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 Tracking 1268 U.S. listed China Stocks and Counting...
 Tracking 3159 U.S. Stocks and Counting...
Created: 01-Jan-2008

Extra Insight into some of the more controversial issues surrounding China Companies

  • Thursday, November 20, 2014, 09:30 AMmore... 
    Advanced Battery (PINK:ABAT) announced the company and Mr. Zhiguo Fu, Chairman and CEO of Advanced Battery Technologies Inc. plan to buy back up to 5 million ABAT common shares over the next 12 months.
  • Thursday, November 20, 2014, 09:30 AMmore... 
    Gigamedia Limited (NASDAQ:GIGM) announced that its CEO continued to purchase a total of 131,938 shares of the company’s stock at an average price of $1.03 during the period between October 28, 2014 and October 31, 2014.
     
  • Wednesday, November 19, 2014, 09:30 AM 
    Ikang Healthcare (NASDAQ:KANG) announced that it acquired three medical centers in Shenyang that are franchised from Ciming Checkup Group.
  • Wednesday, November 19, 2014, 09:30 AMmore... 
    Trina Solar Limit (NYSE:TSL) announced that it has entered into an agreement for the design, build and operation and maintenance of the 10 MW Shamsuna Solar Project in Aqaba, Jordan with Shamsuna Power Company.
  • Wednesday, November 19, 2014, 09:30 AMmore... 
    GeoBargain on the radar Innovative Food H (PINK:IVFH) reported Q3 results, with strong top line growth but a non-gaap loss of $0.02 vs EPS of $0.06. We will continue to monitor the contribution from a recent acquisition of Fresh Diet; management stated “the transaction is expected to be accretive to the Company's earnings beginning in fiscal year 2015”.
  • Tuesday, November 18, 2014, 09:30 AMmore... 
    Jinkosolar Holdin (NYSE:JKS) announced that it closed the private equity investment led by China Development Bank International and the Macquarie Greater China Infrastructure Fund, of an aggregate amount of US$225 million in the Company's downstream solar power project business.
  • Tuesday, November 18, 2014, 09:30 AMmore... 
    Canadian Solar In (NASDAQ:CSIQ) announced that its modules will power a series of projects in Georgia totaling 5.1 MW with Atlanta-based solar developer and Engineering, Procurement and Construction ("EPC") provider SolAmerica Energy, LLC.
  • Tuesday, November 18, 2014, 09:30 AM 
    China Ceramics Co (NASDAQ:CCCL) received NASDAQ notification of non-compliance with minimum bid price rule.
  • Monday, November 17, 2014, 09:30 AMmore... 
    China Information (NASDAQ:CNIT) announced it has signed a Letter of Intent with an unrelated party to sell the Company's Fuyong Industrial Park for approximately US$61.2 million. In addition to working capital, proceeds from the sale will be used to fund a US$10.0 million share repurchase program and pay down short-term bank loans.
  • Monday, November 17, 2014, 09:30 AM 
    Sky-Mobi Limited (NASDAQ:MOBI) reported sequentially down earnings Q3 2014 results, and CFO resigned.
  • Friday, November 14, 2014, 09:30 AMmore... 
    GeoBargain Ocean Bio-Chem (NASDAQ:OBCI) reported Q3 2014 results: sales of $10.4 million vs $10.4 million in the prior year, EPS of $0.10 vs $0.07. Bullish commentary regarding growth in 2015 based on new product launches. 
  • Friday, November 14, 2014, 09:30 AMmore... 
    GeoBargain on the radar Unilens Vision In (PINK:UVIC) reported Q1 2015 results: sales of $1.63 million vs $1.57 million in the prior year; EPS of $0.15 vs $0.09 in the prior year.
  • Thursday, November 13, 2014, 02:39 PMmore... 
    Pacific Health Ca (PINK:PFHO): We mentioned in the morning that the stock was down due to the loss of significant customer, however, we think it was overdone. Here is our update for this issue. 
  • Thursday, November 13, 2014, 09:30 AMmore... 
    GeoBargain on the radar Allied Motion Tec (NASDAQ:AMOT) reported record Q3 2014 results: revenues was $65.3 million vs $24.9 million in the prior year period, a 162% increase; EPS of $0.45 vs $0.09 in the prior year, a 400% increase.
     
  • Thursday, November 13, 2014, 09:30 AMmore... 
    GeoBargain on the radar and Tier One Pink Pacific Health Ca (PINK:PFHO) reported Q3 2014 results: revenues of $2.7 million vs $1.7 million in the prior year; EPS of $0.69 vs $0.42 in the prior year. Need to determine the impact of the loss of significant customer.  We will call management to try and assess the situation. 
     
     
  • Tuesday, November 11, 2014, 09:30 AMmore... 
    Hong Kong Televis (NASDAQ:HKTV) ($11.10, previous symbol: CTEL) – The company is engaged in multimedia production and contents distribution, and other multimedia related activities in Hong Kong. The company produces dramas, variety and infotainment, and purchased content programs. The stock started to break out at the end of October,  increasing 43.8%  from $7.72 on 10/31/2014 to $11.10 on 11/11/2014. On 11/03/2014, the company issued a 6K filing stating it entered into content distribution arrangements with third parties for the distribution of its Cantonese dramas and infotainment and variety programs. However, the company didn’t disclose  which companies were  parties to this agreement. The company issued another 6K on 11/06/2014 disclosing that it entered into the license agreement with Shenzhen Tencent Computer Systems Co., Ltd (HKG: 0700), one of the biggest internet companies in China, regarding the grant of the exclusive right to distribute its Cantonese dramas through Tencent’s Internet Video Platform in the People’s Republic of China. We will continue to track the story. 
  • Tuesday, November 11, 2014, 09:30 AM 
    China Finance Onl (NASDAQ:JRJC) announced new partnership with Great Wall Securities, one of the oldest nationwide securities firm in China. 
  • Tuesday, November 11, 2014, 09:30 AMmore... 
    Insys Therapeutic (NASDAQ:INSY) reported Q3 2014 results; reported Q3 EPS of $0.63, $0.34 better than the analyst estimate of $0.29. Revenue for the quarter came in at $58.3 million versus the consensus estimate of $57.1 million.  See our bullish thesis on INSY published on 8/11/2014. 
  • Monday, November 10, 2014, 09:30 AMmore... 
    China Green Agric (NYSE:CGA): the company continues to stage events, only taking one investor’s questions during its earnings call this morning. The one investor allowed to ask questions on the CGA call pleaded for more transparency. Then, the call ended.  CGA reported Q1 2015 results; Reported Q1 2015 EPS of $0.25 vs $0.35 in the prior year.  Lowered fiscal 2015 EPS guidance to $0.74 to $1.00 vs previous guidance of $0.80 to $1.08.
  • Friday, November 7, 2014, 09:30 AMmore... 
    500.com Limited A (NYSE:WBAI): Yesterday, Muddy Waters tweeted that WBAI director Mr. Qi Li had sold the company’s shares, unbeknownst to the public, using the “pseudonyms” Lionel Rim and John Richard. The tweet includes a copy of a Form 144. This morning, WBAI issued a baffling press release that said although the director did in fact sell the shares, “Lionel Rim” and “John Richard” are both limited liability companies incorporated by said director, not pseudonyms. We believe these to be legitimate red flags that warrant further investigation. 
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ChinaResearch 07-Sep-2011 05:04 AM
Post Type: Public Public
CMED (#11844) In Response to original message: #11542 posted by mbgizmo on 10-Aug-2011 11:03 AM

Investors should use extreme caution when investing in Chinese companies listed in North America. From the information gathered and I believe CMED is another Chinese fraud which raised foreign capital by selling a growth China story. The capital is used to grossly overpay for acquisitions from oblique, often directly related counter party.

1) The due diligence investigation started from the comparison of SAIC vs. SEC reporting. As can see from below table, there is 300mm difference between their local & SEC reporting. I can’t tell why this is such a difference, but the main issues are mainly in 2007 and 2008 while they launched their “high profitable” FISH business.

Company Level (RMB)

Revenue

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

Total Difference

CMED reported

495,580,000

794,622,000

1,112,122,000

795,978,000

787,680,000

SAIC revenue

301,145,200

789,775,884

833,725,200

1,017,073,600

714,080,000

Difference

(194,434,800)

(4,846,116)

(278,396,800)

221,095,600

(73,600,000)

(330,182,116)

Breakdown

GP

-

21,841,300.00

123,323,200.00

394,060,000.00

404,550,000.00

YDME

301,145,200.00

740,444,084.04

690,089,900.00

605,720,000.00

309,530,000.00

BBE

-

27,490,500.00

20,312,100.00

17,293,600.00

NA

GP-Only

SAIC

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

Total

Revenue

-

21,841,300

123,323,200

394,060,000

404,550,000

943,774,500

SEC

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

FISH (GP)

0

98,074,000

284,482,000

393,505,000

462,424,000

1,238,485,000

Difference

0

(76,232,700)

(161,158,800)

555,000

(57,874,000)

(294,710,500)

YMDE & BBE

SAIC

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

Total

Revenue

301,145,200

767,934,584

710,402,000

623,013,600

309,530,000

2,712,025,384

SEC

12/31/2006

12/31/2007

12/31/2008

12/31/2009

12/31/2010

HIFU/ECLIA

495,580,000

696,548,000

827,640,000

402,473,000

325,256,000

2,747,497,000

Difference

(194,434,800)

71,386,584

(117,238,000)

220,540,600

(15,726,000)

(35,471,616)

2) History of Related Party Transactions: like other Chinese fraud names, CMED engaged a bunch of unclear and questionable acquisitions. These activities raise significant concerns about Management motivations.

  1. Bought original ECLIA business (2004) from the chairman for $30.2mm
  2. Bought main building from chairman for $7.8mm
  3. Sold the headline business, HIFU, to chairman for $53.5mm, received over 2.5 years
  4. Bought BBE-Ekon indirectly from Yimin, owned by ex-assistant to chairman.
  5. Bought FISH (2/07) and SPR (12/08) business from CytoTrend
    1. Chen Zhong, chief scientist post FISH acquisition files many patent applications on behalf of Cytotrend/CMED some related to SPR, before SPR is bought but after he is CMED employee. When SPR deal announced his tie to them or even potential conflict not disclosed.

a) BBE Acquisition:- CMEDannounced on 11/08/2007 that it purchased entire equity interest in Beijing Bio-Ekon Biotechnology Co., Ltd, a local Chinese firm, for $28.8mm. When I checked the SAIC filling for BBE, the local government filing shows that the entire consideration was roughly $7.5mm. So question is where did $21mm go?

Sep 2006 to Mar 13 2007 - An entity called Yimin buys up lots of individual Ekon holders on private deals. It pays RMB 49mm. Yimin is controlled by Chen Shu Jun, a 30 year old former assistant to CMED’s CEO Wu Xiaodong. Its pre-acquisition assets are comprised of a small cash balance and 2 HIFU machines. (Mr. Wu even issued a letter to confirm Yimin’s purchase of HIFU machines from YDME which used to help the SAIC registration process)

Apr 18 2007 - Clear Castle Investments Limited (BVI) buys East Crest Enterprises Limited (Hong Kong) from READY-MADE INCORPORATIONS LTD (BVI) i.e., East Crest is a clean empty shell.

May 30 2007 – Yimin sells Ekon to East Crest for RMB 53.6mm and records investment income of RMB4.85mm for FY2007.

Nov 26 2007 - CMED announced it will pay $28.8mm for BBE. It does not disclose the seller nor mention East Crest, Clear Castle, nor Yimin. The only asset it says it acquired is BBE.

Jan 08 2008 – CMED completed acquisition. In 20-F for FY ‘07 (Mar 2008) it lists only BBE as a subsidiary and announces that the seller is Finnea International Limited, with no other details. In 20-F for FY ’08 (Mar 2009) it finally also lists Clear Castle and East Crest as subsidiaries above BBE.

Conclusion – CMED “overpaid” $21mm for an asset that traded twice for $7.5mm only six months prior with one of those trades done by a potentially related party.

b) FISH & SPR acquisitions – CMED claimed it bought FISH assets from Supreme Well -> Molecular Diagnostics -> CytoTrend in Feb 2007. Paid $136.8mm plus $40mm earn out. Chen Zhong, a former Utah professor and former co-director of University of Utah cytogenetic lab, small owner and director in CytoTrend in the past and filer of many patents on its behalf, becomes CMED chief scientist. He signs a 5 year employment and non-compete agreement with CMED as a condition of acquisition. From the merger agreement (filed Sep 2007) it is clear CMED is contemplating purchasing the SPR business from CytoTrend as well (does so in Oct 2008, almost two years later). Both FISH and SPR are research businesses with no revenues prior to the acquisition.

There is possible connection between Chen Zhong and Molecular Diagnostics (MD). He used to be the chairman of CytoTrend and owned 1 share, while MD owned the balance. It is hard to believe that he was the face of the company, led the research effort but had no equity at time of sale. In the official bio, or discussion of the acquisitions, there is no mention of his relationship with CytoTrend though he used to own it, was its chairman, and filed patents on its behalf.

July 20 2007 – CMED pays $22mm as good faith money to Supreme Well for SPR.

Aug/Sep 2007 – Chen Zhong files 20 patent applications with either CMED or CytoTrend as assignee (hard to tell original since it may have been changed later). If it is CytoTrend then he is actively working for them even though they are in negotiations on SPR. If it is CMED then CMED already gets many SPR patents, even though they have not yet acquired SPR. What exactly did they acquire if they already have the IP?

Nov 19 2007 – Chen Zhong becomes CTO of CMED.

Oct 07 2008 – CMED announces SPR acquisition for $345mm, paid over one year. There is no mention of Chen Zhong’s connection to CytoTrend. They are asked on the call about the seller and all they say is that they’ve bought FISH from them before. In the press release they estimate SPR potential market size at $700mm and expect $23 to $26mm revenue in FY09. In FY10 they sold $4mm worth. In their latest presentation they estimate the market will be $250mm in five years.

3) Audit committee received a letter in 2009 alleging improper conduct of senior management in connection with asset acquisitions and sales. Contents were not disclosed. Announced after “independent investigation” completed and found no evidence.

4) The funding environment was getting worse this year after the massive Chinese frauds. CMED might find the capital markets closed to them on corporate governance concerns according to Fitch. On their recent analyst call, CMED claimed that they have access to other sources of funds such as commercial banks in China to provide liquidity. Based on my conversion with some analysts spoke to company earlier, the company told them it’s very hard to get the funding in current tighten credit environment locally. I am surprised that they changed their tone so easily only after two months. Also note CMED doesn’t have any valuable fixed assets as collateral.

Recommendations: Strong Sell.

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