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Just another red flag.

Two thirds of audit committee leave....? 

Hello Gary.. Thanks for Chiming in. You are right that the that an SAT / SEC filings match is more significant than an SAIC and SEC match  (at least for now. I will have more input once i pull filings on more tier one IPOs).  But it certainly is a fact that the SAT and SAIC do perform joint inspections using the same annual financial statements when we are dealing with an FIE.  Thus, the SAIC should = SAT, which in fact has been the case for every FIE for which I have both SAIC and SAT filings. Now going forward, i think companies will find ways to circumvent this process..

Maj

Hi Mike,

Sorry for busting in on your conversation with Maj, but I thought I might be able to help...or at least throw in my 2c

It is my understanding that an SAT / SEC filings match is more significant than an SAIC and SEC match.  Ideally I suppose all three should have similar numbers.

I'm told there is a report coming out on them next week (?) that will hopefully provide some light on their SAT / SEC/ SAIC filings.

At $1.63/share cash,  no meaningful debt, 2010 eps of .87/share,  they're (obviously) trading at a huge discount....one of those "is it too good to be true?" stories.

As we all know, usually, it turns out they were really to be true after all...but sometimes, (and rarely), the market gets it wrong- very wrong... temporarily. 

That said....

I think it's entirely possible in the current environment that a company with a very small float  (insiders own 84% of WKBT) and nervous retail folks who bail day after day due to the overall China small cap market conditions right now, that a company like WKBT can really have nothing "wrong" with it- and yet trade at multiples we now see here. 

That said- I believe their numbers, and I have been buying these last few days (including today) and hope to average in more over the next week or so on pullbacks. 

Cheers,

Gary

Mike.. give me a few days and I will try to get around to Weikang Bio-Tech (OOTC:WKBT)...

Whitetiger,

Sorry for taking so long to reply, but I do want to thank you for your detailed response.

FWIW, I found the following which is taken from a post on IHUB, and which I thought was kind of interesting ...

WKBT will use the Proceeds to fund TV and print advertising campaigns for its products, and to open additional stores within its home base of Heilongjiang Province. Following the Offering, the Company’s organic growth plan is fully funded, and acquisition-led expansion will be financed predominately with internally-generated cash flow, along with the issuance of equity and use of local bank debt if necessary.   

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=58756035&txt2find=dan|mcclory 

I wasn`t even aware that they owned any stores, and I do think it sounds encouraging if in fact they do fund any aquisitions primarily with operating cash flow.

I hope the Company`s management provides you with the information you requested regarding their financials.

Also, with regard to SAIC filings, I was wondering if at some point you would be looking into Weikang`s ... I believe you mentioned elsewhere that a FIE`s have to match its SAT & SEC filings?

This is the last of my holdings in this space, at least for the time being, so I`ll will be looking forward to whatever you might find.

Thanks again,

Mike

Mike... Well, I am really no longer the ChinaHybrid Space right now. Major long positions are   Yongye Intl (NASDAQ:YONG) China Techfaith Wireless (NASDAQ:CNTF) Lj Intl (NASDAQ:JADE) Tri-Tech (NASDAQ:TRIT). I have SAIC filings for YONG and TRIT. Partial filings on JADE (missing a few subs that the company will not fricken supply me with the Mandarin names.. can you believe this??)

Weikang Bio-Tech (OOTC:WKBT).. I have not done on-the -ground DD yet, although Zack Buckley did visit them on a recent trip and took a short video. I really hated the last raise and the reasons for it, so I eventually sold. Marketing campaign? there was no need for the raise.. period. They are not near full capacity, claimed a healthy cash position and received a lengthy extension on registered capital requirements. I always wondered why they could not receive committed capital at the inception of the RTO transaction.

also:

• did not notice any guidance in the last release
• wording in the 4th qtr release hints that they may tap capital markets again, especially since they really did not address liquidity needs in the 2010 10K
•  little concerned about internal controls. Check out the bolded statement in the 2010 10K:

Net cash provided by financing activities was $4.35 million for 2010 compared to $2.55 million cash outflow for 2009. The cash inflow in financing activities for 2010 mainly consisted of proceeds of $4.32 million from stock issued in a private placement. The net cash outflow in financing activities for 2009 mainly consisted of payment of $3.81 million for the remaining portion of the acquisition price of Tianfang; net of a repayment of sales receipts of $1.26 million from management previously deposited into a personal bank debit card owned by the Company’s officer mainly for the purpose of convenience on payment collection.

Now I am not saying this is a big deal, as they did disclose this transaction, but i still want to take a look at it.

I have been attempting to have management provide me with some info that will help shed light on financials

I will let you know what I find. I do want to like this company, but i need to assume guilty until proven innocent in this space right now.

I was reading your SA article, "27 Red Flags for Chinese RTO Stock Investors to Look For",

dated 10-19-10 which was just posted on the WKBT Yahoo message board. I noticed that you were

long WKBT at the time, and that the Company was visited last year, too. I was wondering what

your position might be right now in light of a good 10-K, although figures were a little less than

projected. Looks like the market DOESN`T believe them! Any thoughts would be appreciated.

Thanks,

Mike 

Very nice news. Now we need to see if the market will believe them.

Now we know why... preliminary results released today!

Hello,

I think that they may have completed their capital raise.  Maybe without the overhang it will be free to rise. Also, I would imagine that they will increase IR efforts.

Maj

Nice volume today, news pending?

For the fiscal year 2010, Weikang Bio-Technology expects revenue of $55 million, gross profit of $33 million and net profit of $21 million. The Company is also targeting fiscal year 2011 revenue growth to be in the range of 30% to 50% over 2010 revenue. Average gross margin for 2011 is expected to be approximately 60% as the Company's sales of higher margin products increases as a percentage of overall revenue. Revenue growth is supported by the Company's solid pipeline of new therapeutics to be launched in fourth quarter 2010 and the first half of 2011. In addition to a variety of sales and media promotions, Weikang Bio-Technology will be introducing their new therapeutics to a large number of new retailers and distributors at the 64th National Drug Exchange Convention in December.

"We are upbeat about our future growth opportunities as we continue to strengthen our market position by broadening our sales territory and launching new and exciting therapeutics that have a wide market potential. In the fourth quarter of 2010 and the first half of 2011, we intend to launch five new proprietary therapeutics; Sha Bai Shuanghuai, Gouqi Xi Pu, Shouwu Long Life and Lysozyme Buccal and Ha Ge Jiao Lan," commented Dr. Ying Wang, Chairman & CEO of Weikang Bio-Technology Group Co., Inc. "Our new product launches are supported through a variety of marketing efforts including providing sales incentives to our distributors as well as regular media promotions."