China Techfaith: An Immensely Undervalued Stock Likely To Go Private [View article]
Unfortunately, despite a tightening up of auditing procedures, it is still possible to get round the bank cash balance confirmation process. I can think of several ways this can be done.
The bank confirmation problems with Peregrine Financial Group only last July 2012, when the process was meant to have been tightened in 201,1 also highlight a time lag between procedural tightening and possible discovery of bank cash balance problems. And this is in the USA where it is much easier to uncover fraud.
China Techfaith: An Immensely Undervalued Stock Likely To Go Private [View article]
Interesting that they have all this cash, and yet:
In Sept 2010 when they already had approaching some US$200m of cash in the balance sheet by the year end, they announced they would issue a US$30m convertible bond to fund part of a jv to build a new factory, but then later changed their mind to change the structure of the deal. In 2009, they issued a US$10m Convertible bond at 8% interest, yet by the y/e 2009, they had US$130m in cash at the bank. Now why would they even need to consider these bond issues with all that cash?
They wrote down over half of their inventories in 2011. Moreover, the company spent no cash at all to increase inventories during 2011, despite sales going up. A large chunk of their account receivables was also written down, wiping out a third of their profits for that year. Are these really signs of a thriving business?
Their PPE remained unchanged for at least the last three years (except for construction in progress), and yet their revenues increased by some 50% over the same period up to end 2011. Incredible! And now revenues in the second quarter of this year have collapsed by some 60% compared to what they were in the same period one year ago. No one thinks that's strange?
All this from just a simple quick look at their filings. I wonder what else I could find if I went in deeper.
China Techfaith: An Immensely Undervalued Stock Likely To Go Private [View article]
The bank confirmation problems with Peregrine Financial Group only last July 2012, when the process was meant to have been tightened in 201,1 also highlight a time lag between procedural tightening and possible discovery of bank cash balance problems. And this is in the USA where it is much easier to uncover fraud.
China Techfaith: An Immensely Undervalued Stock Likely To Go Private [View article]
In Sept 2010 when they already had approaching some US$200m of cash in the balance sheet by the year end, they announced they would issue a US$30m convertible bond to fund part of a jv to build a new factory, but then later changed their mind to change the structure of the deal. In 2009, they issued a US$10m Convertible bond at 8% interest, yet by the y/e 2009, they had US$130m in cash at the bank. Now why would they even need to consider these bond issues with all that cash?
They wrote down over half of their inventories in 2011. Moreover, the company spent no cash at all to increase inventories during 2011, despite sales going up. A large chunk of their account receivables was also written down, wiping out a third of their profits for that year. Are these really signs of a thriving business?
Their PPE remained unchanged for at least the last three years (except for construction in progress), and yet their revenues increased by some 50% over the same period up to end 2011. Incredible! And now revenues in the second quarter of this year have collapsed by some 60% compared to what they were in the same period one year ago. No one thinks that's strange?
All this from just a simple quick look at their filings. I wonder what else I could find if I went in deeper.