Shanghai Advisor

12 Comments

    • ON: Tue Apr 29th 23:27 PM
      Commented on:
      Lesson From China: A Swift Decline in Commodities Could Happen
      Chinese stock market trend is NOT applicable to ag commodities trends. Shanghai market went down for purely 2 reasons. Govt pressure to slow the economy and most importantly that the huge huge overhang of locked up shares will hit the market in 2008 - almost twice the current market cap of the entire Shanghai market will hit the market in the next 18 mos. THAT is why the market tanked. Ags are in an uptrend that will last for 5-10 years. People want to eat well - as much as they can afford. 3x the number of people will be eating well in 5 years than currently. Most of China and India currently do NOT use high grade fertilizer or seeds. Read the writing on the wall as they adjust. Not to mention Brazil and Africa.
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    • ON: Mon Apr 28th 04:33 AM
      Commented on:
      Will China Become the New Silicon Valley?
      I have been consulting for senior Chinese management and US management in China for 6 years. China does not respect small company innovation. It does not protect IP. It pays lip service but by no means can it EVER be a Silicon Valley the way we know it. It can be a government owned Silicon Valley copycat to provide the party with revenues however. It will not make the common innovator rich though. And it will not be able to export its technology because there is NO WAY open source or open platform will ever be adopted in China. It's a closed shop oligopoly controlled by the government PERIOD.
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    • ON: Sun Apr 20th 22:45 PM
      Commented on:
      High Agricultural Commodity Prices Likely to Persist
      It is a myth that farmers can just "plant more acres". In many parts of the world, there is no more acreage to just "plant more". Planting more acres upon whim is only feasible in developed countries so there is soon to be reached a maximum plantable acreage. This will arrive much sooner than "peak oil". I call this phenomenon "peak food". This will be here within 5 years and prices will go up at least 2 fold from here as the world middle class population surges. May God bless us all.
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    • ON: Wed Apr 16th 23:20 PM
      Commented on:
      China Organic Agriculture's Recent Moves Bring Up New Questions
      I respect OTC Player posts and thank him however I think he might have made a mistake in the revenue figures for CNOA. It's FY 07 revenues are about equal to Huiming Trading. Also Huiming is more than just transportation they also process and trade and allow CNOA to diversify into wheat and soybeans and cereal. Here's some financial from 10-K

      CONSOLIDATED STATEMENTS OF INCOME
      FOR THE YEARS ENDING DECEMBER 31, 2007 AND 2006

      12/31/2007 12/31/2006
      ------------ ------------
      Sales, net $ 44,500,003 9,002,345

      Cost of sales 29,382,399 5,210,575
      ------------ ------------
      Gross profit 15,117,604 3,791,770

      Selling, general and administrative expenses 1,556,350 364,500
      ------------ ------------
      Income from operations 13,561,254 3,427,270
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    • ON: Wed Apr 16th 00:19 AM
      Commented on:
      China's Agriculture Sector Is Ripe for Investment
      China Organic Agriculture CNOA.OB is a great value right now - I think it should double my year end. They recently announced acquisition of a Northeast China food processing and transportation company (distribution). This will open doors to more channels and customers. Contrary to press reports I view this as a great strategic decision. FYI Here's an excerpt from their 10-k. It seems that Huiming Trading may be a good diversification strategy for CNOA esp if price controls stay in for rice. Diversifying into wheat and soybeans is not a bad idea and having more control over distribution alleviates some potential pressure from higher transportation costs. Also, of the major provinces Huiming and CNOA operate in, it seems ony 1 (Sichuan) was a primary victim of the winter storms. Northeast China largely escaped the bad weather. I'm leaning towards giving CNOA until mid summer before I judge their acquisitions. Operating in China is largely based on relationships - so acquisitions tend to be based on what relationships you get along with the assets. I've advised US companies in CHina for 5 years so I'm ok with this acquisition. Revenues are about equal for the two companies. Let's see what the next steps are. I think CNOA is a good buy here at under 2 and should go to 3 soon - multiples are just too low. Northeast China incl. Dalian are targeted as a primary area of growth for the next 5 years - a govt priority to grow their region!

      Excerpt
      On December 12 2007, the Company announced that it had entered into a letter of intent to acquire the Dalian Baoshui District Huiming Trading Limited ("Dalian"). The acquisition is pending due diligence which is not likely to be completed until late Aprill. Dalian is engaged in grain procurement, international and domestic trading, wholesale sales and food delivery logistic services. Its main products include including soybeans, corn, and cereal crops, which are major products from the Northeast part of China. Sales to consumers are made in national regions including Liaoning Province, Jiling Province, Heilongjiang Province, Sichuan Province, Fujian Province, Beijing, and Shanghai.
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    • ON: Wed Apr 16th 00:09 AM
      Commented on:
      China Organic Agriculture: Sticking with Core Business or Branching Out?
      Here's the excerpt:
      On December 12 2007, the Company announced that it had entered into a letter of intent to acquire the Dalian Baoshui District Huiming Trading Limited ("Dalian"). The acquisition is pending due diligence which is not likely to be completed until late Aprill. Dalian is engaged in grain procurement, international and domestic trading, wholesale sales and food delivery logistic services. Its main products include including soybeans, corn, and cereal crops, which are major products from the Northeast part of China. Sales to consumers are made in national regions including Liaoning Province, Jiling Province, Heilongjiang Province, Sichuan Province, Fujian Province, Beijing, and Shanghai.
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    • ON: Wed Apr 16th 00:08 AM
      Commented on:
      China Organic Agriculture: Sticking with Core Business or Branching Out?
      Here's an excerpt from their 10-k. It seems that Huiming Trading may be a good diversification strategy for CNOA esp if price controls stay in for rice. Diversifying into wheat and soybeans is not a bad idea and having more control over distribution alleviates some potential pressure from higher transportation costs. Also, of the major provinces Huiming and CNOA operate in, it seems ony 1 (Sichuan) was a primary victim of the winter storms. Northeast China largely escaped the bad weather. I'm leaning towards giving CNOA until mid summer before I judge their acquisitions. Operating in China is largely based on relationships - so acquisitions tend to be based on what relationships you get along with the assets. I've advised US companies in CHina for 5 years so I'm ok with this acquisition. Revenues are about equal for the two companies. Let's see what the next steps are. I think CNOA is a good buy here at under 2 and should go to 3 soon - multiples are just too low. Northeast China incl. Dalian are targeted as a primary area of growth for the next 5 years - a govt priority to grow their region!
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    • ON: Thu Apr 10th 23:39 PM
      Commented on:
      Agriculture: A Tale of Human Development
      If you listen to all the conf calls and run the numbers, global production of potash over 5 years is likely to grow 50% or so. The human population consuming "non-poverty levels of food will likely at least triple over the same period. This means all AG will sustain at least current price levels if not spike much higher. Low risk to buy here. Shanghai Advisor.
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    • ON: Mon Apr 7th 00:28 AM
      Commented on:
      John Reed on Citigroup: A Decade Long Disaster
      John Reed is an innovator, gentleman, techno-revolutionary, and genius. Please please give him a bigger role advising Citi. It will be good for Citi and good for America. They don't make them like him anymore. We need him to have a bigger role in American business. Citicorp's culture was unquestionably aggressive, successful, and innovative when the rest of Wall St. was wondering what derivatives were. Citi was moving to tear down technology barriers and build a global brand. He can fix it - I would bet my house on it. By the way, Mr. Reed if you have time, it would be an honor to talk sometime.
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    • ON: Mon Apr 7th 00:16 AM
      Commented on:
      John Reed on Citigroup: A Decade Long Disaster
      I joined Citibank in 1983 and worked in international banking during John Reed's tenure as Chairman. The above article mis-states history. John Reed's vision cannot be questioned - he brought global banking into the modern age. ATM's, online transactions, the development of international banking settlement (SWIFT), establishment of US banks in overseas markets, the beginning of dealing with investment banks as direct competitors to commercial banks, etc. All of this was largely due to John Reed's leadership. John Reed took the help of the NYSE after Grasso for a 1 dollar salary. I would encourage everyone to read between the lines of the Citicorp Travelers merger - John was dealt with harshly by Traveler's management. The fault lies predominantly on their shoulders. Mr. Reed is an intellectual leader and my guess is that the new management post-merger led by Travelers did not have the insight to follow his advice. We should all wish Mr. Reed well.
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    • ON: Wed Mar 26th 01:26 AM
      Commented on:
      Should We Buy the PetroChina Stock Buffett Sold?
      Do any of you folks above actually live in China ? I do. So let me comment briefly - PTR will be the defacto arm of the govt forever. If this means setting price controls for a loss then so be it. It will happen. Also "middle of the barrel" products like diesel will be increasing as a percentage of output and also will squeeze profits further. From a strict valuation standpoint it is impossible to accurately forecast profits for PTR. However, PTR may remain as a good investment because in the long run, China will not let itself be hostage to world markets and the 30-60 day reserves it is building up will be even larger thus resulting in PTR long run strength.
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    • ON: Tue Mar 4th 23:08 PM
      Commented on:
      Gone are the Days of Unlimited Chinese Labor
      China's labor issues will only intensify. The easy money here is over. The question is as China moves up the value chain whether IP progresses so R&D is protected. THis is far from certain. THus GDP growth past 09 is very uncertain to be at 5% or more. Most likely will stabilize around 5% from its 10% levels today.
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