Thursday, April 26, 2012

SEC Charges Former Morgan Stanley Executive with FCPA Violations and Investment Adviser Fraud

The SEC alleges that Garth R. Peterson, who was a managing director in Morgan Stanley’s real estate investment and fund advisory business, had a personal friendship and secret business relationship with the former Chairman of Yongye Enterprise (Group) Co. – a Chinese state-owned entity with influence over the success of Morgan Stanley’s real estate business in Shanghai. Peterson secretly arranged to have at least $1.8 million paid to himself and the Chinese official that he disguised as finder’s fees that Morgan Stanley’s funds owed to third parties. Peterson also secretly arranged for him, the Chinese official, and an attorney to acquire a valuable Shanghai real estate interest from a Morgan Stanley fund. Peterson was acquiring an interest from the fund but negotiated both sides of the transaction. In exchange for offers and payments from Peterson, the Chinese official helped Peterson and Morgan Stanley obtain business while personally benefitting from some of these same investments. Peterson’s deception, self-dealing, and misappropriation breached the fiduciary duties he owed to Morgan Stanley’s funds as their representative.

SEC News

Tuesday, April 24, 2012

SEC Charges SinoTech Energy Limited and Executives with Lying About Asset Values and Use of IPO Proceeds

SEC News

Buying U.S.-China Stocks At Bargain Prices

Article Seeking Alpha

Monday, April 16, 2012

Changda International Holdings Fiscal 2011 Results


EPS $0.19 per share from $0.33 (2010)
higher cost of sales and higher operating expenses, primarily due to the write off of the old plant and equipment, write off of preoperating expenses pertinent to the new Heze plant and the provision for slow-moving inventory items.

I really think this China stock is legitimate because it has also several Westerners on board. One of them is Mr. Jan Panneman!search/profile/person?personId=1570925632&targetid=profile


Thursday, April 12, 2012

Fraud Report On Shougang Fushan Resources Group Limited (HK0639)

Strong Sell Report From Glaucus Research

Monday, April 9, 2012

Guanwei Recycling Corp Could Be The Next 3 Bagger

Article Seeking Alpha

Sunday, April 8, 2012

My Three Amigos For Eastern!!!!!!!!!!

Great picture from tbirdman on CGS. I agree with him completely.

US-listed China stocks on my favorite list are LPH, ALN and CMFO. Not the most 'sexy' Chinese companies but with sound and legitimate business models.

Friday, April 6, 2012

Insider Trading At Zhongpin Inc

SEC news

Wednesday, April 4, 2012

Deloitte's China Problem Comes To A Head

Article Forbes

Monday, April 2, 2012

Lession / Tutorial 14: CAST Chinacast Education Fraud

Article Renaissance Investor

New Energy Systems Group Reports Fourth Quarter 2011 Financial Results

What worries me is the amount of goodwill on the balance sheet. This year there could be another big impairment, frustrating EPS. Almost the half of Total Assets is Goodwill.............a bad sign!

I still own stocks in this company, but I have to confess that my confidence has reached the breaking point.

Press Release

Mr. Jack Yu, Chairman of New Energy stated, "We had a challenging year in several subsidiaries, including E'Jenie and NewPower which was one of the reasons we decided to divest of those business lines by selling them off last year. The weak of entire market forced other companies in 3C related products industry to seek more profitable products such as mobile power devices. This resulted in a significant increase in the number of competitors for Anytone® products, including a few large competitors with greater scale than Anytone® and several opportunists who counterfeited some of our faster moving products.   We have lost some orders as a result of these conditions, resulting in reduced sales starting near the end of second quarter. We also made a strategic decision to selectively reduce prices of several Anytone® products in order combat some of the counterfeit products."
Mr. Yu continued, "We expect to stabilize margins by introducing new, innovative products that carry higher margins and designed to service the fast-growing smart phone and tablet market in China. In addition, we have started to identify areas within our selling, general and administrative expenses where we can become more efficient.  We are, and will be committed to growing our distribution base by attending international trade shows and the many domestic, electronic trade shows in Hong Kong and China."

For the 12 Months Ended December 31

FY 2011
FY 2010

Net Sales
$51.5 million
$45.6 million

Gross Profit
$11.7 million
$12.9 million

Net Income (Loss) from Continuing Ops
($3.8) million
$5.2 million

Adjusted Net Income from Continuing Ops *
$ 6.5 million
$ 8.8 million

EPS from Continuing Ops (Diluted)

Adjusted EPS from Continuing Ops (Diluted)*

*Adjusted net income and adjusted EPS from continuing operations exclude $0.8 million of non-cash stock-based compensation expenses during twelve months end of December 31, 2011, $2.0 million of amortization expenses and a $7.4 million impairment of goodwill.

Winner Medical (WWIN) Announces Receipt of Non-Binding Going Private Proposal Of $4.30

Press Release

WWIN mentioned in article last year:

Article Seeking Alpha "going private or going dark opportunities and risks for u.s.-listed China stocks

Big Mess At ChinaCast Education (CAST)

8k SEC

As previously disclosed in a Form 8-K dated March 26, 2012, the Company terminated Ron Chan as chief executive officer and effected his resignation as a director. In connection with his termination, the Company actively sought to reach Mr. Chan to conduct an orderly transition of his management functions to interim chief executive officer Derek Feng. This transition was meant to include, among other things, the return of the company seals, business licenses and financial seals of the Company’s Chinese subsidiaries relating to its e-learning and training services business and one of its universities, which items the Company believes are in Mr. Chan’s possession or persons under his direction. Under PRC law, the company seals, financial seals and business licenses are necessary for these Chinese subsidiaries to enter into contracts, conduct banking business, and take official corporate action, including registering the change in management with the relevant authorities in China. Mr. Feng and interim chief financial officer Doug Woodrum made a number of unsuccessful attempts to contact Mr. Chan in connection with his termination to conduct this orderly transition.
On March 30, 2012, Mr. Chan appeared at the Company’s Shanghai office and tried to assert control over the business by refusing to comply with the terms of his termination and resign from his legal representative and other positions with the Company’s Chinese subsidiaries. At the same time, Mr. Feng and Mr. Woodrum, along with the Company’s PRC legal advisors, continued to assert their control over the premises per their authority granted by the Company’s board of directors. Thereafter, Mr. Chan remained on the premises and continued to take steps to obstruct the transition of management.

As a result of Mr. Chan’s actions, the new management of the Company is being frustrated from resuming normal operations in Shanghai. The Company is also in the process of assessing the impact of these actions in Shanghai on the overall business. In addition, the Company is investigating as to whether there were questionable activities involving current and former employees, and if so, whether to pursue relevant civil and criminal legal remedies.

The Company has filed lawsuits against Mr. Chan in the PRC courts. In these lawsuits, the Company is seeking to recover, among other things, the company seals, financial seals, business licenses and accounting books of the Chinese subsidiaries from Mr. Chan, and an order to compel Mr. Chan to effect the change in executive director and legal representative of each of the Company’s Chinese subsidiaries with the local Administration of Industry and Commerce. The Company believes that its legal position is sound. However, if the Company’s efforts to regain control of its assets in China are unsuccessful, there may be a significant material adverse effect on its business, financial condition, results of operations and business prospects. The Company’s current loss of control over its assets in Shanghai, China and its efforts to regain control also are occupying significant management time and resources.

For more on VIE Turmoil read:

SA article -gigamedia-will-survive-current-vie-turmoil

Sunday, April 1, 2012

American Lorain (ALN) Reports 2011 Year-end Financial Results

Press Release

2011 Year End Financial Review

American Lorain Corporation
Selected Financial Statements in USD ($ in 000s)
12 months ended
12 months ended
Cost of Revenues
Gross Profit
Gross Profit Ratio
Income from operations
Earnings before tax
Net income attributable to common stockholders
Diluted earnings per share
Weighted average diluted shares outstanding
  • For the year ended December 31, 2011, the Company reported revenues of $213.2 million, an increase of 15.8% compared to $184.2 million in the prior year.
  • Gross profit increased 7.5% to $45.0 million from $41.9 million in the prior year. Gross margin was 21.1% for the year ended December 31, 2011, compared with 22.7% in full-year 2010, due to increase in raw material prices as well as increased manufacturing costs such as labor and utility.
  • Income from operations for the year was $27.9 million, an increase of 1.4% from $27.5 million reported in the prior year. Operating margin for 2011 was 13.1% compared with 14.9% for the prior year.
  • The Company reported net income for the year ended December 31, 2011, of $19.9 million, or $0.57 per diluted share based on 34.7 million weighted average diluted shares outstanding, compared with net income of $17.8 million, or $0.55 per diluted share based on 32.2 million diluted shares outstanding, in the prior year.
Solid results a little bit less than I expected but in general good. On Monday we will hear more about the strategic plans and the railway contract I guess.