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Alfred Little

 
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  • China Green Agriculture's Imaginary Fertilizer Production And Vanishing Cash [View article]
    CGA cut to Sell by Crystal Equity Research, the only analyst covering the stock


    http://bit.ly/1yaOG43


    CGA – Change in rating. Our rating of China Green Agriculture is changed to Sell from Buy. Since the collapse of valuations for small-cap, China-based companies, CGA has traded generally downward from a peak stock price in early 2010. Since taking profits during that period, we have been following a strategy of trading the stock on technical indicators in order to accumulate gains that would improve total return on our remaining shares. Our view has changed in recent weeks as we have become concerned the management team has been less than forthcoming regarding the Company’s fundamental performance.


    The Company recently announced investor events in Xian and Beijing. While the announcement provided only a two-week preparation time, we made arrangements for a representative to attend the Beijing event. Indeed, this is the first investor event ever held by a company in our coverage universe where we did not have at least a three-month notice of the date. Our attempts to register for the event were not acknowledged. We are aware of others that attempted to attend the event, but were also unable to register. Indeed, prior to the investor event announcement, we had made numerous attempts to contact the Company by e-mail and telephone. None of our messages were answered. We asked a senior executive of another public China company to contact China Green Agriculture with a reference for Crystal Equity Research and we presented the Company’s legal representation in the U.S. with details of our questions. None of these overtures were acknowledged, despite the U.S. attorney’s assurances that our questions would be answered.


    When we were unable to register for the investor event, we had again contact the Company’s attorney by e-mail and by phone. We received a receipt for the e-mail and our call was answered by the attorney, who then claimed she could not understand the conversation as soon as we identified Crystal Equity Research. Finally, after both investor events were over, we received an e-mail message from China Green Agriculture’s investor relations representative, indicating that it was too late to register for the events. The message provided evidence that all of our messages were more than likely received and that no technical problem existed to prevent China Green Agriculture personnel from answering our questions or giving our agent access to the investor event.


    The sequence of messages as well as the conduct of the U.S. attorney and investor relations representative, have given rise to suspicion that the investor events were staged. We suspect that China Green Agriculture management has deliberately not responded to questions and that they did not intend to allow legitimate analysts to attend the events.


    The appearance of misconduct casts a different light on other corporate actions, namely the significant investment in a marketing program that has required over $100 million dollars in cash investment over the past three years. Granted the number of participating retail store has increased dramatically to over 26,000 at the end of the last fiscal year. Yet the expenditure is significant on a per store basis given costs of signage and displays in China. If the investment leads to higher sales in the long term, then it is easily justified. However, the lack of transparency around the program and the change in accounting treatment now look deceptive. The marketing program is organized in such a way that it could be easily compromised by fraudulent retailers or unethical employees.


    Given that it appears the Company’s legal representation may be complicit in management’s efforts to avoid investor scrutiny, we also have less confidence in the Company’s financial reports. The reclassification of the marketing program assets from PP&E to deferred revenue was overlooked previously as an understandable mistake. Now we have concerns that the auditor could be more a conspirator as well. That casts new doubt on the integrity of the financial reports


    While we had been managing our position in CGA using technical analysis and paid only tangential attention to fundamental developments over the past couple of years, we find unacceptable the apparent lack of respect for legitimate investor inquiry. In our view, it is preferable to exit CGA with a loss than continue to hold a potentially toxic asset in the portfolio. We recommend divesting of this position as after the dividend record date of October 31st has passed. We note that the stock could appreciate in value if the broader market turns more favorably toward small-capitalization companies. Periods of trading strength would be preferable timing for position liquidation.
    Oct 20 10:19 AM | Likes Like |Link to Comment
  • China Green Agriculture's Imaginary Fertilizer Production And Vanishing Cash [View article]
    Only analyst following CGA cuts rating to Sell, says management wouldn't answer her questions or allow her to attend investor days, which she thinks may have been staged:

    http://bit.ly/1yaOG43

    CGA – Change in rating. Our rating of China Green Agriculture is changed to Sell from Buy. Since the collapse of valuations for small-cap, China-based companies, CGA has traded generally downward from a peak stock price in early 2010. Since taking profits during that period, we have been following a strategy of trading the stock on technical indicators in order to accumulate gains that would improve total return on our remaining shares. Our view has changed in recent weeks as we have become concerned the management team has been less than forthcoming regarding the Company’s fundamental performance.

    The Company recently announced investor events in Xian and Beijing. While the announcement provided only a two-week preparation time, we made arrangements for a representative to attend the Beijing event. Indeed, this is the first investor event ever held by a company in our coverage universe where we did not have at least a three-month notice of the date. Our attempts to register for the event were not acknowledged. We are aware of others that attempted to attend the event, but were also unable to register. Indeed, prior to the investor event announcement, we had made numerous attempts to contact the Company by e-mail and telephone. None of our messages were answered. We asked a senior executive of another public China company to contact China Green Agriculture with a reference for Crystal Equity Research and we presented the Company’s legal representation in the U.S. with details of our questions. None of these overtures were acknowledged, despite the U.S. attorney’s assurances that our questions would be answered.

    When we were unable to register for the investor event, we had again contact the Company’s attorney by e-mail and by phone. We received a receipt for the e-mail and our call was answered by the attorney, who then claimed she could not understand the conversation as soon as we identified Crystal Equity Research. Finally, after both investor events were over, we received an e-mail message from China Green Agriculture’s investor relations representative, indicating that it was too late to register for the events. The message provided evidence that all of our messages were more than likely received and that no technical problem existed to prevent China Green Agriculture personnel from answering our questions or giving our agent access to the investor event.

    The sequence of messages as well as the conduct of the U.S. attorney and investor relations representative, have given rise to suspicion that the investor events were staged. We suspect that China Green Agriculture management has deliberately not responded to questions and that they did not intend to allow legitimate analysts to attend the events.

    The appearance of misconduct casts a different light on other corporate actions, namely the significant investment in a marketing program that has required over $100 million dollars in cash investment over the past three years. Granted the number of participating retail store has increased dramatically to over 26,000 at the end of the last fiscal year. Yet the expenditure is significant on a per store basis given costs of signage and displays in China. If the investment leads to higher sales in the long term, then it is easily justified. However, the lack of transparency around the program and the change in accounting treatment now look deceptive. The marketing program is organized in such a way that it could be easily compromised by fraudulent retailers or unethical employees.

    Given that it appears the Company’s legal representation may be complicit in management’s efforts to avoid investor scrutiny, we also have less confidence in the Company’s financial reports. The reclassification of the marketing program assets from PP&E to deferred revenue was overlooked previously as an understandable mistake. Now we have concerns that the auditor could be more a conspirator as well. That casts new doubt on the integrity of the financial reports

    While we had been managing our position in CGA using technical analysis and paid only tangential attention to fundamental developments over the past couple of years, we find unacceptable the apparent lack of respect for legitimate investor inquiry. In our view, it is preferable to exit CGA with a loss than continue to hold a potentially toxic asset in the portfolio. We recommend divesting of this position as after the dividend record date of October 31st has passed. We note that the stock could appreciate in value if the broader market turns more favorably toward small-capitalization companies. Periods of trading strength would be preferable timing for position liquidation.
    Oct 20 10:15 AM | Likes Like |Link to Comment
  • Where Are China Green Agriculture's 26,175 Branded Stores? [View article]
    Piggy - the link Geo provided works just fine, as anyone can see:

    http://bit.ly/1rITckt;query=


    齐红莉:来自商洛的美术设计师

    (人物小档案:齐红莉,籍贯陕西商洛,毕业于西...
    问:你出生在商洛,小学、初中、高中都是在老家...
    齐红莉:对,我从小就在丹江边长大,对那里的一...

    问:现在的城市生活是你小时候想要的吗,哪些是...
    齐红莉:总的来说,还好吧。
    高中的时候语文老师经常跟我们说,山上的草比山...

    问:你从小就喜欢美术,喜欢画画,继而高中毕业...
    齐红莉:哈哈。其实不是那样的原因。我高中的时...

    问:毕业11年,回顾自己走过的路,你有什么感触?
    齐红莉:说实话,我现在经常还在想:如果我当时...
    问:作为一名资深的平面设计人员,你是如何理解...
    齐红莉:资深真的不敢当,我觉得自己离资深平面...

    问:到鼎天集团工作后,那些设计工作让你曾经赶...
    齐红莉:我觉得有难度的工作其实还挺多的。记得...
    2009年3月份,我调到济农这边做平面设计工...
    在自己比较满意的工作里,有当时自己做为美工设...
    Oct 17 01:46 PM | Likes Like |Link to Comment
  • Where Are China Green Agriculture's 26,175 Branded Stores? [View article]
    Transparency? Debra Fiakas, the only analyst who covers the stock, says CGA excluded her from attending the investor days: http://bit.ly/1rfs5h5
    Oct 16 11:19 AM | 5 Likes Like |Link to Comment
  • China Green Agriculture's Imaginary Fertilizer Production And Vanishing Cash [View article]
    Piggy - According to CGA's SEC filings, Tianjuyuan is owned by Gufeng and together they have 8 facilities all located in the same complex (you can see all the facilities in the satellite view of Gufeng in Geo's report.) Similarly Jinong has 2 facilities located in the same complex in Xi'an, also visible in the satellite view in Geo's report.
    Oct 8 10:25 AM | 1 Like Like |Link to Comment
  • China Green Agriculture's Imaginary Fertilizer Production And Vanishing Cash [View article]
    CGA reports in SEC filings it has factories at Jinong (2 facilities in one complex) and Gufeng (8 facilities in one complex). The transcript shows that the guard said that the Jinong factory is the only one in Shanxi province. CGA has never disclosed any other Jinong or Gufeng factories. So I conclude that the investigators filmed the right place.
    Oct 2 04:01 PM | 2 Likes Like |Link to Comment
  • China Green Agriculture's Imaginary Fertilizer Production And Vanishing Cash [View article]
    Good point Waldo - the 8-K shows the Chairman signed an SPA that sets an unspecified future closing date to be determined by both parties. Until a form 4 is filed, assume the Chairman hasn't paid. Even if a form 4 is filed, who knows if he really paid.
    Oct 2 01:24 PM | 2 Likes Like |Link to Comment
  • China Green Agriculture's Imaginary Fertilizer Production And Vanishing Cash [View article]
    KGJI is a decent company. CGA has and always has been a joke.
    Oct 1 10:39 PM | 1 Like Like |Link to Comment
  • FAB Universal's Undisclosed Acquisition Of Beijing Vanpos Telecom [View article]
    Older - Any guess as to how many Media kiosks there really are? 400,000 Beijing membership cardholders, using how many Media kiosks?
    Sep 2 12:01 PM | Likes Like |Link to Comment
  • FAB Universal's Undisclosed Acquisition Of Beijing Vanpos Telecom [View article]
    Until I exposed that FAB had not deployed 3,954 media kiosks in Beijing (which has now been confirmed by FTI), I am certain that nearly every FAB investor was under the impression that "5c" and "5c Intelligent Media Kiosk" and "media kiosk" all meant the same thing. It is pretty clear to anyone who reviews FAB's historical filings. So just how few "media kiosks" are there in Beijing? FAB won't say.
    Aug 29 10:49 AM | Likes Like |Link to Comment
  • FAB Universal's Undisclosed Acquisition Of Beijing Vanpos Telecom [View article]
    I think Ms. Wang could use the recorded interviews of herself in FAB's office, doing FAB's work as director of franchisee sales, to defend the claim that she was never an employee of FAB. She'd make a great whistleblower!
    Aug 18 07:29 PM | Likes Like |Link to Comment
  • FAB Universal's Undisclosed Acquisition Of Beijing Vanpos Telecom [View article]
    First of all, if you have a mandarin/english speaking friend, I would welcome them to check the translation. My team and I go to great lengths to get them right. Yes, my translator has a habit of manually saving his work ever 5 minutes or so, inflating the number of revisions. Earlier this year I hired a translator with a masters degree but his work still requires a true native english speaker to proof and consult to get the proper english sense/meaning of some of the Chinese colloquial or idiomatic phrases. I welcome anyone to challenge my translations. To date, no one has found any material errors in them.

    To answer your concerns regarding the quality of the interviews, the most important point I stress to my investigators is to try to avoid posing leading questions to the "witness." I want these interviews to stand up in court. I want the interviewee's answers to be clear. Of course interviewees cannot be trusted to be honest, hence I like to conduct multiple interviews of different people, with potentially different points of view. Often the results will vary (the number of Beijing media kiosks reported by the couple dozen people interviewed varied from just 30-40 to as many as 1400. But no one said 4,000!) My investigators are also trained to ask the same question, repeatedly, in different ways, during the course of the interview and follow up interview (when possible) to see if the answers match.

    Thank you for your interest in the quality of these reports.
    Aug 18 07:25 PM | Likes Like |Link to Comment
  • FAB Universal's Undisclosed Acquisition Of Beijing Vanpos Telecom [View article]
    I will soon publish my interviews of her, which she can use to defend herself against FAB's unscrupulous charges. I'd be happy to assist her to file a whistleblower complaint to the SEC against her employer.
    Aug 14 11:03 AM | Likes Like |Link to Comment
  • FAB Universal's Undisclosed Acquisition Of Beijing Vanpos Telecom [View article]
    Obviously you have a lot of technical skill analyzing the metadata of the documents. Beyond providing my assurances that all my documents are legitimate and translated as accurately as possible, I can say that:
    1) Translators are non-native English speakers.
    2) They frequently start/stop/save their work as they translate, generative dozens of revisions.
    3) Following translation the document is further reviewed by others, including myself, to further improve the translation for native english speakers to comprehend.
    4) The final versions are then formatted to match each other (font, layout), since they were sometimes prepared by different translators.
    5) They were shared and sometime re-shared with different regulators and with FAB's counsel
    6) The most recent versions were then reassembled together to publish this week.

    The versions the public has today are the most accurate available at this time. If anyone knows a good Chinese translator they are welcome to check them. I'd be more than happy to correct any errors.
    Aug 13 01:55 PM | Likes Like |Link to Comment
  • FAB Universal: Glaring Contradictions In Its 2013 10-K [View article]
    Older is right about the website. But Fabgou.com looks like another fraud. Scroll to the very bottom and try to click the 4 buttons, which supposedly should link to FAB's various ecommerce business license/registrations. The buttons don't work. Compare the function of the same buttons on the JD.com website, that FABgou.com appears to be a clone of: http://www.jd.com
    Jul 28 09:51 AM | 1 Like Like |Link to Comment
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