Paccamac - nothing could convince you that this is not a fraud. You a 'yellow peril' man. You are convinced that all Chinese are crooks. Therefore you take the accounts of a company like this, which has respectable auditors, NED's etc and you say 'this is all a fraud'. But there is absolutely no evidence to suggest that.
I have no idea how to even begin with your post. What does 'ultra prudent approach to cash on the balance sheet' mean with regards to my point that the stock is trading at a massive discount to reported cash reserves?
The company claims to do close to £30M of pre-tax profit but has a market cap of just £19M and trades at a massive discount to net cash which is reckons is close to £50M.
Wake up and smell the coffee man. This is an out and out, crystal clear FRAUD and whilst the share price might bobble up and down over the coming year it will eventually go to 0p.
It's great to see China Chaintek recovering. The catalyst here at CTEK was Utilico Emerging Markets Trust increasing its position.
With this company investors seem to have conquered the wall of fear that surrounds Chinese stocks on AIM in general. This fear has always been around, but intensified after the suspension of Naibu, which did great damage to sector's reputation. It is still unexplained.
Hopefully we are gong to see the same sort of snap-back over at JQW, which also seem to offer exceptional value and has results next Thursday. The management are in London for the presentation of results.
It's disappointing that CTEK are paying this 4p divi in shares rather than in cash, despite having plenty of cash on the balance sheet. But I suppose it's better than nothing. Investors can always sell those extra shares.
I've noticed that Chinese companies seem to regard cash dividends as bonuses to be paid in good years rather than as a commitment to investors to be maintained in all but the most dire circumstances (which is the UK-company point of view).
So at the first sign of a trouble - a bit of a slowdown, slightly higher capex, or whatever, Chinese companies ditch the divi, which infuriates the UK investors and causes them to question whether there is any cash on the BS at all etc.
This is a cultural difference. Chinese companies are much more risk-averse. They don't like debt and they like to have plenty of cash for a rainy day.
Pacamac - Chinese co.s seem to take an ultra- prudent approach to cash on the balance sheet. This is certainly true of Asian Citrus (HK company). All incomprehensible to us in the UK, I know.
Respectable NEDs, auditors, etc are re-assuring for investors. The NED here is chairman of JpMorgan China It. I don't think he's the dope you imagine.
For goodness sake people - when will you learn that just because some toff NEDs are involved who sound legit does not stop something being a fraud.
Every single company on AIM has some form or non-exec team that are verified by the nomad as being a 'fit and proper person' but this doesn't mean a bean and frauds happen regularly.
A lot of NEDs have little clue what a management team are up to and are simply happy to lend their names to an IPO to bag a few % equity.
When this goes pop (and believe me it will) don't say you weren't warned. It is competely illogical for a company to remain trading at a massive discount to cash without either a) the share price rapidly correcting itself or b) the company taking advantage and doing a buy back.
For what its worth I have followed and invested in this company for the last two years and have to agree that there appears to be something "not quite right" with this company, if you read the financials and believe them then this company should be trading a lot higher. I have enjoyed the dividend but not the slide in price from £2.25 to 45p.
The only issue I saw before investing is that only a small percentage is in small shareholders hands and liquidity is low.
Every RNS is positive and cash ay hand is good with excellent margins yet the share price falls, if this company was in britain I valued it at £125 million or there abouts so to me there is a rat around somewhere so I took the decision to pull out. I do however hope im wrong and this company thrives ive researched it alot and if you believe the news then your onto a winner, if however its all false then someone needs to go to jail.
The Non-Exec Chairman is William Knight, also chairman of JP Morgan China IT. Would someone with a CV and portfolio of interests like his really risk his reputation on working for a fraud? I don't think so.
"William Knight, a co-founder of Emerisque Brands, is Chairman of JP Morgan Chinese Investment Trust Plc, Myanmar Investments International Ltd and MCS Apparel (HK) Ltd. He is also a director of Fidelity Asian Values Trust Plc, Ceylon Guardian Investment Trust Plc, Axis Fiduciary Ltd and LG India Fund Ltd."
Paccamac - yours seems to the consensus view (that all these Chinese companies on AIM are a fraud) but if the consensus view is wrong there's a big opportunity here and also with JQW and CAMK.
Investors have been been frightened into selling their shares, and these companies are probably being heavily shorted .
I've been invested for a while in Asian Citrus, which is a Hong Kong company. There are frequent allegations that this is a 'Chinese con', but there is no evidence that this is the case.
I've looked at Naibu. I see that it's temporarily suspended at the request of Non-Execs. So it may come out of suspension and there may be a good reason for the suspension. But at the moment it's not a great advert for Chinese companies on AIM, I agree.
There's a lot abut CTEK which suggests to me this is not a fraud - the quality of the Non-Execs, for instance. But thankyou for your warning, which I appreciate.
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