Karl Francis

China Sky's Weight-Loss Patch Has a Questionable Future

CSKI has received all the required approvals from Chinese regulators to sell the Slim Patch in China, its main market. That's what counts, not what the US FDA or the US FTC opines. Somehow, Asensio forgot to mention that.

China Sky Confusion: Management Is Flying in Circles

It's obvious that you are getting frustrated. In spite of your relentless smear attacks, the stock price isn't crashing.

It's revealing that you don't even try to contact the company and ask for clarification of the alleged issues. If others address those issues in the CC and if management tries to provide detailed answers, you qualify those answers as tortuous and report them in an intentionally distorted way. It should be clear that in CC's of Chinese companies, there is always some information loss in translation and misunderstandings occur. It's always advisable to contact management afterwards to check this out before basing arguments on what the interpreter has said.

In your eyes, the company is always at fault. If CSKI changes (and upgrades) to a better known auditor, you call that suspicious, if it doesn't, it's bad too. The current auditor, Moore Stephens, is a well regarded international accounting group with a good presence in China. Why should CSKI switch to another one? Management says that it has chosen Moore Stephens last year after consultation with its international institutional investors. What is bad with that? Management has said that it will stick with this auditor because it has learned that changing the auditor too often invites critique. Management has also explained that it is difficult for a Chinese micro cap to get full auditing services from one of the big four accounting firms. Those firms are more focussed on big companies. Now that CSKI has been able to contract one of this four as a second auditor for help in further enhancing internal auditing and accounting, you are not happy again. It's obvious that if the company can further enhance the credibility of its accounting, you are getting in serious trouble with your short position.

You allege that the company's business is less than reported. Because the company's reported earnings translate into fast growing piles of cash on the company's balance sheet, you insinuate that Moore Stephens has wrongly certified non existing cash. You avoid saying this directly because you know that this could invite lawsuits and that you could be proven wrong easily, leading to another conviction (see asensioexposed.com).

Regarding inventories, management has explained it's just in time inventory policies. Why should the company be obliged to pay deposits to suppliers for asking them keep enough inventories of raw materials, if those suppliers are eager to have CSKI as a customer? During the year, CSKI's inventories are low, but not unnaturally low. At year end, most finished good inventories are pushed into the sales channels, resulting in somewhat higher receivables. The reasons for this have been explained. If this hasn't satisfied you, you should try to clarify this with management. Many major investors regularly visit the company's facilities in China and ask detailed questions directly to management. You should do the same before drawing premature conclusions.

Based on your own web of very questionable allegations and wrong or distorted arguments, and mostly quoting yourself, you are spinning a rather absurd case.

Revealing the Shoddy Practices of China Sky One Medical

Cabeza Howe, your arguments and wording are strangely similar to those of the known short seller and convicted fraudster Asensio, well known for his smear tactics. What's your relation with that person?

Regarding CSKI. I can't say it better than China Expert.

MSPC is a well respected international auditor group - certainly one of the best international auditors working in China. Do you pretend that this auditor has wrongly certified CSKI's impressive cash reserves and cash flows?

Three Reasons to Heed China Sky One Medical's 10-K Filing Extension

Today, the company gave an explanation fort the delayed 10K filing which caused the stock to jump 10%. The reason is a harmless technicality.

The company upgraded its auditor in two steps from an unknown local Chinese firm to a well regarded international audit organization. That was clearly a positive and not a negative development.

The company's independent directors have a scientific orientation. It would indeed be preferable to have one or two US based independent directors with a financial background. Maybe Mr Qui Feng is a talented individual able and willing to rise to the task. Maybe he has been put on the audit committee because he is fluent in English and can better communicate with the international auditors.

Why I Sold My China Positions

Nouriel Roubini is a perma bear, no China expert. Following him, you should not hold shares at all.
If you base your decisions on the hodgepodge of partly inaccurate, partly irrelevant facts you present, I wonder how you can make sound decisions and outperform the markets. In Q3, China's economy was growing at 9% y/y, nominal retail sales were up 21% y/y, despite US in recession, flat export growth, depressed steel prices, flat local real estate markets. 3/4 of its growth is internal, independent from exports; a lot comes from infrastructure investments, financed through high savings rates. The huge stimulus package will make sure that impressive growth will continue.

For stock selection, you have always to look at the sector and the particular company. Not all sectors will benefit equally. Chinese pharmaceutical stocks in particular are immune to the global crisis, in a long term impressive growth market and some of them are dirt cheap currently, certainly no sells.
Retail sales will also continue growing at high rates. China 3C, that you mentioned, is well placed in its segment of the retail sector with its 1000+ stores, had impressive same store growth in Q3, outperforming its sector, and is trading at a PE ratio of 2, or 1.4, if you deduct net cash. The company will continue to grow organically and through acquisitions, certainly no sell either

China Pharma Reports Improved Collection of Accounts Receivable

Amex listing requirements: If the market cap exceeds 50M (that is the case), the minimum share price is $2 (standard 3). We are close!

Analyst: Oil Prices Inflated by 50%

The first name is Fadel, not Fidel.

Fadel is of course right. Oil prices will most likely fall much further. Financial speculators probably still hold more than 80B $ speculative long postions in various oil futures markets. If, under the next Administration, the CFTC has to get serious in observing position limits for financial speculators, there will be a blood bath.

Whither Oil Prices?

@gigem
The petrobras cost information is from 2008.
Petrobras knows better than others what the deep water costs will be. They have done a lot of drilling, build the infrastructure and started producing. 30$/bbl are their total cost estimates,once a field is in full production.

Besides light crude oil, there are plenty of unconventional oil alternatives. For example GTL (gas to liquids - proven technology, existing plants. conversion costs per BOE: 15-20 US$. Half of known global natural gas reserves are stranded - not in production actually.

Whither Oil Prices?

The costs of deep water production are overstated.
Finding costs are on a downward learning curve.
Petrobras, the leader in deep water drilling and production, calculates with lifting costs of $8/barrel and total costs of a maximum of $30/barrel, once a deep water field is developed. Deep water oil reserves are enormous and will determine the marginal costs of light crude oil production in the next 15 to 20 years

China 3C Group Finally Turns a Corner

This stock is grotesquely undervalued.

The downfall of the share price was caused by deficient communications from part of the management, a very conservative outlook for earnings at the beginning of the year and a general lack of interest in Chinese small caps this year. Such phases are recurring and are usually followed by some explosive share price recovery.

With current business trends, earnings of $.50/share in 2008 look very conservative.

Operating wise, management is doing a very good job - low cost operations, very fast turnover of merchandise. No debt, net cash currently around $35M or $.70/share.

Management is looking for acquisitions accretive to earnings. Without acquisitions, net cash will be around $50M or $1/share at year end.

Deducting that cash, expected 2008 PE is close to 2

It’s a $10 stock. The stock is coming down from $8.5. Nobody should be surprised if that level is revisited in the next 12 months.

The Oil Bubble Will Meet the Same Fate as Tech, Housing

Jason, you are right. Most of the comments here confirm the old experience that the big majority doesn’t recognize a bubble until it has really burst.

Oil: Time for Caution

You cannot deduct fundamental facts from Boone Pickens' talk. He is a speculator, following trends and arguing in favor of those trends. After he has decided to go short, he will appear in the media and telling you that the world is drowning in oil.

China 3C Group Hits Major Milestone

If I have interpreted the recent quarterly statement correctly, 2008 EPS should be .45 or better. So, the PE is less than 3.

How Big a Contribution Comes from Oil Speculation?

James Hamilton: I doubt that your income elasticity considerations are helpful. Too many other variables are interfering.

Recent news from credit card companies suggests that US gasoline demand, on a comparable level, is down by about 5%. I guess that is twice as much as the IEA, which seems always behind the curve in its demand projections, is taking into account – price elasticity wise. European consumption has apparently fallen by a similar percentage. That dwarfs the projected demand increase from the Chinese for this year.

So we can assume that oil consumption growth in 2008 is probably below the IEA’s current forecasts.
On the other side, global oil production is inching upwards, even with the much publicised Nigerian problems. Spare capacity today is double that of 2005 and, following the IEA, will further increase towards year end, probably reaching 3.4 Mb/day. The IEA doesn’t distinguish between real demand (consumption) and speculative demand. For the IEA, the latter doesn’t seem to exist. It simply says that all demand is satisfied. Some independent experts believe that average consumption is currently more than 1 Mb/day below production.

There is enough refinery capacity in the world able to handle the sour crude of the Saudis and the Iranians. Nevertheless, the Iranians have apparently problems finding buyers for their oil. (Reliance, btw, is in the process of opening Jamnagar 2, a 500000 b/day refinery specially targeting all those difficult oils)

Global political risks and oil supply risks today are not higher than they have been in the last 3 years.

In light of all those facts, we have to ask: why is the price of oil still rising? The answer is simple: it’s a speculative bubble.

Masters presented a chart (from Goldman Sachs) showing that, by March 2008,
“Commodity Index Investment” had risen to 260 Billion $ (from 13 B, 4 years before). A major part of that seems to be in oil. And that is only part of the total speculation in commodities and in oil.

The energy agencies admit that they don’t have reliable data regarding global oil inventories. Even the numbers for the US rely on voluntary reports not covering the whole sector and having never been verified. Finance investors could in fact control more than 1.5 Billions barrels of oil currently – without much knowledge about that in those agencies.

Someone who believes that the additional demand from finance investors/speculators hasn’t contributed significantly to the oil price increases in recent years should see a brain doctor.

Pay Attention to Oil Decline Rates

The observation, that the production of maturing fields tends to decline is a platitude, true since 1860. The question is, how much new capacity is beeing added.
If you quote Cera or others, you shouldn't quote out of context.
Here is the Cera comment on the peak oil nonsense:

www.cera.com/aspx/cda/...