Yuhe Intl (PINK:YUII)

	Recent 52-week high
	30% Earnings Per Share (EPS) growth rate
	10% revenue growth year over year
	Strong balance sheet
	15% minimum return on equity (ROE)
	8% minimum pre-tax margins
	Under 50 million shares outstanding
	High insider ownership
	Limited institutional ownership
	P/E at least 1/2 of EPS growth rate

The GeoTeam® is suspecting that Yuhe Intl (NASDAQ:YUII) may be contemplating a capital raise:

At the last minute, management cancelled its participation in the Rodman conference last week. We were scheduled for a one on one with the company. Early last week, we emailed the investor relations firm to inquire why YUII canceled, but never received a response.  Although not for certain, we may be able to assume that YUII is in a quiet period or saw no reason to attend the conference, as they may have already secured a capital raise deal. Shares have also been weak, despite the company reporting solid 2010 second quarter financial results and publicized claims that its SAIC files match SEC files. Most of the price decline has happened since September 7, 2010.

This reminds of us a similar situation when Skypeople Fruit Juice (NASDAQ:SPU) did not host a question and answer during its 2010 second quarter conference call. Just days after the call, SPU announced a private placement, contradicting its related 10Q which eluded it would not do so at the time.

YUII does have some debt, which could limit financing options. Still, we would consider it a slap in the face to investors if YUII completes a raise anywhere near its current price, which is about 30.0% off its recent highs.  2011 EPS is expected to grow 58.6% to $1.76.  It would be more prudent to allow this growth to play out before joining the ranks of other ChinaHybrid companies that have showed a lack of consideration to shareholder value. On the bright side, YUII had mentioned that it would only use its stock as currency for accretive acquisitions. Issuing EPS guidance would be beneficial if our speculation is validated.  Hopefully, we are overreacting, but the Chinese RTO sector is becoming increasingly difficult to read.