyong Rhee. "Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia."

The report adds that if the global food and oil price hikes seen in early 2011 persist for the remainder of the year, economic growth in the region could be reduced by up to 1.5 percentage points.

Monday, April 25, 2011

Interview RedChip with Lotus Pharmaceuticals (LTUS)

Lotus Pharmaceuticals, Inc. (OTCBB: LTUS) ("Lotus" or the "Company"), a fast-growing, profitable developer, manufacturer and seller of medicine and drugs in the People's Republic of China ("PRC"), announced today that its Vice President of Corporate Development, Dr. Xing Shen, was interviewed by Gary Eelman, Director of Institutional Sales at RedChip Companies, Inc.

A full transcript of the interview is below:

Q: First, congratulations on the Company's recent quarterly and fiscal year-end results. Lotus has been executing well, with solid double-digit growth in both its retail and wholesale segments. Presently, the Company's focus appears to be on completing the construction of your new headquarters in Beijing. You mentioned that construction may be delayed till year's end, an additional six months from your earlier guidance. Do you expect to meet the new deadline?

A: Yes. I recently visited the site and spoke with the builder. He believes they will still meet the June 2011 deadline, but to my untrained eye, there appears to be a fair amount of work that still needs to be done. After discussing with the management team, we decided to extend the timeline by six months to ensure the quality of the facility and buffer any unforeseeable delays. I thought it prudent to inform shareholders that an extra six months may be needed. We prefer to be conservative when providing timelines.

Q: For the benefit of those reading this interview, please clarify why the new Lotus headquarters is so important to the future of the Company.

A: The primary reason is that it provides us with the opportunity to market to hospitals in Beijing. Pharmaceutical companies are required to maintain warehousing facilities large enough to guarantee shipment on designated dates. The current minimum size requirement is 5,000 square meters. Once our new building is operational, we will meet the requirement and can enter the bidding for hospitals in the Beijing area.

Please note that over 70% of our 2010 revenue came from our wholesale division, and this was without selling to Beijing hospitals. At the same time, we estimate that pharmaceutical sales in Beijing will account for two-thirds of our total sales in northern China, or approximately one-third of our total domestic sales in 2011. So the opportunity is significant for Lotus.

Q: In 2008, Lotus paid $32.6 million to acquire property in Mongolia, which is about a two-hour drive from Beijing, to build your headquarters. Shortly thereafter, Lotus received permission to upgrade its manufacturing facility in Beijing. Chairman Liu and the board decided the new building in Beijing makes more sense due to its closer proximity to your target hospitals, which I agree. On the March 30 earnings call, some of your shareholders requested Chairman Liu sell the property in Mongolia, using the proceeds to buy back stock and concentrate on selling higher-margin pharmaceutical products. Can you provide us with the estimated value of that property today and the main reason Lotus has decided not to sell, but to develop 10% of the property?

A: We recently spoke with the local Land Resource and Trade Center and estimate the property's value at $60 million to $80 million. When we invested in the land in Inner Mongolia, we received a favorable tax benefit with the first 8-year full exemption and the second 8-year half exemption. Lotus received tax breaks of $5 million in 2009 and $6 million in 2010. As a return, we are obliged to make a further investment in this property. We plan to use approximately 10% of the land, or approximately 100 square meters, to build a pharmaceutical distribution center serving primarily the five northwestern provinces in China. We are negotiating with several potential collaborators to share the cost of building the distribution center and receive rights to develop the other 90% of the land as payment. By doing this, we can preserve the tax breaks. Alternately, we could sell 90% of the property outright and use the sales proceeds to pay for the distribution center. No matter which transaction we decide to pursue, we intend to coordinate with related parties to ensure that we will continue to enjoy the tax break with the transaction.

Q: You wrote off the $6.2 million used to improve the Mongolian property this quarter. Why not sell and take the gross profit of approximately $20 million to $40 million [not including the tax benefit for 2009-10]?

A: The value of building a distribution center in Mongolia is clear: to serve as a base for our continued sales growth into the five northwestern provinces, which remain underdeveloped and will be a major contributor to China's growth in the coming years. In addition, as mentioned above, the tax advantages amounted to $11 million in the last two years and will extend to 2024. Furthermore, the land purchase came with an obligation to develop this site. To put all this together, we believe it makes sense to implement our plan instead of pocketing the short-term gain.

Q: With China's central bank raising interest rates for the sixth time this year, coupled with increased reserve rate requirements to cool both inflation and the real estate market, are you concerned that the value of the property will fall and potentially reduce your profit on the Mongolian land, or that Lotus may be unable to sell the property?

A: Let me be clear: we did not obtain the land in Mongolia for a land trade. Both projects, Beijing and Inner Mongolia, were undertaken after considerable thought. We are in discussions with several potential collaborators for the Inner Mongolia land and will provide cost information and start and completion date estimates once we complete the process.

Q: Companies listed in the U.S. referred to as "China reverse mergers" have been under considerable pressure lately. A number of small-cap Chinese companies have had their stock halted from trading due to concerns about the alleged overstatement of their revenue and earnings. How are you different from these companies?

A: We are comfortable with our financial reporting. In preparation to uplist to a senior exchange, we have strengthened our required internal control measures, including the audit committee and independent directors. Additionally, we have a good working relationship with our auditing firm, Friedman LLP. Friedman has been operating for over 85 years and has offices in both the U.S. and Beijing, so its auditing and accounting staff is thoroughly familiar with U.S. and Chinese regulatory requirements.

Q: One of the drugs being developed by Lotus, R-bambuterol, is currently in clinical trials. You mentioned that controlled-release gliclazide and isosorbide mononitrate are waiting for SFDA approval to start clinical trials, yet will only require one phase of clinical trials. Please give us some sense of the R&D costs associated with bringing three drugs to market during the 2013-2014 period.

A: Our lead candidate in the pipeline, R-bambuterol for asthma, is currently in Phase I trials, and we expect Phase I data this quarter. R-bambuterol is a Class 1 new drug and will therefore need to go through Phase I to III clinical trials before we can submit the application for approval to the SFDA. We estimate the total clinical trial cost will be approximately RMB 50 million, or roughly $8 million. Controlled-release gliclazide for diabetes and isosorbide mononitrate for cardiovascular indications are currently awaiting approval to start clinical trials, but the approval will come after our manufacturing facility becomes functional. These two candidates will only need to run one trial each for regulatory approval, as they are branded generics. We estimate the clinical trial cost for those two candidates will be RMB 10 million, or roughly $1.5 million.

Q: With clinical trials for R-bambuterol estimated to cost $8 million, two other drugs in development, and two building projects underway in Beijing and Mongolia, is there any concern that Lotus has taken on too much at one time? Also, please tell us about financial provisions taken to provide for unexpected cost overruns with clinical trials or construction in Beijing and Mongolia, or both.

A: Those projects are part of our growth plan, and frankly we do not have the resources to take them all on at the same time. Our plan is to work on them one or two at a time, so the expense will be spread out over the years. This year, our focus is on completing the construction of our Beijing facility. After that, we will focus our resources on building our pipeline. As for the project in Inner Mongolia, we plan to fund it through the sale of our land assets there.

Q: With the addition of an OTC sales team as well as a new sales manager, Jinzhong Han, and the Beijing and Mongolian facilities coming online soon, are there plans to increase sales distribution of foreign drugs, acting as a broker? If so, are there plans to further leverage your sales force to sell third-party medical devices?

A: After we complete the construction in Beijing, we will focus on two things: first, to establish and improve our sales platform to Beijing hospitals. With a new and modern storage warehouse, we will be well-positioned for this large market, but it will still take time to build relationships and grow our reputation in the new field. Second, we will continue to strengthen our pharmaceutical offerings, focusing on drugs for which we can obtain patent protection or exclusive rights. We believe as the industry evolves and matures, we will have to build our proprietary drug pipeline to stay competitive. On this front, we will actively seek new opportunities, including collaboration with foreign companies trying to expand in China and local companies with limited distribution, as well as in-licensing promising candidates or products.

Q. Please discuss your international sales plans for self-branded drugs.

A: That is in our growth plan as well, although it is more complicated as those drugs will need regulatory approval from equivalent foreign agencies. Our new manufacturing facility in the new corporate building is designed to comply with U.S. and European regulatory standards, so we will have the capability to manufacture and sell drugs internationally if we overcome the regulatory hurdle.

Q: When does Lotus expect to be uplisted to a senior exchange?

A: We are still working with a senior exchange for an uplisting. However, probably due to the recent shakeout in the Chinese small-cap sector, the senior exchange is taking more time to scrutinize applications these days. We have not yet received guidance from the senior exchange on the timeline.

Q: Is there any plan to switch to a Big 4 or Big 6 accounting firm in the near future?

A: We have no immediate plan to upgrade our auditor. As a small company with limited resources, we believe our current auditor, Friedman, meets our needs at this time. We understand the potential positive impact of an upgrade on investor confidence, but on the other hand, an upgrade will not change our fundamentals. If we continue to grow and someday our current auditor no longer meets our needs, we will make a change.

Additional Information

Dr. Shen presented on behalf of Lotus on April 20, 2011 at the RedChip Small-Cap Equities Virtual Conference. The full presentation is available for viewing here. For more information on Lotus Pharmaceuticals, please visit

Saturday, April 23, 2011

The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets

A do-it-yourself guide to investing like the renowned Harvard and Yale endowments.

The Ivy Portfolio shows step-by-step how to track and mimic the investment strategies of the highly successful Harvard and Yale endowments. Using the endowment Policy Portfolios as a guide, the authors illustrate how an investor can develop a strategic asset allocation using an ETF-based investment approach.

The Ivy Portfolio also reveals a novel method for investors to reduce their risk through a tactical asset allocation strategy to protect them from bear markets. The book will also showcase a method to follow the smart money and piggyback the top hedge funds and their stock-picking abilities. With readable, straightforward advice, The Ivy Portfolio will show investors exactly how this can be accomplished—and allow them to achieve an unparalleled level of investment success in the process.

With all of the uncertainty in the markets today, The Ivy Portfolio helps the reader answer the most often asked question in investing today - "What do I do"?

Thursday, April 21, 2011

Nasdaq Seeks Tougher Rules on RTOs

Article by Scott Eden on The Street

China Security & Surveillance (CSR) Technology Enters into Merger Agreement with Rightmark Holdings Limited and Rightmark Merger Sub Limited

Under normal circumstances the deal has materialized.

Article Seeking Alpha "US-listed China Stocks Vulnerable to Management Buy-Outs"

SHENZHEN, China, April 20, 2011 /PRNewswire-Asia/ -- China Security & Surveillance Technology, Inc. ("CSST" or the "Company") (NYSE:CSR - News), a leading integrated surveillance and safety solutions provider in the P.R.C., today announced that it has entered into a definitive agreement and plan of merger with Rightmark Holdings Limited ("Parent"), a British Virgin Islands company wholly owned indirectly by Mr. Guoshen Tu, and Rightmark Merger Sub Limited ("Merger Sub"), a Delaware corporation wholly owned by Parent. Mr. Guoshen Tu is the Company's Chief Executive Officer and the Chairman of the Company's Board of Directors and beneficially owns approximately 20.9% of the Company's outstanding shares of common stock (the "Company Common Stock").

Under the terms of the merger agreement, each share of the Company Common Stock issued and outstanding immediately prior to the effective time of the merger will be converted into the right to receive $6.50 in cash without interest, except for (i) shares in respect of which appraisal rights have been properly exercised under Delaware law, and (ii) shares owned by Parent and Merger Sub (including shares to be contributed to Parent by Mr. Guoshen Tu and certain other senior members of the management (collectively, the "Rollover Investors") pursuant to a rollover agreement between Parent and the Rollover Investors (the "Rollover Agreement") immediately prior to the effective time of the merger), which will be cancelled without receiving any consideration. The offer represents a 58.5% premium over the closing price as quoted by Bloomberg L.P. on March 7, 2011, the last trading day prior to the Company's announcement on March 8, 2011 that it had received a "going private" proposal, and a 30.3% premium over the 90-day volume weighted average price as quoted by Bloomberg L.P. as of the same date, on March 7, 2011.

Parent has secured debt facility from China Development Bank Corporation Hong Kong Branch to finance the transactions contemplated by the merger agreement. The Company's Board of Directors, acting upon the unanimous recommendation of the Special Committee formed by the Board of Directors, approved the merger agreement and resolved to recommend that the Company's stockholders vote to adopt the merger agreement. The Special Committee, which is composed solely of independent directors unrelated to any of Parent, Merger Sub or any of the management members of the Company, negotiated the terms of the merger agreement.

The merger contemplated by the merger agreement, which is currently expected to close before the end of the third quarter 2011, is subject to customary closing conditions, including, but not limited to, (i) adoption of the merger agreement by the Company' stockholders, (ii) the absence of any order or injunction prohibiting the consummation of the merger and (iii) truth and correctness of each party's representations and warranties at closing. The merger agreement may be terminated under certain circumstances, including, among others, termination by mutual agreement of the parties, termination by either party if the merger is not consummated on or before April 20, 2012 and termination by the Company at any time for any reason on or prior to May 4, 2011, as set forth in the merger agreement. The Company will call a meeting of its stockholders for the purpose of voting on the adoption of the merger agreement as soon as practicable. If completed, the merger will, under laws of the state of Delaware, result in the Company becoming a privately held company and the Company Common Stock would no longer be listed on the New York Stock Exchange or Nasdaq Dubai.

Shearman & Sterling LLP is serving as U.S. legal advisor to the Special Committee. Pillsbury Winthrop Shaw Pittman LLP is serving as U.S. legal advisor to the Company. Bank of America Merrill Lynch is serving as financial advisor to Mr. Guoshen Tu. Skadden, Arps, Slate, Meagher & Flom LLP is serving as U.S. legal advisor to Mr. Guoshen Tu. White & Case is serving as Hong Kong legal advisor and Walkers is serving as BVI legal advisor to China Development Bank Corporation Hong Kong Branch.

Additional Information about the Transaction

The Company will furnish to the Securities and Exchange Commission (the "SEC") a current report on Form 8-K regarding the transaction, which will include the merger agreement and related documents. All parties desiring details regarding the transaction are urged to review these documents, which are available at the SEC's website (

In connection with the proposed merger, the Company will prepare and mail a proxy statement to its stockholders. In addition, certain participants in the proposed transaction will prepare and mail to the Company's stockholders a Schedule 13E-3 transaction statement. These documents will be filed with or furnished to the SEC. INVESTORS AND STOCKHOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THESE MATERIALS AND OTHER MATERIALS FILED WITH OR FURNISHED TO THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT RIGHTMARK, THE COMPANY, THE PROPOSED MERGER, THE PERSONS SOLICITING PROXIES IN CONNECTION WITH THE PROPOSED MERGER ON BEHALF OF THE COMPANY AND THE INTERESTS OF THOSE PERSONS IN THE PROPOSED MERGER AND RELATED MATTERS. In addition to receiving the proxy statement and Schedule 13E-3 transaction statement by mail, stockholders also will be able to obtain these documents, as well as other filings containing information about the Company, the proposed merger and related matters, without charge, from the SEC's website ( or at the SEC's public reference room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. In addition, these documents can be obtained, without charge, by contacting the Company at 13/F, Shenzhen Special Zone Press Tower, Shennan Road, Futian District, Shenzhen, People's Republic of China, 518034, telephone: (86) 755-83510888.

The Company and certain of its directors, executive officers and other members of management and employees may, under SEC rules, be deemed to be "participants" in the solicitation of proxies from our stockholders with respect to the proposed merger. Information regarding the persons who may be considered "participants" in the solicitation of proxies will be set forth in the proxy statement and Schedule 13E-3 transaction statement relating to the proposed merger when it is filed with the SEC. Additional information regarding the interests of such potential participants will be included in the proxy statement and Schedule 13E-3 transaction statement and the other relevant documents filed with the SEC when they become available.

This announcement is neither a solicitation of a proxy, an offer to purchase nor a solicitation of an offer to sell any securities and it is not a substitute for any proxy statement or other filings that may be made with the SEC should the proposed merger go forward.

Peak Fish Opportunities

Something totally else then China, although China is becoming a major player in aquaculture.

Article Seeking Alpha

Wednesday, April 20, 2011

China Reverse Mergers Continue Wild Ride

Article by Scott Eden on The Street

Copper Prices, ETFs Still Have Plenty of Upside Potential

Article Seeking Alpha

A Chinese company that can profit from higher copper prices is Jiangxi Copper. Jiangxi Copper’s FY2010 net profit amounted to Rmb 4,988 million, up by 109% year-on-year, on the back of strong copper prices as well as strong volume growth.

Tuesday, April 19, 2011

You can follow me on Twitter!!!

For all OTC/RTO junkies and other (high risk) investors who like to be informed about Chinese stocks listed in the U.S. you can follow me on Twitter.

Follow chinabooming on Twitter

My 10 Amigos For The Next 12 Months

I follow the InvestorHub China Growth Stocks forum. I don't post there because I don't want to pay for a forum. Despite the fact that I don't participate I want to contribute my 10 Amigos for the next 12 months.

American Lorain (ALN)
SkyPeople Fruit Juice (SPU)
New Energy Systems (NEWN)
Ossen Innovation (OSN)
Man Shing Agricultural Hld. (MSAH)
China Botanic Pharmaceutical (CBP)
Rodobo International (RDBO)
China Green Material (CAGM)
China Marine Food (CMFO)
China TechFaith Wireless (CNTF)

We will see if these buddies are going to perform accordingly.

Star UK fund manager Anthony Bolton and colleagues at Fidelity International are predicting a pick-up in Chinese domestic consumption

Article Asian Investor

Monday, April 18, 2011

Emerald Dairy (EMDY) Reports Record 2010 Financial Results

10-K filing

Revenues Increase 24% to $55 million, Adjusted EPS of $0.30
Customer base grows to 6,500 retail sales points in 20 Provinces in China
Cash from Operations was $11.9 million
2011 Guidance Adjustments: Management expects revenue to grow approximately 27% to $70.0 million, adjusted net income to grow approximately 30% to $12.9 million

Buy on Weakness

Shell Shock: Chinese Demand Reshapes U.S. Pecan Business

Article Wall Street Journal

Nestlé Expands in China

Nestlé SA said today it has acquired a 60% stake in Chinese food maker Yinlu Foods Group Co., expanding the Swiss company's instant-food offerings in a key growth market to help compensate for more sluggish sales in developed countries.

Family-owned Yinlu is a well-established brand in China and a major distributor of ready-to-drink peanut milk and instant canned rice porridge. The deal extends cooperation between the two companies, as Yinlu is a co-producer of Nestlé's Nescafé coffee in China.

M&A activity in the food sector could lead to renewed interest in US-listed China food stocks, such as American Lorain.

Sunday, April 17, 2011

The Chinese Dream

Editorial Reviews Super!


"In a mere two decades China has developed the world's largest middle class. Helen Wang tells that story - and her own - in this wonderfully informative and readable book." --Joseph Nye, Distinguished Service Professor, Harvard University, the author of The Future of Power.

“… the most insightful voice that accurately captures the China of today – its promise and peril – … have a sense of the country’s past, but an equally vibrant vision for its future.“ - Asia Time Online “The growth of China’s middle class rivals the growth of China’s overall economy as a phenomenon with huge implications for the entire world. Whether China will become a more liberal and democratic society, … whether it will develop a spiritual power to match its material influence — these and other questions are Helen Wang’s topic in this fascinating book. It rings true to what I have seen in China and suggests new possibilities.” --James Fallows, National Correspondent of The Atlantic, the author of Postcards from Tomorrow Square: Reports from China.

"The Chinese Dream offers a fascinating look at one of the most dynamic forces shaping our world today. ... A truly valuable read ..." --Gady Epstein, Beijing Bureau Chief, Forbes

"... An unusual book, very readable and full of insight." --John Quelch, Professor at Harvard Business School and former Dean of London Business School

"Helen Wang takes us through the world of China's middle class with riveting personal stories,... A must-read..." --Shaun Rein, Founder and Managing Director of China Market Research Group (CMR)

“The Chinese Dream tells one of the most important stories of our time – the rise of the world’s largest middle class. Helen Wang enlightens us with the possibility of ‘unity in diversity’. A comprehensive, and yet easy to read book about modern China.”- Ken Wilcox, Chief Executive Officer, Silicon Valley Bank
In The Chinese Dream, a groundbreaking book about the rising middle class in China, Forbes columnist, consultant, and China expert Helen Wang challenges us to recognize that some of our fears about China are grossly misplaced. As a result of China's new capitalist paradigm, a burgeoning middle class-calculated to reach 800 million within the next fifteen years-is jumping aboard the consumerism train and riding it for all it's worth-a reality that may provide the answer to America's economic woes. And with China's increasing urbanization and top-down governmental approach, it now faces increasing energy, environmental, and health problems-problems that the U.S. can help solve. Through timely interviews, personal stories, and a historical perspective, China-born Wang takes us into the world of the Chinese entrepreneurial middle class to show how a growing global mindset and the realization of unity in diversity may ultimately provide the way to creating a saner, safer world for all.
  • Deconstructs the myths about China as a superpower and global manufacturing power
  • Takes us into the world of the driven middle class and shows how the not-so-private sector operates
  • Provides a historical perspective on China and examines the possibility of democracy in China's future
  • Shows how a mindset that embraces the idea of unity in diversity could help solve China and America's growing energy, health, and environmental problems
Through this eye-opening book, Wang widens our understanding of China today and shows how this new class of upwardly mobile young people, who have modern ambitions and a growing global consciousness, are beginning to drive China toward a new and different future.

To gain a clear view of the impact of this new middle class, Wang provides us with interviews of executives of foreign-owned firms, connected Communist party members, rural migrants who are seeing their dreams of a better life come to fruition, and young entrepreneurs who are becoming increasingly westernized, consuming as fast as the money pours in. She also provides us with a careful analysis of the social and political forces at work in society, as she takes us on a journey to many places in China that reflect her own life-changing experiences.

Investing in BRIC Countries: Evaluating Risk and Governance in Brazil, Russia, India, and China

Investing in BRIC Countries: Evaluating Risk and Governance in Brazil, Russia, India, and China

The world's largest and fastest-growing emerging markets are those of the BRIC nations'Brazil, Russia, India, and China. Combined, these countries house more than 40 percent of the world's population, and their respective GDPs are growing at an impressive rate.

This economic success comes partly from a trend toward good corporate governance, a concept virtually unheard of in these four nations just a decade ago. Still, the BRICs have a long way to go. Corruption, doubledealings, and other conflicts of interest are regular business practices for far too many companies. Although investing in BRIC nations can be wildly profitable, you must familiarize yourself with the realities of their corporate governance to avoid catastrophe.

With Investing in BRIC Countries, you are equipped with the best available tool for detecting the signs of poor governance. Edited by Standard & Poor's� equity research and governance group, it details the group's highly successful approach to analyzing risks in emerging economies.

With case studies illustrating the effectiveness of corporate governance scrutiny, Investing in BRIC Countries examines the economic structure and governance status of each BRIC nation'and then explains how to:
Detect the malevolent influences of a powerful minority of shareholders
Protect yourself from misleading or false audits and risk assessments
Recognize regulatory weaknesses with regards to shareholder rights
Distinguish effective boards of directors from weak or corrupt ones

As the financial crises in Mexico, Russia, and Asia during the 1990s prove, corporate governance is the pivot on which an emerging market's success or failure hinges. Before entering one or more BRIC markets, perform the due diligence they require.

Investing in BRIC Countries is the best tool available for mitigating your exposure to risky deals and other problems that can arise when dealing with international companies.

Reverse Mergers — Pushers May Be The Problem

Article on Forbes Blog

Saturday, April 16, 2011

Expert David Feldman on Recent Developments in China RTO Space

Article Don't Trash Our Sector...Please

I agree with the author that reverse mergers are not the one that caused the problem in the China space.

In my opinion regulators, investment banks/boutiques, promotors, lawyers and others involved have the task and the obligation to do due diligence to try to prevent nasty failures (fraud) in the future.

Friday, April 15, 2011

Bad IPOs not our fault, say advisers. Professional advisers blame mainland firms

Article South China Morning Post

It's about US-listed China stocks!

SkyPeople: Strong Potential for Fruitful Returns

Article from China Economic Review on Seeking Alpha

I am also positive about SkyPeople, so it is always nice to read that some other investors/experts feel the same.

Rising disposable income will lead to a healthier lifestyle, so SkyPeople Fruit Juice (SPU) is a company that really can benefit from this trend.

American Lorain (ALN), Nice Entry Point at These Levels around $2

Research Joy Wang, CFA - Senior China Analyst Rodman&Renshaw

Article Seeking Alpha - The Long Case for American Lorain

Interesting article about Agriculture 2.0 San Francisco

Article The Reformed Broker

Pimco Is ‘Large Overweight’ on China, Predicts Earnings Growth in Region

Article Bloomberg April 13

China's economy expands 9.7% in Q1

China's economy expanded 9.7 percent in the first quarter of 2011 from a year earlier, and 2.1 percent from the previous quarter to 9,631.1 billion yuan (US$1,459.3 billion), the National Bureau of Statistics (NBS) said Friday.

"The national economy has a good beginning given the steady and relatively fast growth," said Sheng Laiyun, spokesman of the NBS.

Consumer prices rose 5.4 percent in March from a year ago, a 32-month high, said the NBS. The country aims to hold inflation at around 4 percent for the full year.

Retail sales, which measure consumer spending in China, rose 16.3 percent year on year in the first quarter, compared to 15.8 percent during the first two months.

The State Council, or China's Cabinet, has pledged to continue the country's prudent monetary policy to rein in soaring prices.

"Judging from the inflation situation in the first quarter, we are still under great pressure of price hikes," said Premier Wen Jiabao at an executive meeting of the cabinet on Wednesday, adding, "We should never lower our guard."

Foreign trade and investment, two key drivers of the country's economy, both accelerated in the first quarter.

The foreign trade volume surged 29.5 percent to US$800.3 billion, with a trade deficit of US$1 billion in the first quarter.

Urban fixed asset investment rose 25 percent to 3.9465 trillion yuan, with investment in the property sector rising 34.1 percent year on year to 884.6 billion yuan, according to the NBS.

China has set its GDP target for 2011 at 8 percent.

Wednesday, April 13, 2011

China Green Material Technologies (CAGM) FY 2010 Results

10-K (FY 2010 results)




Years Ended
December 31,
Cost of Goods Sold
Gross Profit
Operating Expenses
Selling expenses
General and administrative expenses
Stock based compensation
Total Operating Expenses
Income From Operations
Other Income (Expenses)
Interest income
Interest expense
Net rental (expense)/income
Impairment of investment
Loss on fixed assets disposal and intangible assets written off
Other (expense) income, net
Total Other Expenses
Income Before Income Taxes
Provision for Income Taxes
Net Income
Foreign Currency Translation Adjustment
Comprehensive Income
Net Income Per Common Share -Basic and Diluted
Weight Common Shares Outstanding -Basic and Diluted

Changes in internal controls

During the fourth quarter of 2010 we implemented certain improvements in our Company’s internal control over financial reporting. These improvements were in response to the conclusion by our Certifying Officers that, as of June 30 and September 30, 2010, there existed a material weakness in respect of our internal control over financial reporting, specifically in our control over the adoption of ASC 815-15, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock” which the FASB finalized in June 2008 and which became effective for fiscal years beginning after December 15, 2008. As in more detail in our Form 10-Q/A for June 30, 2010 and September 30, 2010, each of which was filed with the SEC on March 23, 2011, in response to comments raised by the SEC Staff, we determined that an error was contained in the initial filing of the reports on Form 10-Q as of and for the quarterly periods ended June 30 and September 30, 2010. Such error related to the accounting for certain warrants issued during April 2010 and July 2010 and our failure to properly apply the accounting principles set forth in ASC 815-15 with respect to such warrants. Based on the impact of the aforementioned accounting error, we determined to restate our consolidated financial statements as of June 30, 2010 and September 30, 2010. As a result of this material weakness, our CEO and CFO concluded that, as of such date, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, or that such information is accumulated and communicated to the Company’s management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

We believe we have remediated the material weakness identified above. Because the material weakness was related to a lack of sufficient technical accounting expertise and knowledge of accepted accounting principles in the United States of America (“U.S. GAAP”) that are relevant to the Company’s financial reporting requirements, we believe our addition of an employee within our accounting department has helped to remediate this material weakness. This employee, who has 14 years of accounting experience, was hired during 2010 and has been assigned the task (among others) of helping to establish and carry out internal audit procedures and assisting with certain other accounting and related finance matters. Since August 2010, we also have conducted several internal training sessions for various members of our accounting staff relating to various subjects including understanding and application of US GAAP and communication skills such as English-language report writing. We believe that the hiring of an additional accounting department employee will permit our senior financial management team, led by our CFO, to increase its focus on the implementation of new accounting pronouncements such as ASC 815-15, and on our compliance with U.S. GAAP generally, and enhance our ability to properly account and report on complex material or non-routine transactions. In addition, we believe our greater emphasis on the training of our internal accounting staff and our new internal audit procedures will also improve the effectiveness and reliability of our internal control over financial reporting.

Although the management of our Company, including the Chief Executive Officer and the Chief Financial Officer, believes that our disclosure controls and internal controls currently provide reasonable assurance that our desired control objectives have been met, management does not expect that our disclosure controls or internal controls will necessarily prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Positive developments in this company. If the cleansing in the US-listed China space is done, we are going to hear and see more from this company.