(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)
On September 19, 2013, we published our research report on L&L Energy (NASDAQ:LLEN), "Blowing the Whistle on LLEN." On Tuesday September 24, 2013 the National Business Daily ("NBD"), a national financial newspaper in China, published an article regarding our report. In this news piece, NBD reporters concurred with many of the GeoTeam's findings.
We summarized a few of the more important points addressed by NBD:
- The Hong Xing coal washing facility that LLEN claims to own in fact stopped its operations in 2012. This point supports our similar finding and that LLEN significantly misrepresented reported revenues from Hong Xing for its fiscal year ended April 2013.
- Interestingly, the article also pointed out that LLEN does not own Hong Xing. Rather, it is owned by an individual. This concurs with our evidence that LLEN does not own Hong Xing according to officially chopped (sealed) SAIC records.
- NBD stated that ZoneLin was shuttered and confirmed the government website source of our information.
- Confirming our finding, the NBD article also states that the DaPing mine was assigned to Pan County Pannan Coal, not Union Energy.
- Union Energy is approved to consolidate mines in Guizhou province, whereas LLEN is not approved to consolidate mines in Guizhou province.
- NBD found that none of the 5 mines LLEN claims to own in Yunnan and Guizhou provinces are in fact owned by LLEN.
In our opinion, NBD's finding on Hong Xing is a de-listable event on its own.
We applaud the Chinese State Media for its quick action reviewing some of the most important conclusions in our report. We can't help but notice that PRC reporters were able to establish in a couple of days what L&L's so called "Independent Committee" apparently have not verified in the past 5 days. What did NBD reporters do to research our evidence? They simply showed up, asked questions, clicked on government websites, made some calls and gave readers their truly independent findings.
You can find GeoInvesting's translated text from National Business Daily's original article here.
Disclosure: I am short LLEN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.