GeoInvesting Research, GeoAlerts, and GeoWire Releases

China Green Agriculture (CGA) - Analyst Reports

Thu, 02 Sep 2010 04:00:00 GMT

Rodman & Renshaw on CGA:

F4Q10 results overview: China Green Agriculture (“China Green”, Ticker: CGA, Market Perform) reported its F4Q10 results that on balance exceeded our expectations. Total revenue grew 54.5% YoY to $16.2 million, beating our estimate of $14.8 million and Street consensus of $15.1 million. The growth was primarily driven by Jinong branded fertilizer products, which grew 61.4% YoY to $15.3 million and accounted for 94.2% of total sales. This strong performance of Jinong was in turn mainly attributable to larger sales volume which soared 119.5% YoY to 9,315 tons. ASP, on the other hand, decreased to $1,638/ton (derived from sales volume and revenue) from ASP of $2,098/ton in Q3. We believe this was mostly due to the company’s increased sales of powder and granular fertilizer products that commanded lower prices. Gross profit increased 42.8% YoY to $9.1 million. However Q4 gross margin of 56.3% was lower than the 60.9% in F4Q09 and 60.3% in F3Q10. Increased sales of lower margin granular fertilizers again contributed to the lower gross margin, in our opinion. Net income increased 35.5% YoY to $6.0 million, or $0.24 per diluted share, slightly better than our estimate of $5.7 million, or $0.23 per diluted share, but in-line with Street consensus. For the full fiscal 2010, total revenue came in at $52.1 million, exceeding the company’s previous guidance of $50.6 - $51.2 million. Net income reached $21.3 million, or $0.91 per diluted share, within the guidance range of $21.1-$21.4 million, or EPS of $0.90-$0.91.

FY2011 guidance lower than our expectations: China Green provided its FY2011 guidance with total revenue of $150.5-$152.8 million, net income of $36.2-$36.8 million, and EPS of $1.35-$1.37. The guidance takes into consideration of the revenue and net income contributions of $88.4 million and $10.6 million from Beijing Gufeng Chemical Products Co. (“Gufeng”) it acquired in July. (Please refer to our report published on July 7, 2010 for more details.) We note that this guidance is lower than our previous expectations of $158.6 million of revenue, $39.0 million of net income, and $1.46 EPS. Excluding the revenue and net income contribution from Gufeng, it appears that management expects top-line organic growth will be in the range of 19.2%-23.6% and bottom-line organic growth will be between 20.2% and 23.1%. Both are significantly lower than the YoY 48.0% revenue growth and 40.9% net income growth in F2010. With regard to the Gufeng acquisition, while we believe it can prove to be attractive both financially and strategically for China Green, we await realized benefits from the integration, upgrade of Gufeng’s current chemical fertilizer production facility to organic humic acid-based fertilizer production lines, and capacity utilization ramp-up. We also believe the increased sales of granular fertilizers will significantly compress gross margin in the near term.

Adjusting estimates and maintaining Market Perform rating: We are maintaining our Market Perform rating on the shares of China Green in light of slower organic growth, margin compression, and uncertainties related to the integration of Gufeng. We have adjusted our estimates in accordance with management’s guidance. For FY2011, we now expect total revenue of $152.5 million, net income of $35.8 million, and $1.33 EPS. Our respective estimates for F1Q11 are $38.4 million, $7.8 million, and $0.29.

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Labarge (LB) - Comments & Business Outlook

Thu, 02 Sep 2010 04:00:00 GMT

Fiscal 2010 fourth-quarter net sales grew 27 percent to a record $82,413,000, compared with $64,753,000 in the comparable period a year earlier, and grew 10 percent from $74,735,000 in the fiscal 2010 third quarter.
Fiscal 2010 fourth-quarter net earnings grew 85 percent to a record $4,820,000, or $0.30 per diluted share, compared with $2,608,000, or $0.16 per diluted share, in the comparable period a year earlier, and grew 17 percent from $4,128,000, or $0.26 per diluted share, in the fiscal 2010 third quarter.

“Outstanding operational performance and increased customer demand across most key market sectors propelled LaBarge’s sales and earnings to record levels in the Company’s fiscal 2010 fourth quarter and full year,” said Craig LaBarge, chief executive officer and president. “Additionally, bookings of new business in fiscal 2010 set a new Company record, and fiscal 2010 full-year gross profit, operating income and backlog generated double-digit increases over the previous fiscal year’s levels. We begin fiscal 2011 in a position of strength and look forward to another year of growth and excellent operational performance.”

Commentary and Outlook:

“Looking ahead, bookings of new business have continued at a strong pace into the fiscal 2011 first quarter. We also expect sales and earnings in the fiscal 2011 first quarter to be up significantly from the year-ago period with sales of $80 million to $82 million and earnings per share of $0.26 to $0.28. Based on our current visibility, we believe this business strength will continue throughout the current fiscal year, fueled by healthy order flow in our major market sectors,” said Mr. LaBarge.

China Carbon Graphite (CHGI) - CFO Trail

Wed, 01 Sep 2010 04:00:00 GMT

On September 1, 2010, Ms. Ting Chen, Chief Financial Officer, informed the Board of Directors of China Carbon Graphite Group, Inc. (the “Company”) that she would resign as the Chief Financial Officer and as a member of the Board of the Company, effective on that date, and the Board of Directors has accepted her resignation. There was no disagreement between Ms. Chen and the Company which led to her resignation.

China Fruits (CHFR) - CFO Trail

Wed, 01 Sep 2010 04:00:00 GMT

On August 31, 2010, the Registrant announced the appointment of Mr. Li, Lin Feng to the position of Chief Financial Officer of the Registrant as approved by the Board of Directors, and effective immediately.

China Green Agriculture (CGA) - Comments & Business Outlook

Wed, 01 Sep 2010 04:00:00 GMT

Fourth Quarter FY2010 Results

Total net sales for the three months ended June 30, 2010 were $16.2 million, an increase of 54.5% from $10.5 million for the three months ended June 30, 2009. Net sales of Jinong, which is the division that sells humic acid based compound fertilizers, accounted for 94.2% of total net sales.
Gross profit for the fourth quarter of fiscal year 2010 totaled $9.1 million, an increase of 42.8% from $6.4 million in the same quarter of fiscal year 2009. Gross profit margin was 56.3% for the fourth quarter of fiscal year 2010, down from 60.9% a year ago. The decrease in gross margin was primarily due to significantly higher growth in lower margin fertilizer products such as granular fertilizers.
Operating income for the fourth quarter of fiscal year 2010 was $7.1 million, up 36.2% from $5.2 million in the fourth quarter of fiscal year 2009. Operating margin was 43.7%, compared to 49.5% in the same quarter of fiscal year 2009.
Net income for the fourth quarter of fiscal year 2010 was $6.0 million, up 35.5% compared with net income of $4.4 million during the same period in fiscal year 2009.
For the three month period ended June 30, 2010 basic and diluted net income per share was $0.25 as compared to $0.24 for the same period in 2009, based on weighted average shares outstanding of 24.6 million and 18.6 million, respectively. Net income margin approximated 37.0% and 42.1% for the three months ended June 30, 2010 and 2009, respectively.

"Fiscal year 2010 has been a monumental year for our Company which resulted in exceeding our revenue and net income guidance," stated Mr. Tao Li, Chairman, President and Chief Executive Officer of China Green Agriculture. "We successfully implemented several growth initiatives resulting in the increase of our production capacity and geographic footprint, expanding our product line, and instilling brand awareness. At the end of June, we completed Phase I construction of our new research and development center, which consisted of one hundred sunlight greenhouses. We also launched 23 new liquid-based fertilizer products and added 43new distributors during the fiscal year 2010. To date, we have opened 15 directly-owned retail stores and selected 608 stores as 'China Green Agriculture Authorized Retailer' of our Jinong branded HA compound fertilizer products. In July, we closed on the acquisition of Beijing Gufeng Chemical Products Co., Ltd., which expanded our annual fertilizer production capacity from 55,000 metric tons to 355,000 metric tons. The facility extends our distribution network and broadens our product mix to meet the growing demand for both traditional and organic fertilizers in China, and is expected to contribute at least $10.6 million in net income in fiscal year 2011. With our strong working capital position, growing product offering and expanding R&D capabilities, we feel we are well positioned to gain market share and build on being one of the leading fertilizer producers in China."

Fiscal Year 2011 Guidance

For the fiscal year ending June 30, 2011, management expects

Revenues of $150.5 million to $152.8 million
Net income to $36.2 million to $36.8 million
EPS to $1.35 to $1.37 based on 26.8 million weighted average shares.
Current analyst EPS estimate is $1.43

For the first quarter ending September 30, 2010, management expects

Revenues of $38.2 millionto$38.6 million
Net income to $7.7 million to $8.0 million
EPS to $0.29 to $0.30 based on 26.8 million weighted average shares.
Current analyst estimate is $0.35

This guidance reflects the anticipated strong sales resulting from the Company's increased production capacity from 55k metric tons to 355k metric tons.

Chinawe.com (CHWE) - CFO Trail

Wed, 01 Sep 2010 04:00:00 GMT

On August 26, 2010, Vivian Chu submitted notice of her resignation as (i) a member of the Board of Directors and (ii) Chief Financial Officer of Chinawe.com Inc. (the “Company”), effective immediately. Ms. Chu has not expressed any disagreement with the Company’s operations, policies or practices.

The Company’s Board of Directors elected on August 26, 2010 Alan Wai, Chairman of the Board of Directors and the President and Chief Executive Officer of the Company, to serve as the Chief Financial Officer of the Company.

L & L Energy (LLEN) - Conference Call Notes

Wed, 01 Sep 2010 04:00:00 GMT

2011 Fiscal First Quarter:

Shunda Mining Company acquisition is taken off the table. During the LLEN's due diligence process, management spotted safety record issues that would have increased business risk.
Assured investors that the company is evaluating additional accretive acquisition targets that could help exceed financial guidance; Believes a transaction will be consummated before the end of 2010.
Reaffirmed that company guidance does not include acquisitions.
Addressed sequential decline in gross margins: The company continues to diversify its business and reduce overall business risk. Part of this strategy includes ramping up its coal washing business which carries less margin than direct mining operations. Management also noted that the company has made some investments that may benefit margins going forward.
Vertical integration strategy and emphasis on being a service provider gives it pricing power.
Financing goals: Appears that the company will use debt over equity in the current market environment.
L & L Energy has strengthened its internal control procedures.
- Hired internal auditors and a CPA from Arthur Anderson.
- Will continue to upgrade professional staff.
- Contemplating retention of a new auditor.

Moqizone Holdings (MOQZ) - Deal Flow

Wed, 01 Sep 2010 04:00:00 GMT

We completed the initial closing of a private equity financing of approximately $247,000 on August 27, 2010 with 2 accredited investors pursuant to a Securities Purchase Agreement. Net proceeds from the offering, are approximately $207,000. Pursuant to the financing, we issued a total of 11 units of our securities at $22,500 per unit. Each Unit consists of (i) an 8% Convertible Note, convertible into shares of the Common Stock, (ii) a Series E Warrant, and (iii) a Series F Warrant, each such warrant gives the holder the right to purchase up to that number of shares of our common stock as shall be equal to fifty percent (50%) of the number of shares of common stock underlying the Convertible Note. Each of the Warrants has a term of three (3) years.

Yongye Intl (YONG) - Deal Flow

Wed, 01 Sep 2010 04:00:00 GMT

Yongye International, announced that the Company's operating subsidiary, Yongye Nongfeng Biotechnology ("Yongye Nongfeng"), entered into two new revolving credit facilities totaling RMB 400 million (approximately $59 million).

GeoTeam® Note: We feel that capital infusion via debt can help establish credibility for a company, as lenders have likely scrutized financial statments.

Asia Entertainment & Reso (AERL) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

Financial Highlights for the Three and Six-months Ended June 30, 2010

Rolling Chip Turnover (a metric used by casinos to measure the aggregate amount of players’ bets and overall volume of VIP gaming room business transacted that is defined below) for the three and six-months ended June 30, 2010 in our 2 VIP gaming rooms in Macau was $2.45 billion and $4.34 billion, respectively, up 194% and 160% year-over-year, compared to $831 million and $1.67 billion in the same periods of 2009.
Revenue for the three and six-months ended June 30, 2010 was $30.1 million and $55.4 million, respectively, up 172% and 120% from $11.1 million and $25.2 million in the same periods of 2009.
Income (including pre-acquisition income) grew 176% to $9.5 million and 103% to $19.2 million, respectively, in the three and six-months ended June 30, 2010 from $3.4 million and $9.4 million in the same periods of 2009.
Earnings per share (EPS) derived from income (including pre-acquisition income) for the six-months ended June 30, 2010 was $1.58, based on a basic weighted average share count of 12,158,912, and $1.05 based on a fully diluted weighted average share count of 18,273,664.
GAAP EPS for the three and six-months ended June 30, 2010 (based on net income after deduction of $4.3 million pre-acquisition income) was $0.76 and $1.22, based upon the basic weighted average share counts, and $0.40 and $0.65, based upon fully diluted weighted average share counts.
Total available cage capital at the end of the second quarter was approximately $73.3 million, up 6.2% from $69.0 million the first quarter of 2010.

Outlook for 2010

For the first seven months of 2010, AERL’s Rolling Chip Turnover averaged $745 million per month. Its Rolling Chip Turnover year-to-date through July 2010 in Macau was $5.21 billion, an increase of 150% year-over-year, compared to $2.08 billion for 2009.

Chairman Lam further stated, “While the monthly percentage year-over-year growth rates may decline for the remainder of 2010 due to the highly successful last quarter of 2009, we continue to forecast growth. For 2009, the average monthly Rolling Chip Turnover was $433 million. We are providing Rolling Chip Turnover guidance for our two existing VIP rooms in Macau to average $700 million to $725 million per month, which equate to $8.4 billion to $8.7 billion for the full year 2010, up from $5.19 billion in 2009.

“We continue to believe that for the remainder of 2010, the majority of the business will be on a fixed commission basis.

We are issuing initial income (including pre-acquisition income) guidance of $38 million to $39 million for 2010 based on current performance of our existing 2 VIP gaming rooms in Macau.

“We are delaying our proposed expansion in Jeju, Korea because the continued strength of the Macau VIP gaming market makes it desirable to continue to increase our efforts there. Also, the favorable risk/reward of the commission model in Macau offers more stability than the capital risk of the win/loss split model used in Jeju.”

China Gerui Advanced Mate (CHOP) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

Second Quarter 2010 Summary:

Revenue increased 15.5% to $64.0 million compared to the same period last year.
Gross profit increased 13.0% to $19.1 million.
Gross margin decreased 60 basis points to 29.9%.
Net income increased 5.8% to $12.1 million, or $0.26 per diluted share vs. $0.33 per diluted share in the prior year comparable quarter.

"Our second quarter results were driven by increased sales volume as compared to the same period last year," said Mr. Mingwang Lu, Chairman and Chief Executive Officer. "During the quarter, we fulfilled large orders for some of our lower margin products. This enabled us to post a double-digit increase in sales as well as higher net income, but also resulted in a decrease in our margins. We continue to see strong demand for our products and as our new production lines focused on higher priced, higher margin products commence production later this year, we expect to achieve sustained increases in sales, margins, and earnings performance."

Business Outlook:

As previously announced, by December 2011, the Company plans to double its existing production capacity to 500,000 tons per annum, and increase its chromium plating capability to 250,000 tons per annum, covering 50% of its total annual steel production capacity. Phase I of the expansion plan involves the construction of two new cold-rolled, wide-strip steel production lines with 150,000 tons of total annual capacity and a chromium plating line capable of processing 200,000 tons of cold-rolled steel per annum. The Company expects total capital expenditures for Phase I to be $42 million, of which approximately 65% has been spent to date. The foundation for the building housing the two new cold-rolled steel production lines was completed in August 2010 and the building will be completed by mid-September 2010.

The two cold-rolling machines are expected to be completed by October 2010. The acid pickling, annealing, and temper rolling facilities relating to the Company's new steel production lines are expected to be completed by the end of September 2010. As for the chromium plating line, the building to house this line was completed in August 2010; installation is currently underway; testing is scheduled for mid-September 2010; and the line is expected to be ready to begin production in mid-October 2010. The chromium plating line can handle both narrow and wide-strip cold-rolled steel.

For Phase II of the project, the Company expects to construct a third cold-rolled wide strip steel production line with 100,000 tons of capacity by the end of the third quarter of 2011. The Company expects the capital expenditures for Phase II to total $12 million.

Mr. Lu commented, "Our expansion project remains on track and we look forward to bringing this new capacity online later this year. Our business outlook remains strong as the sale of our products are driven by domestic purchasing power in China, which continues to rise, and the import replacement trend in our industry. With our new facility we will be able to produce both narrow and wide-strip cold-rolled steel for a wider range of high-end applications than we do currently. We see the demand in the market and are confident in our ability to ramp up production once our expansion is complete."

China Infrastructure Cons (CHNC) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

Net revenue for the fourth quarter ended May 31, 2010 was $22.34 million as compared to $12.41 million for the same period last year, an increase of 80.05%.

The robust increase in net revenue is mainly attributable to good execution of the Company's geographic expansion strategy. The new factories in Xi'an and Shidu started operations during the quarter to meet rising market demand. As a result, the sales volume of concrete products increased approximately 28.61% for the fiscal year ended May 31, 2010 as compared to the same period last year. The increase in net revenue also resulted from technical solution services provided to a Tianjin concrete producer from late March with approximately $1.26 million in sales recorded during the quarter. The Company also leased stone and sand production equipment from a supplier in Hebei to secure raw materials for its Beijing facility. All the sand and stone from the leased equipment has been exclusively provided to the Company since April. Not only did this arrangement provide the necessary raw materials for the Beijing facility during the quarter but it also contributed approximately $0.90 million to revenues for the quarter.

Operating income for the three months ended May 31, 2010 totaled $5.98 million, an increase of $3.67 million or approximately 159.02%, as compared to $2.31 million for the three months ended May 31, 2009. The increase was mainly due to increased net revenue.
GAAP net income for the three months ended May 31, 2010 was $5.90 million, an increase of $3.71 million or approximately 169.39%, as compared to $2.19 million for the three months ended May 31, 2009. The increase was mainly a result of increased net revenue and improved operational efficiency.
Net income per share for the fourth quarter of the fiscal year 2010 was $0.46 (basic and diluted, based on 12.77 million and 12.80 million basic and diluted weighted average shares outstanding), compared to net income per share of $1.43 for the same period of the last year (basic and diluted, based on 1.53 million weighted average shares outstanding).

Non-GAAP EPS was $0.47 vs. $1.43

Business Outlook

Mr. Yang concluded, "As we enter fiscal year 2011, our focus remains on strong execution of the strategies that have started to serve us well, mainly geographic expansion through new facilities or M&A opportunities and vertical integration of product lines into raw materials to secure supplies and lower production costs. We are fully aware of the concerns about a potential real estate bubble in China but our recent strategic moves have strongly aligned our business with China's massive investments in infrastructure. This is a must for the country given the rapid pace of urbanization, the acceleration of industrialization and the need to rebalance economic growth geographically. According to The National Development and Reform Commission, China planned to invest in excess of $100 billion in the year 2010 spread out among 23 infrastructure projects in the western regions. It is estimated that by 2011, China will spend about $725 billion dollars for infrastructure projects. We believe that we are well positioned to benefit from this broad infrastructure development that creates tremendous market opportunities for us. We are confident that our solid business platform, geographic expansion and strong execution will bring revenue growth, gross margin improvement and higher earning power."

China Linen Textile Industry (CTXIF) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

SUMMARY FINANCIALS

    First Quarter 2010 Results (unaudited)

                                       Q1 2010        Q1 2009       CHANGE
    Net Sales                        $8.8 million  $5.5 million     +58.7%
    Gross Profit                     $2.7 million  $1.1 million    +139.0%
    Net Income                       $2.1 million  $1.1 million     +89.8%
    EPS (Diluted)                           $0.10         $0.06     +89.1%


    Second Quarter 2010 Results (unaudited)

                                       Q2 2010        Q2 2009       CHANGE
    Net Sales                        $8.8 million  $8.3 million      +5.7%
    Gross Profit                     $2.7 million  $2.5 million      +7.4%
    Net Income                       $1.9 million  $1.6 million     +22.5%
    EPS (Diluted)                           $0.10         $0.08     +21.8%


    Six-Month 2010 Results (unaudited)

                                     6-Month 2010  6-Month 2009    CHANGE
    Net Sales                       $17.6 million $13.9 million    +26.9%
    Gross Profit                     $5.4 million  $3.7 million    +48.3%
    Net Income                       $4.0 million  $2.7 million    +50.3%
    EPS (Diluted)                           $0.20         $0.13    +49.6%

"We are pleased to report strong revenue and earnings growth during the first half of the year, which resulted from our increased marketing efforts, higher average selling prices for linen fabric, and the strong demand for our linen fabric in both domestic and international markets," stated Mr. Gao Ren, Chairman and President of China Linen. "We have seen an increase in demand from domestic and international customers this year due to the recovery of the global economy and the increasing awareness of the benefits of natural textiles, such as linen, among consumers."

"Our enhanced international market expansion is anticipated to introduce more customers and orders to generate incremental revenues for the balance of 2010. The addition of new production capacity from the lease agreement signed in July 2010 enables us to fulfill more of those orders and improve our 2010 financial performance. Combined with our increased marketing efforts, higher average selling prices for linen fabric, and the strong demand for our linen fabric in both domestic and international markets, these expansion efforts give us confidence in meeting our 2010 revenue and earnings guidance."

Reiterates 2010 revenue guidance of $38.1 million and 2010 net income guidance of $9.3 million, representing anticipated year-over-year growth of approximately 29.6% and 63.2%, respectively.

China Power Equipment (CPQQ) - Analyst Reports

Tue, 31 Aug 2010 04:00:00 GMT

Rodman & Renshaw take on CPQQ

Investment Thesis

We are initiating coverage on China Power Equipment, Inc. (CPQQ.OB) with a Market Outperform/Speculative Risk rating and a price target of $6. China Power Equipment is an emerging market leader in a nascent amorphous transformer sector in China. The company’s energy-saving power distribution transformers and transformer cores improve power grid efficiency by significantly reducing electricity losses. As an early stage entrant into amorphous transformer space, the company has witnessed rapid revenue growth in recent years. Given its brand equity and manufacturing expertise, established distribution channels, increased capacity and strong management team, we believe China Power Equipment is ideally positioned on a number of levels to take advantage of strong demand for amorphous transformers in China arising from growing electricity consumption, government support for energy-saving distribution transformers, continuing build-up and modernization of the power transmission and distribution networks and multiple government initiatives to promote energy-saving technologies including recently issued minimum energy efficiency standards for distribution transformers. The company presents a unique opportunity for investors looking to get exposure to China’s booming electricity infrastructure and grid efficiency space at a highly attractive valuation.

Valuation

CPQQ.OB is currently trading at 6x our FY10 fully diluted EPS estimate of $0.32 and 4x our FY11 fully diluted EPS estimate of $0.46. If we take into account company’s cash per diluted share of $0.55 ($0.70 per basic share) at the end of 2Q10, the stock is currently trading at 4.5x and 3x our FY10 and FY11 our fully diluted ESP forecast, respectively. These multiples are well below current FY10 and FY11 industry averages of 18x and 15x for the US-listed peer group and 38x and 27x for the China-listed peer group. The company’s closest comparables – Advanced Technology & Materials or AT&M (000969, Not Rated) and Shanghai Zhixin Electric Co (600517, Not Rated) trade at 35x and 24x FY11 projected EPS, respectively. We believe the stock is significantly undervalued compared to its peer group. Given robust demand for amorphous transformers in China and company’s uniquely competitive position, we believe it should be trading much closer to the industry average. We derive our 12-months target price of $6 by applying a 13x multiple to our FY11 estimate of $0.46.

Risks

(1) Supplier concentration (2) Increasing competition and entry of traditional transformer manufacturers into the production of amorphous transformers (3) Intellectual property loss (4) Slowing infrastructure spending (5) Liquidity.

Notice Regarding Privacy and Confidentiality:

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Funtalk China Holdings (FTLK) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

First Quarter Financial Results:

The Company reported consolidated net revenue of $253.0 million for 1Q FY2011, representing a 28.0% increase from the first fiscal quarter of 2010 ("1Q FY2010).
Net income attributable to the Company was $9.6 million, or 3.8% of total revenue, for 1Q FY2011, representing a 132.9% increase from $4.1 million, or 2.1% of total revenue for 1Q FY2010.
1Q FY2011 diluted earnings per share ("EPS") was $0.19 based on a diluted share count of 51.1 million shares compared to 1Q FY2010 diluted EPS of $0.09 based on a diluted share count of 45.0 million shares.

Business Outlook:

For 2Q FY2011:

Revenue to be in the range of $240 million to $260 million.
Its net income attributable to the Company to be in the range of $8.0 million to $10.0 million.
The Company expects approximately even revenue split between its retail and distribution business segments in 2Q FY2011.

Gross margin and operating income margin are projected to be in the ranges of 13.5% to 14.5% and 5.8% to 6.8%, respectively.

For FY2011, the Company reaffirms its:

Revenue outlook to be in the range of $1.0 billion to $1.2 billion.
Its net income attributable to the Company to be in the range of $40 million to $45 million.
The Company expects a revenue split of approximately 57% for its retail business segment and approximately 43% for its distribution business segment in FY2011.
Gross margin and operating margin for the full fiscal year are projected to be in the range of 15.0% to 16.0% and 8.5% to 9.5%, respectively. Such projections are based on the Company's current views on operating and market conditions and are subject to change.

"Funtalk China's Fiscal Year 2011 is off to a strong start. With our leading nationwide distribution network for mobile communications products and services, we have gained strong momentum to help increase our market share in China's fast growing retail mobile phone market. Our strategically located retail outlets serve as a significant barrier to entry for prospective competitors, while our large scale enables us to gain favorable terms from handset manufacturers and mobile carriers. Moving forward, we will continue to expand our retail network in China and further increase our retail presence in existing covered areas, both organically and through acquisitions. Given the favorable trends and our strong competitive position, we aim to further enhance our brand awareness and significantly broaden to our value-added services. With our increased cash position and strong balance sheet, we are very confident in our ability to execute on our goal of reaching 2,000 retail stores within the next three years," concluded Mr. Fei.

L & L Energy (LLEN) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

L & L Energy reported preliminary results for its fiscal 2011 first quarter:

Revenues for the first quarter increased approximately 336% to $55.3 million, compared with revenues of $12.7 million in the same period a year ago.
Gross profit for the first quarter increased to $18.6 million, up approximately 207% compared with $6.1 millionin the same period a year ago.
Net income increased approximately 306% year-over-year to $10.9 million, compared with $2.7 million in the same period a year ago.
Earnings per share for the quarter totaled $0.36 per diluted share, an increase of approximately 177% compared with $0.13 in the same period a year ago.

"We are delighted to be able to announce such exceedingly positive preliminary results for our first quarter," commented Dickson Lee, Chairman and CEO of L&L. "We continue to experience the accretive effects of the four acquisitions we made last year, as well as the benefits of operational improvements at those facilities. China's government recently reiterated its commitment to consolidate the coal industry and support mergers and acquisitions of smaller mines, which form the crux of our strategic expansion. We look forward to sharing our full quarterly results with our shareholders shortly. We expect strong continued growth for the rest of the year as we continue to execute our core businesses, integrate our recent acquisitions, and seek out new growth avenues."

GeoTeam note:

According to analysts estimates, LLEN has one more quarter left of above average EPS growth, before EPS growth is forecast to slow for a few quarters.

Quarter	Fiscal 2012	Period Change	Fiscal 2011	Period Change	Fiscal 2010
First	$0.45 E	9.8%	$0.41	215.4%	$0.13
Second	$0.49 E	16.7%	$0.42 E	41.4%	$0.29
Third	$0.40 E	25.0%	$0.32 E	-5.9%	$0.34
Fourth	$0.52 E	26.8%	$0.41 E	2.5%	$0.40
Year	$1.85 E	20.1%	$1.54 E	32.8%	$1.16

Source: Reuters

We have referenced this issue in the past. Please be aware that 2011 company EPS guidance of $1.61 is greater than analyst estimates. Also keep in mind that LLEN goal is to pursue accretive acquisitions.

Liandi Clean Tech (LNDT) - Legal Insights

Tue, 31 Aug 2010 04:00:00 GMT

Annual Inspection:

In accordance with relevant PRC laws, all types of enterprises incorporated under the PRC laws are required to conduct annual inspections with the State Administration for Industry and Commerce of PRC or its local branches. In addition, foreign-invested enterprises are also subject to annual inspections conducted by PRC government authorities. In order to reduce enterprises’ burden of submitting inspection documentation to different government authorities, the Measures on Implementing Joint Annual Inspection issued by the PRC Ministry of Commerce together with other six ministries in 1998 stipulated that foreign-invested enterprises shall participate in a joint annual inspection jointly conducted by all relevant PRC government authorities. Beijing Jianxin, as a foreign-invested enterprise, has participated and passed all such annual inspections since its establishment on May 6, 2008.

Noah Edu Holding Ltd Ads (NED) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

Fourth Quarter Fiscal 2010 Financial Highlights:

Net revenue for the quarter decreased by 71.9% to RMB33.5 million (US$4.9 million), compared with RMB119.1 million in the fourth quarter of fiscal 2009.
Net loss was RMB83.5 million (US$12.3 million), compared with net income of RMB17.9 million in the fourth quarter of fiscal 2009.
Basic and diluted loss per share were RMB2.19 (US$0.32) and RMB2.15 (US$0.32) respectively, compared with basic and diluted earnings per share of RMB0.50 for the fourth quarter of fiscal 2009.
Non-GAAP basic and diluted loss per share, excluding share-based compensation expense, were RMB2.13 (US$0.31) and RMB2.09 (US$0.31) respectively, compared with basic and diluted earnings per share of RMB0.57 (US$0.08) for the fourth quarter of fiscal 2009

Financial Outlook for First Quarter of Fiscal Year 2011:

Net revenue in the range of RMB123 million (US$18.1 million) to RMB129 million (US$19.0 million) for the first quarter of fiscal 2011, which includes RMB102.5 million to RMB106.5 million from the traditional ELP business, RMB12.5 million to RMB13.5 million from the LNS business and RMB 8 million to 9 million from Wentai Education (August 30 - September 30, 2010).
Basic loss per share in the first quarter of fiscal 2011 is expected to be in the range of RMB0.32 (US$0.05) to RMB0.38 (US$0.06)

One Bio (ONBI) - Liquidity Requirements

Tue, 31 Aug 2010 04:00:00 GMT

One Bio strategy:

As discussed elsewhere in this document, the Company has implemented a two pronged strategy, which is:

to encourage and support organic expansion within the enterprises it acquires and utilize synergies and economies of scale between the entities; and
to identify and acquire accretive acquisition targets.

To be successful, each strategy requires adequate funding from available liquidity resources. Accordingly, ONE has determined that its organic expansion strategy is first supported through organically generated cash flow and supplemented by available borrowing capacity depending on the requirements of the anticipated expansion project. Any liquidity organically generated in excess of reinvestment needs will be channeled to the accretive acquisition strategy or retained for future expansion projects.

The Company had working capital of $9,508,982 as of June 30, 2010. Our operating and capital requirements in connection with supporting our expanding operations and introducing new products have been and will continue to be significant to us. Although we are profitable, and have been profitable, for the six months ended June 30, 2010 and 2009, our growth strategy, which is initially focused on accretive acquisitions and organically expanding our product lines will require substantial capital which we may not be able to satisfy solely through our operations.

Based on our current plans for the next 12 months, we anticipate that additional revenues earned from our expanded product line and broadened distribution channels will be the primary organic source of funds for future operating activities in 2010. However, to fund continued expansion of our product lines and extend our reach to broader markets, including international markets, and to acquire additional entities, we may rely on bank borrowing, if available as well as capital raises.

Origin Agritech Ltd (SEED) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

During the third quarter of fiscal 2010 the Company generated:

Revenues of RMB 462.23 million (US$68.07 million), a decrease of 3.13% from RMB 477.17 million (US$69.84 million) generated in the three months ended June 30, 2009.
Operating profit for the third quarter of 2010 amounted to RMB153.36million (US$22.58 million) compared with an operating profit of RMB118.95 million (US$17.41 million) for the same period in 2009.
Net income attributable to Origin Agritech Limited for the third quarter of 2010 was RMB105.16 million (US$15.49million), or RMB 4.52 (US$0.67) per diluted share, as compared to a net income attributable to Origin Agritech Limited of RMB74.97 million (US$10.98million), or RMB3.26 (US$0.48)per diluted share in the same period one year ago.

Based on its current outlook, and existing and anticipated business conditions, Origin believes the revenue guidance for FY 2010 to be in the range of RMB 580 million to RMB 600 million.

Sino Oriental (SMPN) - Reverse Merger Activity

Tue, 31 Aug 2010 04:00:00 GMT

On August 20, 2010 Sino Oriental became a public entity via a reverse merger transaction.

Concurrent Private placement:

On August 20, 2010, under the terms of the Securities Purchase Agreement, we sold 1,939,407 units, each consisting of one share of our common stock and a warrant to purchase one-fifth of a share of our common stock, to certain institutional investors for a total of $15.3 million.

Company Snapshot:

Green and organic food producer

Industry Snapshot:

Bamboo is a group of perennial evergreen plants and is one of the fastest growing woody plants in the world. Bamboo shoots are new bamboo culms that come out of the ground. They are edible and widely used in a number of Asian dishes and broths.
China has over 10 million total acres (40,468 square kilometers) of bamboo forest, placing it first in the world (Source: China Bamboo Shoot Association). China is also the largest producer of bamboo shoot products with over 90% of global market share (Source: China Bamboo Shoot Association). The overall Chinese bamboo shoot industry is highly fragmented; there are currently over 2,000 bamboo shoot companies in China. Based on information from the China Bamboo Shoot Association and our estimate, we believe that we are one of the largest producers of bamboo shoot products in China.
The global organic food market has experienced over 30% growth in the past few years. China is one of the world's fastest growing markets for organic food products both in terms of consumer demand and commercial production

Post Merger Share Calculation:

5,000,004: Pre reverse merger outstanding shares
11,685,617: Shares cancelled as part of the Share Exchange
11,685,617: Newly issued shares of Common Stock
1,939,407: Shares associated with private placement
387,881 : Warrants associated with private placement exercisable @ $9.45 per share
135,759: Warrants issued to financial institutions exercisable @ $9.45 per share

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 15,253,518

Please not that we are taking a closer look at the share count. Although we did not find any supporting language in recent filings, we suspect that the shell company may have enacted a forward stock split and subsequent reverse split that has not yet been refelcted in the price.

Financial Snapshot:

Three months ended June 30, 2010

Net sales were $10.0 million compared to $4.8 million for the same period last year, an increase of $5.2 million or 109%.
Our net income increased by $1.6 million or 294%, to $2.1 million for the three months ended June 30, 2010 from $0.5 million for the three months ended June 30, 2009.

Fiscal year ended 2009

For the fiscal year ended 2009 our net sales were $39.8 million compared to $25.8 million for the same period last year, an increase of $14.0 million or 54%.
Our net income increased $5.4 million or 81%, to $12.1 million for the fiscal year ended 2009 from $6.7 million for the fiscal year ended 2008.

GeoTeam note: The company has retained a top 100 auditor:

On August 19, 2010, our board of directors recommended and approved the engagement of PKF Hong Kong effective as our independent accountant to audit our financial statements for its fiscal year ended December 31, 2010.

We have audited the accompanying consolidated balance sheets of Fujian Yada Group Co., Ltd. (the "Company") and its subsidiaries as of December 31, 2009 and 2008, and the related consolidated statements of income and comprehensive income, stockholders' equity and cash flows for each of the two years in the period ended December 31, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Sino Oriental (SMPN) - Financial Target Agreements

Tue, 31 Aug 2010 04:00:00 GMT

In connection with the Securities Purchase Agreement, the Majority Shareholder entered into a make good escrow agreement (the "Make Good Escrow Agreement") pursuant to which he pledged to the investors that invested under the terms of the Securities Purchase Agreement, 1,939,407 shares of our common stock owned by the Majority Shareholder. The shares will be released from the pledge if we meet certain operating milestones contained in the Make Good Escrow Agreement. If we fail to meet the operating milestones, then the investors will have the right to receive the shares pursuant to the pledge and the terms of the Make Good Escrow Agreement. The make good EPS target is defined as net income divided by shares outstanding at the time of the close which appears to about 14,719,878 (does not include warrants).

2010 EPS make good target: $18,176,145 divided by commons shares outstanding= $1.23

2011 EPS make good target: $27,264,218 divided by commons shares outstanding= $1.85

GeoTeam® 2009 Pro-forma EPS calculation: $0.91

Sino Oriental (SMPN) - Investor involvement

Tue, 31 Aug 2010 04:00:00 GMT

Investors who participated in the reverse merger

Investor's Legal Name	Investor's Investment Amount
CID Greater China Venture Fund III, L.P.	1,269,036
Value Partner Hedge Master Fund Limited	253,800
Deng Hui	12,690
Hu Hong	12,690
Gu Liping	27,285
Ye Fang	5,076
Wu Mijia	19,670
Wang Heping	25,381
Chen Daiwu	12,694
Zhang Hong	5,076
Fu Shuhua	8,883
Lee Chih Kwang	2,538
Shao Zijian	1,269
Zhang Chunyan	133,249
Xu Yihong	63,458
Zhang Yizi	12,690
Zhu Yuanhao	3,807
Lu Murong	2,538
Hudson Bay Master Fund Ltd.	12,691
The USX China Fund	19,987
Anthony G. Polak	3,173
Anthony G. Polak “S”	3,173
Jamie Polak	3,173
Domaco Venture Capital Fund	3,173
RL Capital Partners, L.P.	6,346
Pershing LLC Custodian FBO Ronald M. Lazar IRA	3,173
RL Capital Partners	1,269
Halter Global Opportunity Fund LP	12,691

Wowjoint Holdings (BWOW) - Comments & Business Outlook

Tue, 31 Aug 2010 04:00:00 GMT

Second-quarter Ended June 30, 2010:

Revenues for the Company's second quarter ended June 30, 2010 were $2.6 million as compared to $1.7 million in the first quarter of 2010, and $8.4 million in the three month period ended June 30, 2009.

"he year-over-year decline in revenue is primarily attributable to a reduction in government spending beginning in late 2009 on large infrastructure projects, resulting in a significant reduction in new contracts being awarded for railway, highway and bridge projects. Government budgeting for large infrastructure projects has recently increased, which has in turn positively impacted Wowjoint's sales pipeline and backlog."

For the three months ended June 30, 2010, the Company reported a net loss of $0.8 million, or $.10 per share based on 7.9 million weighted average shares outstanding, compared to net income of $1.7 million for the three months ending June 30, 2009.

"Our financial results for the second quarter of 2010, while still disappointing, showed a slight increase over the first quarter of 2010," stated Mr. Yabin Liu, Chief Executive Officer of Wowjoint. "Our business continued to be impacted directly by government decisions and timing associated with major infrastructure purchases for new projects. While the effects of this policy were reflected in our second quarter 2010 financial results, China's fiscal policy is becoming more accommodative again, which is resulting in an increase in government budgeting for large infrastructure projects and in the current flow of potential contract activity. As a result, our contract backlog grew and we expect to see a significant improvement in our financial performance in the second half of 2010. It is important to note that management believes the recent short-term shift in government spending only resulted in a delay in these high-value infrastructure projects, and shall not have an effect on the long-term plans for these projects. Furthermore, we continue to work on diversifying our revenue stream as shown by our substantial growth in technical services sales during the second quarter of this year."

"Contract activity is improving and our sales and marketing team has made progress as we look for business opportunities both domestically and abroad," added Mr. Liu. Our recently announced sales contract with China Railway Group combined with the recently announced equipment lease and service agreements with China Railway Construction Company and China Railway Group bring the value of contracts announced since July 29th to approximately $11 million. Given the proprietary design of our equipment, our innovative engineering expertise and our market position, we expect to capitalize on long-term trends which benefit our business. To complement our growth and speed the sales cycle, we are investigating alternative business models, such as equipment leasing, which would enable us to capture additional share of customer expenditures on construction equipment."

"Given the fact that the construction equipment business consists of large, long lead-time contracts subject to macro-economic factors, our business and our financial results are, by definition, difficult to predict and are extremely 'lumpy' in nature on a quarter to quarter basis.

Revenue Guidance and Contract Backlog

Management issued revenue guidance for Q3 2010 of approximately $8.0 million, as current backlog of signed contracts totals approximately $17.0 million, up from $13.1 million at the end of the first quarter 2010.

China Energy Corp (CHGY) - Investor Alert

Mon, 30 Aug 2010 04:00:00 GMT

China Energy Corporation (the “Company”) is a Nevada corporation, formed on October 11, 2002 under the name Omega Project Consultations, Inc. The name was changed to China Energy Corporation on November 3, 2004. On November 30, 2004, the Company entered into a share exchange agreement with Inner Mongolia Tehong Coal Group Co., Ltd. (“Coal Group”), and Inner Mongolia Zhunger Heat Power Co. Ltd. (“Heat Power”) and their respective shareholders. The transaction was accounted for as a reverse merger, a procedure that treats the transaction as though Coal Group had acquired the Company. Under the accounting for a reverse merger, the assets and liabilities of the Company, which were nil at the time, were recorded on the books of Coal Group, the continuing company, and the stockholders’ equity accounts of Coal Group were reorganized to reflect the shares issued in this transaction.

The share exchange agreement, which resulted in the Company’s acquisition of the Coal Group and Heat Power, was governed by and valid under Nevada law and was not perfected under the then People’s Republic of China (“PRC”) law. It was not until certain changes in PRC law, which became definitive in 2006, that the series of procedures of governmental approvals and corporate actions were clarified and the Company acknowleged the condition precedents to that perfection.

The Company does not believe the lack of perfection impairs its ability to exercise control over the Coal Group and Heat Power as it continues to exercise control over them, consistent with the intent of the original shareholders.

The Company is in the process of completing the necessary actions to meet the current PRC legal requirements related to the acquisition of Coal Group and Heat Power. On July 13, 2009, the Company entered into a framework agreement which detailed the actions contemplated for the restructuring of the Company, Coal Group and Heat Power under a "variable interest entity" (“VIE”) structure to meet the current requirements of applicable PRC law.

The framework agreement provides that (i) the Company will establish a newly-formed, indirect subsidiary of the Company incorporated in the PRC (“CEC China”), (ii) CEC China will enter an exclusive service agreement and option agreement with each of Coal Group and Heat Power (collectively, the “Operating Companies”) and a share pledge agreement with each of the Operating Companies and certain of their respective PRC Shareholders (“PRC Shareholders”). The framework agreement also requires the PRC Shareholders to fully authorize CEC China to exercise all shareholders’ rights that the PRC Shareholders can exercise in the Operating Companies. By entering into the framework agreement and subsequently setting up the structure involving the use of VIEs, the Company will have the control and the economic benefits and costs of ownership of the Operating Companies consistent with PRC regulatory requirements.

Soko Fitness & Spa (SOKF) - Comments & Business Outlook

Mon, 30 Aug 2010 04:00:00 GMT

2010 Fiscal Fourth Quarter Financial Highlights:

Fourth quarter 2010 revenue totaled $8.0 million, an increase of 40% over $5.6 million in the fourth quarter of 2009.
Gross profit increased to $5.2 million, or 65% of revenue for the quarter, compared with $3.8 million, or 68% of revenue in the fourth quarter of 2009.
Operating income was $2.0 million, a 5% increase over $1.9 million in the fourth quarter of 2009.
Net income was $2.0 million, or $0.10 per diluted share, compared with $2.0 million, or $0.12 per diluted share in the same period a year ago.

Commenting on SOKO's plans for the upcoming year, Mr. Liu stated, "Our growth plans for fiscal 2011 remain aggressive. We believe that the cash we generate from operations, coupled with the proceeds from our April financing, will give SOKO the resources to maintain our robust expansion plans to open new facilities and acquire centers that we believe complement our existing portfolio. We achieved a great deal in fiscal 2010 and believe that the stage is set for continued advancement in fiscal 2011. With an established, well-respected brand in the beauty and fitness markets, a growing base of potential customers driven by increasing affluence in China, and a strong financial position that will enable us to achieve our growth objectives, we are excited about what the future holds for SOKO."

GeoTeam Note®:

Please note that operating income growth was lack luster. EPS was also held back by dilution from money SOKF raised earlier this year that it has still not deployed.

NN inc (NNBR) - Research

Fri, 27 Aug 2010 04:00:00 GMT

Earlier today, we began tracking NNBR due to:

Bullish commentary in its financial press release issued on August 11, 2010.

"For the second half of the year, we are forecasting continued strong customer demand for our products. Traditionally, in terms of revenues, our third quarter is our weakest quarter due to seasonality factors. Historically, our third quarter has been down sequentially versus the second quarter in a range of 8% to 10%. However, based on continued strong customer demand, we are anticipating a third quarter with sales only slightly down from second quarter levels with continuing good demand through the end of the year. We therefore are revising our previous guidance of $315 million to $335 million in revenues to a range of $350 million to $360 million in revenues for the full 2010 year. The midpoint of our guidance reflects the assumption that during the second half of 2010 we will see revenues in line with our experience during the first half of the year. We are encouraged by the pace of the recovery and the significant improvement we have experienced in profitability and corresponding cash flows during the first half of 2010. We look forward to the last half of 2010 with some level of confidence that the global economic recovery will continue to provide a level of demand that will return NN to solid levels of profitability moving forward."

EPS Estimates that point to some strong growth for the back half of 2010, where the company is expected to report EPS of $0.34 compared to a loss in EPS of $(0.53) in the same period in 2009.
At $7.30, the stock has pulled back from a recent high of $8.42, which could give investors a chance to enter a stock that is selling at a P/E of 10 on 2010 EPS estimates of $0.73.

Please note that EPS comparisons will become more challenging starting in the second half of 2011.

A-Power En General Systems (APWR) - Comments & Business Outlook

Thu, 26 Aug 2010 04:00:00 GMT

"GAAP net income attributable to A-Power in the 2010 second quarter increased 86.3% to $11.6 million, or $0.25 per diluted share, from $6.3 million, or $0.14 per diluted share in the prior year period. Non-GAAP net income, declined to $1.1 million from $4.7 million in prior year period."

Non-GAAP EPS works to about $0.02 vs. $0.13.

In the 2010 second quarter, total shares outstanding on a diluted basis were 46.5 million shares, an increase of 32%, compared with 35.3 million in the prior year period.

Business Outlook

The Company reiterates its guidance for its full year 2010 outlook of revenues of $500 million and net income of $60 million. This guidance is based upon the on-going DG projects and revenues from the expected sale of wind turbines to be generated during the remainder of 2010.

Mr. Lu continued, "We have many compelling opportunities in our business that can drive our revenue growth significantly higher in the second half of the year. Our DG business is expected to remain the primary performance driver with sales coming from our existing 15 projects. Significant sales are also expected in our wind turbine business in the second half of the year. We expect to begin delivery of 2.0 MW or larger turbines to customers in the second half of 2010. We are building a platform that will establish A-Power as an emerging leader in both distributed power and alternative power generation systems and are working aggressively to capitalize on the long-term growth opportunities in these areas."

China Shuangji Cement (CSGJ) - Investor Alert

Thu, 26 Aug 2010 04:00:00 GMT

China Shuangji Cement, Ltd. announced today that one of its 4 cement plants, the Dongfang facility on Hainan Island, is on a recently published list of more than 2,000 production lines across China that the Ministry of Industry and Information Technology (MIIT)* wants to phase out due to concerns about outmoded production methods. China Shuangji is working closely with the government to keep the plant open and potentially expand production in this fast growing resort area.

According to the list, published on August 6, 2010, the Company’s Dongfang production line may eventually be phased out as part of the Chinese government’s efforts to upgrade and consolidate the cement industry. However, no time-table has been given and the Company is working with the government to allow it to upgrade and modernize its Dongfang plant instead. In the event of a closure, the Company believes that it may be granted a new production permit for a more modern and bigger production line and other forms of compensation in exchange for the closure. The Company’s Dongfang production line, established in 1994 in Hainan Province, has an annual production capacity of 500,000 metric tons of cement, representing 33% of China Shuangji’s current total production capacity. After the Company’s new Zhaoyuan facility comes online, the Dongfang facility would represent only 20% of its new increased total production capacity.

“We are working very closely with the Chinese government to resolve this issue as quickly as possible,” said Mr. Wenji Song, Chairman and President of China Shuangji Cement, Ltd. “We feel confident we will be successful in this regard and are in a good position to upgrade and modernize our Dongfang facility."

Mr. Song continued, "The Company is also presently nearing completion of a brand new state-of-the-art cement facility that would meet all new government standards. This new facility, in Zhaoyuan City, is expected to increase our production capacity by 1,000,000 metric tons to an estimated 2,500,000 metric tons per year, assuming the Dongfang facility remains at 500,000 MT per year. We believe that this new capacity from Zhaoyuan, once it is open, will solidify our position as a major cement player in Shandong and Hainan Provinces.”

*A link to the Ministry of Industry and Information Technology’s (MIIT) list may be found at http://www.miit.gov.cn/n11293472/n11293832/13333261.html

Skypeople Fruit Juice (SPU) - Research

Wed, 25 Aug 2010 04:00:00 GMT

Skypeople Fruit Juice may have surprised investors the morning with the announcement of a public offering of stock of about five million shares, priced at $5.00. The offering will result in about 25.0% dilution. Those who follow this story knew this event was coming at some point. But commentary in its 2010 second quarter 10Q implied that the company would use internally generated funds until markets stabilized.

You be the judge. Have markets stabilized?

While the company certainly needs to begin construction of new product lines now in order to stay on schedule to meet anticipated demand before the next squeezing season, a greater portrayal of confidence would have been instilled to the street if management could have at least:

Used some of its cash on hand or
Embarked on a smaller scale expansion strategy

On the positive side, it important to note that SPU has been able to deliver EPS growth since the last offering of stock they completed in 2009.

Skypeople Fruit Juice (SPU) - Liquidity Requirements

Tue, 24 Aug 2010 04:00:00 GMT

Excerpt from 2010 Second Quarter filing:

In the second quarter of 2010, we filed a registration statement to register for the sale of 5,300,000 shares of our Common Stock. We intend to use the net proceeds from the offering primarily for capital expenditure purposes.

Our capital expenditures for 2010 and 2011 are expected to be approximately $62 million, which includes a

Beverage production line.
50 ton/hour concentrated apple juice production line.
Refrigeration storage with a capacity of 15,000 tons.
Concentrated fruit juice mixing center with a capacity of 10,000 tons.
Related construction and an environmental project in Huludao Wonder factory
PET bottle blowing machine system.
24,000 PET bottle/hour fruit juice beverage aseptic cold-filling line.
10 ton/hour concentrated pomegranate production line.
Fructose production line.
One refrigeration storage.
Kiwifruit Quality and Safety Testing Center in Shaanxi Qiyiwangguo factory.
20 tons/hour concentrated pear juice production line in the Jingyang facility.
20 tons/hour concentrated apple juice production line in the Yingkou facility.

To the extent our proceeds from the offering cannot adequately cover the total capital expenditures of the above projects, we plan to finance the rest of the capital expenditures primarily through operating cash flows income from government subsidies and bank loans. We currently consider the foregoing projects our priority projects and intend to use the proceeds from the offering first and primarily for such projects. However, depending on the changing needs of our business and market opportunities, we may instead use a portion of the net proceeds from the offering to acquire or license products, technologies or businesses we believe to be complementary to our business, should we determine that our business will benefit more from such expenditures. We currently have no agreements, commitments or understandings relating to any material acquisitions or licenses.

We plan to postpone some of our capital expenditure plans if we cannot complete the offering that we planned due to the unstable stock market condition. We plan to continue to invest in our business though our operating cash flow and short term loans from banks in order to continue growing our business.

GeoTeam note:

We found it interesting that SPU would not take questions on its 2010 second quarter conference call. Companies sometimes follow this procedure when they are in a quiet period.

Trina Solar Adr (TSL) - Comments & Business Outlook

Tue, 24 Aug 2010 04:00:00 GMT

Second Quarter 2010 Financial and Operating Highlights:Second Quarter 2010 Financial and Operating Highlights:
-- Solar module shipments were approximately 223 MW, compared to the Company's previous guidance of 200 MW to 205 MW, representing an increase of 15.7% sequentially and 248.7% year-over-year
-- Net revenues were $370.8 million, an increase of 10.1% sequentially and 147.2% year-over-year
-- Gross margin was 32.1%, above the Company's guidance of high 20s in percentage terms, compared to 30.9% in the first quarter of 2010 and 27.4% in the second quarter of 2009
-- Operating income and operating margin were $83.3 million and 22.5%, respectively, compared to $76.0 million and 22.6%, respectively, in the first quarter of 2010
-- Net income was $38.7 million, which includes a net foreign currency exchange loss of $29.2 million, compared to net income of $44.5 million in the first quarter of 2010
-- Earnings per fully diluted ADS were $0.52, which include the impact of a net foreign currency exchange loss of $0.37 per fully diluted ADS, compared to $0.66 in the first quarter of 2010

Excerpts:

We are very pleased to report another quarter of strong operating results," said Mr. Jifan Gao, Chairman and CEO of Trina Solar. "We exceeded our previous guidance through both record shipment volumes, and despite significant Euro currency pressures, a sequential improvement in gross margin.

Our high quality products, well-recognized brand and customer loyalties allowed us to expand shipments to an increasing number of geographical end-markets and PV user segments. In addition to growing our business in Australia and Southeast Asia, we had notable successes in the United States. This included signing a landmark supply agreement with Southern California Edison to participate in their California Solar Program, a milestone utility-owned PV generation project in the United States.

We see increasing evidence that strong demand for our PV products will extend well into 2011, and we are currently looking into how best to manage capacity expansion to capture increasing global market opportunities.

Sales Outlook

As a result of strong demand for its module products in both European and non-European markets, the Company expects to increase its shipment volume in the second half of 2010 compared to the first half. Additionally, the Company expects to increase its percentage of global shipments to the United States in the second half of 2010.

2010 and 2011 Capacity Expansion

Through yield increases achieved from improved cell conversion efficiency rates, improved production efficiencies and manufacturing line enhancements, the Company has increased its annualized in-house production capacities of ingot and wafer as well as PV cells and modules to approximately 700 MW and 850 MW respectively as of June 30, 2010. The Company expects to expand its annualized cell and module production capacity to reach up to 950 MW by the end of August 2010.

By the end of 2011, the Company expects to expand its annualized in-house production capacities of ingot and wafer as well as PV cell and module production capacity to approximately 1.0 GW and 1.5 GW respectively.

Weikang Bio-Tech Group (WKBT) - Conference Call Notes

Tue, 24 Aug 2010 04:00:00 GMT

The GeoTeam® listened to the WKBT 2010 second quarter conference call to determine if the company could meet its full year $17 million make good target despite a weak quarterly performance, resulting from

"harsh weather, which disrupted business operations and impacted our sales."

Operations are back to normal and normal rate of growth is intact.
Weather disruption should not result in a loss of customers.
Acquisition strategy will be employed as part of overall growth strategy.
Sufficient capacity to fund growth. We hope this means that an equity offering is not in the cards, unless for the purpose of an accretive acquisition.
Upbeat for rest of 2010.
2010 results will exceed $17.0 million make good target.
Will update outlook soon.

Zst Digital Networks (ZSTN) - Comments & Business Outlook

Tue, 24 Aug 2010 04:00:00 GMT

ZST Digital Networks, Inc. announced that its Board of Directors has authorized the Company to repurchase outstanding shares of the Company's common stock in an amount not to exceed $1 millionin open market purchases, with block trades being permitted, from time to time in the discretion of the Company's management and as market conditions allow.

Mr. Bo Zhong, Chairman and Chief Executive Officer of ZST, commented, "The Board's authorization of the share repurchase program reflects our confidence in the favorable growth outlook for ZST. As we enter the second half of 2010, the demand for our products and services remains robust, supported by the continued expansion of our end markets. In addition, our strong second quarter 2010 results and the rapid development of our commercial GPS products give us confidence in the long-term growth prospects of our business. As such, we believe that current share price levels do not fully reflect the fundamental strength of our business and outlook. We remain committed to maximizing long-term shareholder value, and believe that our stable financial position and healthy balance sheet will allow us to execute a share repurchase program while continuing to invest in our business."

Sino Oriental (OTC BB:SMPN) Goes public. Includes EPS make good that implies a 2011 50.0 % growth r...

Thu, 02 Sep 2010 14:02:00 GMT

Sino Oriental (OTC BB:SMPN) Goes public. Includes EPS make good that implies a 2011 50.0 % growth rate. $$

GeoSpecial Amtech Systems (NASDAQ:ASYS) Announces $37 Million in New Solar Orders; Fiscal 2010 YTD S...

Thu, 02 Sep 2010 13:25:00 GMT

GeoSpecial Amtech Systems (NASDAQ:ASYS) Announces $37 Million in New Solar Orders; Fiscal 2010 YTD Solar Orders Reach a Record $157 Million

China Mediaexpress Holdin (NASDAQ:CCME) Provides Clarification to 144 Filing.

Thu, 02 Sep 2010 13:24:00 GMT

China Mediaexpress Holdin (NASDAQ:CCME) Provides Clarification to 144 Filing.

GeoBargain Labarge (NYSE AMEX:LB) reports $0.30 vs $0.16; Management Optimistic About Fiscal 2011 Bu...

Thu, 02 Sep 2010 13:21:00 GMT

GeoBargain Labarge (NYSE AMEX:LB) reports $0.30 vs $0.16; Management Optimistic About Fiscal 2011 Business Outlook

GHBAA now trades as Uan Cultural & Creative Co L (OTC BB:GHBAD).

Thu, 02 Sep 2010 13:00:00 GMT

GHBAA now trades as Uan Cultural & Creative Co L (OTC BB:GHBAD).

China Green Agriculture (NYSE:CGA) reports results - Q4 FY2010 Sales Increase 54.5% to $16.2 Million...

Wed, 01 Sep 2010 19:45:00 GMT

China Green Agriculture (NYSE:CGA) reports results - Q4 FY2010 Sales Increase 54.5% to $16.2 Million, Net Income Increases 35.5% to $6.0 Million with EPS of $0.25; Company Provides Fiscal Year 2011 Guidance: Revenue, Net Income and EPS of at least $150.5 Million, $36.2 Million, and $1.35, respectively.

Worldwide Energy (OTC BB:WEMU) July Revenue Update - $14.8 Million July Revenues With 9.1% Gross Pro...

Wed, 01 Sep 2010 15:24:00 GMT

Worldwide Energy (OTC BB:WEMU) July Revenue Update - $14.8 Million July Revenues With 9.1% Gross Profit Margin.

NN inc (NASDAQ:NNBR) Bounces back nicely. see original note

Wed, 01 Sep 2010 14:21:00 GMT

NN inc (NASDAQ:NNBR) Bounces back nicely. see original note

U.S. Earnings Recap, September 1, 2010

Wed, 01 Sep 2010 13:45:00 GMT

Below is a recap of some latest U.S. company strong earnings beats compared to estimates and prior period, with links to their commentaries. Note: This list may be updated throughout the day, up to and including the guidance comments!

Strong Earnings Beats for Some U.S. Companies

	EPS Estimate	Reported Non-GAAP EPS	Prior Year Reported Non-GAAP EPS	Comments or Guidance
Culp (NYSE:CFI)	0.24	0.28	0.15	Sees uncertainty
G-Iii Apparel Group, Ltd. (NASDAQ:GIII)	(0.02)	0.15	(0.17)	Raises guidance
Calavo Growers, Inc. (NASDAQ:CVGW)	0.41	0.41	0.17	Analyst estimates indicate growth may moderate. See release
Concurrent Computer Corporation (NASDAQ:CCUR)	0.03	0.11	0.03	See release. No guidance.
Unify Corporation (NASDAQ:UNFY)	N/A	0.15	(0.14)	Maintains guidance

Disclosure

Positions: CCUR

You agree that you shall not republish or redistribute in any medium any information on the GeoInvesting website without our express written authorization. You acknowledge that GeoInvesting is not registered as an exchange, broker-dealer or investment advisor under any federal or state securities laws, and that GeoInvesting has not provided you with any individualized investment advice or information. Nothing in the website should be construed to be an offer or sale of any security. You should consult your financial advisor before making any investment decision or engaging in any securities transaction as investing in any securities mentioned in the website may or may not be suitable to you or for your particular circumstances.

China Earnings Recap, August 31, 2010

Tue, 31 Aug 2010 15:00:00 GMT

Below is a recap of some latest Chinese company earnings compared to estimates and prior period, with links to their commentaries or releases. Note: This list may be updated throughout the day, up to and including the guidance comments!

Most Recent Quarterly Earnings for Some U.S. Listed Chinese Companies

	EPS Estimate	Reported Non-GAAP EPS	Prior Year Reported Non-GAAP EPS	Comments / Guidance
Wowjoint Holdings (NASDAQ:BWOW)	n/a	(0.10)	(0.07)	Quarters can be lumpy
China Gerui Advanced Mate (NASDAQ:CHOP)	0.24	0.26	0.34	Sees strong demand
Funtalk China Holdings (NASDAQ:FTLK)	0.15	0.19	0.09	Issues guidance
Asia Entertainment & Reso (NASDAQ:AERL)	n/a	0.40	0.00	Initiates net income guidance.
China Infrastructure Cons (OTC BB:CHNC)	n/a	0.47	1.43	No specific guidance. EPS hurt by a massive increase in share count
Noah Edu Holding Ltd Ads (NYSE:NED)	0.03	(0.31)	0.08	Sees continued losses
Origin Agritech Ltd (NASDAQ:SEED)	0.61	0.67	0.48	Lowers revenue guidance

Disclosure at time of this post: Long CHNC

GeoTeam Tackles Earnings Season, Part 2

Thu, 26 Aug 2010 16:20:00 GMT

So far, a good deal of ChinaHybrid stocks have either reported strong June 2010 financial results, exceeded analysts estimates or issued positive business outlooks. Unfortunately, prices have not really responded, held back by weak market sentiment and rumor mongering on the China front.

EPS growth for our tier one stocks was strong:

All three stocks in our tier one list came through with stellar results. China Mediaexpress Holding (NASDAQ:CCME) and Deer Consumer Products (NASDAQ:DEER) smashed estimates, while China Digital Communications (NYSE AMEX:NEWN) also reported strong financial results.

	EPS Estimate	Reported non-GAAP EPS	Prior Year Reported Non-GAAP EPS
CCME	$0.53	$0.80	$0.40
DEER	$0.06	$0.18	$0.08
NEWN	n/a	$0.35	$0.22

Thus far, these stocks have had a muted reaction since results were announced.

We are suspecting that some trepidation in DEER shares may have resulted from:

Trade growth data released by China that, although still strong, missed expectations.
Negative operating cash flow.

We published a transcript of the conference call notes which conveyed bullish sentiment. We could not get our hands on the Q&A session.

Regarding CCME weakness, It could be possible that investors were hoping that the company would raise guidance. The high end of the company s current adjusted net income guidance of $85.0 million would imply EPS of $1.08 for the last half of 2010 compared to $1.05 in the comparable 2009 period. We had a similar concern after the 2010 first quarter's performance, but the company squelched this fear. Hopefully, the next two quarters will do the same.

Possible additional reasons:

Some investors have been questioning the accuracy of CCME financial results.
Selling pressure from a recently filed registration statement.

Please be aware that we are still awaiting a response from management on "the need to obtain an advertising license for certian services and for certain jurisdictions."

In general, we feel that uncertainty regarding quality issues in the ChinaHybrid Space is leading to investor confusion and trepidation.

Please see some of our initial due diligence findings.

NEWN just had its shares up-listed to the NYSE-AMEX which investors are hoping will increase exposure and trigger upward price momentum. Comments were bullish.

GeoBargain Yuhe Intl (NASDAQ:YUII) beat 2010 second quarter analyst estimates by a penny, reporting a 46.2% increase in EPS to $0.19. The company is on track to meet its financial guidance and is experiencing positive pricing trends. Shares have shown some weakness, possibly an over reaction to news that the company will experience a slight delay in the commencement of its new hatchery.

June quarter financial results for tier two companies have been mixed:

Telestone Technologies (NASDAQ:TSTC) and China Armco Metals (NYSE AMEX:CNAM) delivered subpar second quarter EPS results. Recent updates on GeoInvesting highlighted this possibility.

We had commented on TSTC's history of sporadic quarters. On top of this:

TSTC s accounts receivable position has not improved.
A negative article surfaced questioning the accounts receivable standing.

On the bright side:

It appears that the company invested funds in preparation for the remainder of the year.
The company has maintained previous net income guidance which implies that it will report EPS of about $1.85 for the last half of the 2010 year. TSTC reported EPS of $0.91 in the back half of 2009

It would be helpful if TSTC could issue third and fourth quarter guidance to ensure investors that it can grow quarterly EPS consistently. A recent interview with Zack Buckley, who has traveled to China on GeoInvesting's behalf We also need to be aware that the company has recently filed a prospectus allowing it to raise capital in the future.

As we expected, CNAM could not keep pace with its 2009 second quarter. Results were dismal. In addition, the company reduced its guidance for 2010 due to a delayed ramp up of its new recycling venture. However, the new 2010 guidance of $10.0 million implies adjusted EPS of $0.79 on about $11.0 million in net income for the remainder of 2010 compared to adjusted EPS of $0.27 in the 2009 comparable period (most of which came in the fourth quarter).

Will fear create opportunity?

How do you play these two stocks? Because guidance still implies rapid EPS growth for the reminder of 2010, we will continue to track CNAM and TSTC as tier two stocks. Those who monitor CNAM should keep a close eye on scrap metal prices which could impact guidance. If prices hold up, CNAM could have some impressive third and fourth quarter EPS numbers. For TSTC, the decision is not as easy. The potential for lumpy quarters throws a wrinkle into its story, as does the continual attack by short investors. From a cursory glance, it appears that TSTC has never put together more than two strong quarterly EPS performances in a row.

China-Biotics (NASDAQ:CHBT) had a delayed reaction to its earnings report issued on August 9, 2010. It looks like the company is well on its way to diffusing one of our roadblocks regarding concerns over short-term EPS growth. Analysts have already raised estimates, indicating that CHBT will experience 30%+ EPS growth in five of the next seven quarters.

China Valves Tech (NASDAQ:CVVT) also came through with a nice surprise, exceeding analyst estimates by ten cents by growing 2010 second quarter EPS 56.0%. The stock has been in a tight range since its earnings release. The Street may have taken a tepid view on shares, as the company did not increase guidance.

The Company reiterates its net income guidance of $40 million for fiscal year 2010. (This implies about $20.0 million in adjusted net income or EPS of about $0.57. The company reported adjusted net income of $13.7 million and EPS of $0.44 in the second half of 2009).

"Although we passed the midpoint of our guidance six months into the year and have a solid backlog, we choose to remain conservative at this time and will continue to provide regular updates to investors on our business," concluded Mr. Fang.

China Marine Food (NYSE AMEX:CMFO) crushed estimates, helping its shares gradually rise past $6.00 for a period if time. Recall that CMFO is battling issues over questionable comparisons between its SAIC and SEC filings.

Yongye Intl (NASDAQ:YONG) reported EPS in line with analyst estimates.

Points to ponder regarding YONG:

Operating cash flow is negative.
In the original release YONG commented that it had issued net income and EPS guidance. However, no EPS guidance was provided. The company has since retracted this statement. Some investors may wonder why a company that just claimed it would have sufficient cash resources to finance the remaining phases of the two vertical integration initiatives could not issue EPS guidance. Still the company was clear about focusing on EPS growth:

"We are committed to continuing to maximize shareholder value not just through increased sales and net income, but also through further increases in our per share earnings performance."

It is good to see that IR firms and companies are beginning to listen to our pleas to emphasize EPS growth.

Here is a response from a YONG supporter (GeoInvesting user name Ratobranco), regarding the negative cash flow position.

I don't like the A/R, but I accept it as part of their business model. It happens every 2Q, their A/R position blows up as they sell to the farmers, then get paid after the harvest. They didn't have any problem collecting in 2009, so I'm not worried about 2010. With the huge problems in the domestic Chinese and global food markets, I think YONG's customers are going to do just fine in terms of profitability.

To be honest, I think the dilutive offering we saw last year was a result of the fact that they lacked the cash flow to fund the lignite project internally. They had big investment plans with big future returns, and they needed funding. Equity markets exist for exactly that kind of situation. So, I don't see the offering as a knock on their commitment to shareholder value, nor do I think it will be a continuing trend.

Despite the A/R disadvantages associated with the business model, I'm long on YONG because (1) I'm impressed with their CFO and CEO, (2) they have a strong brand name and market position in a crucial Chinese growth industry, (3) with KPMG as the auditor, they qualify as what I would consider to be a high class equity. I can go to sleep at night knowing that they aren't a fraud, and so can fund managers, which means that when the bull market in China hybrids eventually comes to pass, they will be among the first that get to participate.

We Recently coded Eastern Envtl Solutions Corp (OTC BB:EESC) as a GeoBargain. Recall, that we have been tracking this story since March 10, 2010. In its March 2010 first quarter the company reported net income of 1.2 million or $0.07 ($0.06 taxed). While not overly undervalued at the time, we thought the company might be able to exceed its $4 million 2010 net income run rate and report sequentially higher EPS for its 2010 second quarter, aided by capacity expansion and a resumption of operations that were temporarily inactive. see full note

EESC is also an ideal up-listing candidate.

Last week, the company filed its 2010 second quarter 10Q which highlighted the results of what could be a break out quarter:

Revenue increased 1071% to $5.2 million.
Gross profit increased 706% to $2.9 million Income from operations increased 1173% to $2.8 million.
Operating margin increased 385 basis points to 53.3% from 49.5%.
Net income increased to $2.4 million from $180,511.
$7.2 million of working capital.
shareholders' equity of $16.7 million.

See more on EESC.

We are eagerly awaiting the release of financial results for Soko Fitness & Spa (OTC BB:SOKF). According to Zack Buckley s interview notes from the July Global Hunter conference, SOKF expects to continue to report solid EPS growth.

To see a comprehensive list of strong ChinaHybrid EPS results, including Zst Digital Networks (NASDAQ:ZSTN) and Harbin Electric (NASDAQ:HRBN). See our full earnings recap.

On the U.S. side, GeoBargains Cpi Aerostructures (NYSE AMEX:CVU), Electronics Corp (NYSE AMEX:IEC) and GeoSpecial Lgl Group (NYSE AMEX:LGL) reported strong quarterly results.

CVU exceeded estimates by two cents:

Second Quarter 2010 vs. 2009

Revenue increased 10% to $12,544,625 from $11,437,691.
Gross margin was 26.7% compared to 24.8%.
Pre-tax income increased 31% to $1,826,254, compared to $1,389,489.
Net income increased 33% to $1,205,254 or $0.18 per diluted share, compared to $903,489, or $0.14 per diluted share. Diluted earnings per share were calculated on 8.7% more shares in 2010 second quarter vs. 2009 second quarter.

But EPS growth is struggling to achieve the GeoBargain 30% requirement on a consistent basis and probably will not for the remainder of the year. However, analysts have EPS pegged to balloon to over 90.0% in 2011 and over 70.0% in each 2011 quarter. Furthermore, management has done an excellent job communicating with investors and attaining its goals. For these two reasons, we will keep CVU coded as a GeoBargain, with the understanding that short-term investors may not take to this story until 2011 rolls around.

On July 19, 2010, IEC reported financial results in line with its expectations and maintained guidance.

Revenue of $26.1 million compared to revenue of $17.3 million.
Operating profit of $2.3 million compared to operating profit of $1.3 million.
Net income of $1.2 million or $0.13 per share compared to net income of $903,000 or $0.10 per share for the quarter ended June 26, 2009.

We do not believe investors will aggressively flock to IEC shares until it issues Fiscal September ending 2011 guidance.

LGL announced a monster 2010 second quarter , reporting EPS of $0.94 ($0.60 tax adjusted) and easily on its way to exceeding our high end EPS expectation of $1.77 ($1.17 tax adjusted). The company continues to build on its:

Margin expansion initiatives
Product expansion
Expansion into Asia

The conference call was very bullish.

We have removed Ricks Cabaret Intl (NASDAQ:RICK) from the GeoBargain list. We just do not see how the company will meet its 2010 September guidance due the moderation of economic growth. We had originally coded RICK as GeoBargain on August 13, 2009 at $9.05. The stock reached a high of $16.05 during the first quarter of 2010 and currently trades below $7.00 per share.

Also see notes on: ANR, CTIB, SMTX, ISSI,

See notes on new GeoSpecials AEIS, BDR, SGMA and Article on ASYS, AXTI and NANO)

Stocks in danger of being removed from the GeoSpecial list:

G Willi-Food Intl (NASDAQ:WILC): dilution may hamper consistent EPS growth.
Career Education (NASDAQ:CECO): One of our worst performing stocks since the inception of GeoInvesting. Industry wide regulation and lower estimates do not bode well for this company in the near term.
Unilens Vision Inc (OTC BB:UVIC): EPS growth does not seem to be in the cards. However, we believe there is a good chance that the company goes private at some point.

Long Disclosure: YUII NEWN SOKF EESC CVU IEC LGL ANR CTIB SMTX ISSI AEIS BDR SGMA ASYS AXTI NANO

The SEC vs SAIC Fact Finding Mission

Wed, 25 Aug 2010 14:30:00 GMT

By Maj Soueidan
President, GeoInvesting

As I have begun to perform quality checks on the ChinaHybrid Space, I have received criticism from some investors who have questioned the relevance of some of the items on my check list. I had expected this, but blind ignorance is not the path I choose to follow, at least not yet. Such tact would be would be irresponsible to my readers. If I have to delay an opportunity to purchase a stock worth $20.00 at $5.00 as opposed to $8.00, the only harm done is damage to my ego.

One of the items on my check list that has received constructive criticism is the validation of whether SEC files match Chinese State Administration for Industry Commerce (SAIC) files. My critics hold the general belief that the SAIC financial statements have no relevance to those filed with SEC.

SAIC functions in maintaining market order and protecting the legitimate rights and interests of businesses and consumers by carrying out regulations in the fields of enterprise registration, competition, consumer protection, trademark protection and combating economic illegalities. Source: http://www.saic.gov.cn/english/aboutus/Mission/

My original motivation for this mission was not necessarily to find the truth, but arose from an understanding that the "perception" of risk can affect portfolios. Just like the majority of body building depends upon proper diet, psychology can play a large role in determining short-term stock valuations. By at least identifying mis-matches, I can be aware of the possibility that bad press may influence my investment until this issue may finally be put to rest. In the interim, I can buy put options, write calls against my long positions, establish larger positions in stocks where filings do match and adjust portfolio diversification.

Ultimately, I set out to gain an understanding of why filings don't match and determine if the fear created by the skeptics has led to unique opportunities to purchase insanely cheap stocks, especially those related to companies participating in an industrial revolution.

I almost published an article a couple weeks ago on the imbalance of SAIC filings versus SEC filings. My references for my original conclusions came from various blogs and matter of fact of opinions from investment professional; but what about auditors and lawyers? I paused for a second and thought if I continued upon this conjecture fueled by the "he said, she said" mentality, I would be just adding to the rumor mill. So I set out to analyze SAIC filings first hand and obtain a written legal opinion on this subject from an attorney with knowledge of Chinese law.

I am still perplexed that IR firms and analysts have not pursued this path. My opinion as to why they have not is because they know the truth. As luck would have at, one of my GeoTeam associates enrolled in a Mandarin class that is taught by an instructor who is friends with a Chinese lawyer (let's call him "Bob") who recently moved to the U.S. My luck did not end there as he also has an exceptional understanding of financial statement analysis. Initially, I asked Bob to get in touch with various SAIC and Local AIC agencies to learn more about them and any tax related issues. (See attorny letter. Comments are welcome).

Tax Issues:

There are two types of taxes relevant to this discussion. The value added tax (VAT) is levied as a percentage of revenue. (In the service industry there is a business tax; there is no VAT. The Business Tax is similar to VAT and the PRC government is transferring Business Tax into VAT) China has a sophisticated mechanism for collecting the VAT that involves a process of tracking invoiced transactions among all parties involved in a particular sale chain. Thus, the payment of this tax is difficult to circumvent. However, companies can underreport the top line through what is called white receipts, or transactions without invoices. On the other hand, underreporting income to lessen the burden of income tax appears possible. This arises from an inefficient income tax oversight process. Taxes are paid to the State Administration of Taxation (SAT).

I also learned that the SAIC is referred to as the "last stop", meaning that by the time financial statements reach the SAIC, a company has probably already filed reports with the SAT and disclosed its tax liability.

The most important factoid I received was that SAIC documents can be audited. Most supporters, including investment banks, have commented that SAIC filings are not audited or used in the tax system. This is generally true for companies that have a Variable Interest Entity (VIE) structure in which the U.S holding company does not have direct ownership in a PRC firm. The flow of funds is set forth by a series of contractual agreements that establishes control without direct ownership. On the other hand, for companies that have direct ownership (FIE, Foreign Invested Enterprises), the SAIC does police the PRC firm and requires AUDITED financial statements, which can be shared by several government authorities. Furthermore, this financial statement is also provided to the SAT. The audit is normally completed by a local auditor. (You will understand why after reading my lawyer's legal opinion).

The Investigation Begins

I asked Bob the following:

1. Verify that SAIC filings can be audited.
2. Retrieve the filings of seven ChinaHybrid firms, including two IPOs (one of which is an ADR) and five reverse merger firms. I also made sure that two companies did not have VIE structures.
3. If filings do not match, offer an explanation as to why.

Although my sampling is not large enough to draw a statistically reliable conclusion, I deemed it as a good start to my due diligence process that will eventually cover over 70 companies. Thus far, the results are unanimous. None of the filings come even close to matching on sales, net income and taxes paid. One company even showed revenue growth on the SEC filings from 2007 to 2008 to 2009, while the SAIC filing showed growth from 2007 to 2008, followed by a decline in 2009.

Are we to believe that all these companies and likely the majority of ChinaHybrids are a hoax? Fraud would be a much easier circumstance to phantom if it was related to just a few firms. If you accept the fraud argument, you are basically subscribing to a well orchestrated conspiracy theory.

The excuses as to why filings do not match may have some merit and include such things as varying accounting rules, complicated ownership structures, pawning off reporting duties to "agents" and the SAIC not being a tax agency. But I can't be convinced that possibly over 80% of companies (as some would have it) will fall into this "circumstance" by accident. This is more than just a random force of ineptness and bureaucratic mayhem. I challenge an auditor or investment bank to show me how diverging accounting rules can account for a company reporting revenue of $100 million and huge profits in an SEC filing compared with revenues of $1 million and substantial losses in the SAIC filings.

As for CFOs not having a good handle on audited financial statements at the time a filing is submitted to the SAIC - that is a troubling thought in and of itself. What some firms have listed as "filing agents" may be entities that the company has paid in order to purchase a generic financial report. Furthermore, what am I supposed to make of the certification signature conveying the accuracy and reliability of the SAIC document? As I indicated earlier, by the time a company files with the SAIC, taxes may have been paid and some SAIC reports even audited. So the excuse of not having a good handle on the financial statement seems illogical. The misrepresentation of SAIC filings appears deliberate.

Through information provided by my lawyer and other fact finding means I have come to the following conclusions.

Although I have found that SAIC filings do not match SEC filings, proving the fraud case is easier to conclude for FIE than for VIE structures. So far, I have pulled the SAIC filings of two FIE firms; one IPO and one reverse merger. In both cases, sales, income and taxes paid matched at the SAIC and SAT level, but did not match at the SEC level. Both showed losses on the China filings and healthy profits with the SEC.

Worse yet, the SEC audits were performed by top tier firms. In a case like this, you can not help but surmise that a deeper level of misrepresentation and/or lack of auditor oversight has taken place. Is the company showing the auditor a different tax receipt? Did the auditor see the actual tax receipt and dismiss it? Are there existing tax documents that take precedence over SAT records? Finally, where did the reported taxes shown on the SEC flings go?

In the cases of VIE structures, I have only proven that SAIC files do not match SEC files. My attorney has commented that this can occur since SAIC filings are not usually required to be sent to the SAT. It is basically just a waste of time. Also, companies do not want to reveal information to competitors. The more accurate information will be in the SAT files which are unavailable to the public.

I still believe that VIE's are involved in some type of fraud. For example, in one of the companies I came across where sales in the SAIC and SEC did not match, the cash balance matched.

Drawing a Conclusion

Tax evasion may be prevalent across the ChinaHybrid space. However, what we call fraud could basically be common practice in China and possibly acceptable, as evidenced by my attorney's findings that the punishment for tax fraud does not seem harsh. As ChinaHybrid supporters have expressed, SEC filings are likely a better representation of a company's financial standing than SAIC filings, at least for VIE structures. Auditors, knowing that the income tax paid is unreliable, are likely looking at the VAT tax, white receipts and the "real" numbers contained in "secondary books" to verify sales numbers.

I also don't buy that auditors are in the dark on this issue. I am learning that it common knowledge that many Chinese firms have more than one "book". I am not sure what to make of a situation where, in the case of an FIE, we know that the SAT and SAIC documents are identical, yet diverge from SEC filings. In actuality, the SEC document is what the Chinese company should have filed in the PRC. (It makes more sense that the tax liability should be logged as taxes payable).

Another conclusion could be that some of these firms are real but smaller than they purport to be. This would involve a much more intense due diligence process.

Navigating These Findings?

Even if we can come to the conclusion that SEC documents are more reliable than SAIC documents, should China Hybrids really expect to garner unconditional investor loyalty when a level of misrepresentation exists. The uncertainty surrounding this topic can still reduce the appetite and P/E expansion for the ChinaHybrid space, where many stocks have had muted reactions to spectacular 2010 second quarter financial results. The unfortunate circumstance is the collateral damage imparted on the quality companies.

In order to invest in this space you have to accept that what we may consider fraud is the norm in China. If all we have is tax fraud, it appears doubtful that China will levy punishment that would jeopardize the existence of so many companies. However, we cannot fully assume that serious monetary punishment will escape tax violators in the future. My lawyer's letter confirms this thought. It is more logical to assume that China will have to improve its tax system. Will monetary fines need to come from the company and necessitate capital raises to meet obligations? We also need to consider what interest the SEC may take in an issue where fraud and lax accounting oversight may abound. The Public Company Accounting Oversight Board (PCAOB) has already begun sniffing around the ChinaHybrid sector. (See more: http://pcaobus.org/News/Releases/Pages/07122010_SAPA.aspx and http://www.macpa.org/Content/25643.aspx)

Although SEC filings are likely more accurate, proving that they are 100% accurate would require firms to show why their filings don't match, or basically admit to some level of fraud and show us receipts. In the end, we have to trust auditors, a tough commitment now that we know of a few suspect FIE scenarios.

Our focus should be to use the available information in SEC documents, interviews and on premise visits to validate a company's story.

1. Follow the cash. Cash in the bank is the easiest source of funds to verify. In order to fool an auditor, the majority of companies would have to be conspiring with bank tellers to forge bank accounts. Thus, we would prefer companies with healthy cash balances. When filings are off, attempt to identify clues that prove SAIC files are junk. The example of cash matching SAIC filings when everything else does not match is an example. Reference companies that use cash that is greater than balances outlined in SAIC filings to that pay regular dividends or large special dividends, enact stock buy backs and to complete acquisitions. Furthermore, we know that many of these firms completed offerings. It would be odd for them to have virtually no cash on the books as evidenced in many SAIC filings.

2. Look for clues in credit ratings, which ironically the SAIC administers. For example, when observing a company that has no debt, pristine financial ratios, healthy cash balances and steady operating cash flow in SEC filings, a low credit rating could indicate a red flag.

3. While I am not a fan of debt, companies that utilize debt as part of a growth strategy were likely scrutinized by the lender.

4. Look for companies that have canceled an existing financing transaction or given weak excuses for changing ownership structures from a FIE to a VIE.

5. Realize that companies who retain top U.S auditors with a strong presence in China will likely get more investor love.

6. Be aware of companies with internal control problems as defined in SEC filings.

7. Be aware of more than routine changes in CFOs.

8. Understand that SAIC filings for FIE structures should match SAT filings.

Please Prove Me Wrong

My intent for this article is not to cause abandonment, but to inspire debate and comments from regulatory bodies to eliminate conjecture on this topic, giving investors comfort to focus on fundamentals. I actually want to be proven wrong. In the end, my hope is that the current mayhem will make the sector stronger by increasing the pool of quality companies. The ChineseHybrid universe is evolving and will surely experience hurdles and pockets of fraud as it matures. Firms must become more familiar with the demands of U.S. investors, increase disclosure and eliminate uncertainty. The SEC needs to crack down on individuals who may be spreading "conceivable" lies to bring down companies. More importantly, these firms that we have helped make rich should just pay their fair share.

Please note that I am still probing into the Chinese tax system, especially to determine if SAT documents are actually representative of taxes paid. We will continue to highlight companies on the basis of fundamentals in SEC filings. Investors need to formulate their own opinion on the severity of the SAIC vs. SAT vs. SEC issue.

Disclosure: The GeoTeam has taken a very tepid stance on the ChinaHybrid space as our due diligence process contiues.

Cash from Trash - Eastern Environmental Solutions Corp (OTC BB:EESC)

Tue, 24 Aug 2010 14:45:00 GMT

On August 16, 2010, we coded Eastern Envtl Solutions Corp (OTC BB:EESC) as a GeoBargain. Recall that we have been tracking this story since March 10, 2010. In its March 2010 first quarter the company reported net income of $1.2 million or $0.07 ($0.06 taxed). While not overly undervalued at the time, aided by capacity expansion and a resumption of operations in late 2009^a, we surmised that the company might be able to exceed its $4 million 2010 net income run rate and report sequentially higher EPS for its 2010 second quarter.

On August 16, 2010, the company filed its 2010 second quarter 10Q which highlighted the results of what could be a break out quarter. The related press release shed some more light on the quarter:

Revenue increased 1071% to $5.2 million.
Gross profit increased 706% to $2.9 million Income from operations increased 1173% to $2.8 million.
Operating margin increased 385 basis points to 53.3% from 49.5%.
Net income increased to $2.4 million from $180,511 in 2009 $7.2 million of working capital.
Diluted EPS increased to $0.24 ($0.21 fully taxed) from $$0.02.
Shareholders' equity of $16.7 million.

Ms. Feng continued, "The major factor contributing to our strong sequential revenue growth was the shift in our strategy to include recycling polyethylene terephthalate (PET) plastic bottles and plastic bottle caps, which we implemented in the first quarter of this year and began generating substantial revenue in the second quarter. In addition to separating plastic bottles and plastic bottle caps from our own landfill, we have established relationship with local collection points which provide us with much larger and more stable supplies of plastic bottle waste than we had previously collected on our own."

Ms. Feng says, "In addition to providing a valuable new revenue stream, our PET recycling removes waste from our landfill and, in turn, increases our overall disposal capacity at the landfill. Looking ahead, we are focused on further expanding our waste processing operations by implementing additional recycling technologies that will provide new revenue streams from our landfill. At the same time, we are actively seeking new landfills we can either develop or acquire. Given the overwhelming growth of Harbin and other cities within Heilongjiang Province, there is enormous demand and government support for new landfills and recycling technologies."

Simply put, what we have here is a company with:

An annuity type revenue stream (via landfill business with the government) that found a way, through its recycling business strategy, to tap into an environmentally friendly growth market.
A break out quarter that is likely sustainable.
Pre-tax margins of over 50.0%.
Cash flow from operations that has turned positive and is tracking at a $2.0 to $3.0 million annual run rate.
A Current ratio of 5.24 to 1
A top tier auditor (Friedman LLP)
Sufficient liquidity to maintain its current business levels. However, at some point, EESC will likely need to raise capital to fully implement its growth strategy, but we are currently not overly concerned about this issue in the near term.
A clear intent to up-list to a senior exchange as indicated in our August 9, 2010 research note and by company comments in yesterday's press release:

"During the quarter, we also enhanced our leadership team with the addition of three new independent directors. These three new board members bring a wealth of industry experience as well as financing and accounting experience that will be instrumental as we prepare for the next phase of our growth. As a result of these board appointments, we believe we meet most of the qualifications to list on a senior exchange."

At near $3.00, EESC is trading at 2.7 times its book value per share of $1.12 and a meager 7.3 P/E times our annualized tax adjusted 2010 EPS expectation of $0.41. If the market sentiment for ChinaHybrids abates and SAIC not matching SEC filings issues fade away, we think investors could flock to EESC shares. Short-term investors may have to exercise patience as EESC is trading at trailing tax adjusted P/E of around 14. (Although a P/E of 25 may be warranted).

^a On June 13, 2007, the company filed a Form 8-K with the SEC, announcing that in accordance with the PRC National Environment Protection Bureau s request in relation to landfills and adjustments to their peripheral inhabitants well-being, the Harbin municipal government city administrative bureau was carrying out certain adjustments to the original landfill plans of our subsidiary, Harbin Yifeng Eco-environment Co. Ltd. ( Harbin Yifeng ). Such adjustments resulted in the relocation of some peripheral inhabitants of the landfill and its waste water disposal plant. The costs of such adjustments will be borne by the Harbin municipal government city administrative bureau. These measures disrupted Harbin Yifeng s normal operations. After careful consideration, our Board of Directors decided to temporarily suspend Harbin Yifeng s operations while the measures were being carried out. However, Harbin Yifeng was still entitled to collect the minimum fixed fees for the Suspension Period as per the Special Permission Operation Rights Contract , which Harbin Yifeng had signed with the Harbin municipal government city administrative bureau on September 1, 2003. The bureau was required to compensate and pay Harbin Yifeng a sum equivalent to the fee for disposing 800 tons of waste per day during the Suspension Period.

GeoTeam note : We have not obtained EESC SAIC filings. We will continue to highlight companies on the basis of fundamentals in SEC filings. Investors need to formulate their own opinion on the severity of this issue. We may soon publish an extensive article on the topic of SAIC filings not matching SEC filings.

Disclosure at time of this update: Long EESC. Please see information on the GeoTeam note sell discipline principals that we generally consider.

China Earnings Recap, August 20th to 24th, 2010

Tue, 24 Aug 2010 13:32:00 GMT

Most Recent Quarterly Earnings for Some U.S. Listed Chinese Companies

	EPS Estimate	Reported Non-GAAP EPS	Prior Year Reported Non-GAAP EPS	Comments / Guidance
SSRX		0.17	0.17	See release
STV	0.11	0.15	0.12	See release
LFT	0.28	0.31	0.20	Increases guidance.
EMDY	n/a	0.06	0.04	Maintains guidance.
EESC	n/a	0.24	0.02	Coded as GeoBargain
YYIN	n/a	0.00	0.07	Net income falls.
CREG	n/a	0.15	0.08	Maintains guidance.
HGHN	n/a	0.08	0.06	No specific guidance. Recent reverse merger.
CAHS	n/a	0.07	0.00	Sees little impact from China's tightening policies. Raises guidance.
KYNP	n/a	$0.11	n/a	May require financing.
RDBO		0.10	0.13	Dilution hurts EPS. Claims liquidity is intact.
SKBI		0.31	0.36	Will not raise equity at current prices.
VIT	0.19	0.20	0.14	Raises full year guidance.
ECBI	n/a	0.29	0.32	Dilution holds back EPS growth
BSPM		0.21	0.16	Maintains guidance.
WEMU	0.16	0.03	0.07	GeoTeam makes EPS adjustement
CHBU	n/a	0.05	0.02	New business model gains traction
XNYH	n/a			Business conditions remain challenging.
CRUI	n/a	0.05	0.04	Maintains guidance.
CYXN	n/a	0.11	0.09	No guidance.
CNYD	0.36	0.41	0.39	Operations back to normal
CNVP	n/a	0.18	0.11	Will CNVP need to raise capital?
CMKM	n/a	0.03	0.01	New model gains traction
FMCN	0.22	0.30	0.22	See note
CISG	0.27	0.37	0.27	See note
CNOA	n/a	0.04	0.03	No guidance
CSGJ	n/a	0.07	0.04	GeoTeam makes EPS adjustment
TSL	0.49	0.52	0.35	Exceeds guidance.

Disclosure: Long XNYH, ECBI, EESC, CMKM, CNVP

China Earnings Recap, August 16, 2010 Part II

Thu, 19 Aug 2010 20:11:00 GMT

Most Recent Quarterly Earnings for Some U.S. Listed Chinese Companies

	EPS Estimate	Reported Non-GAAP EPS	Prior Year Reported Non-GAAP EPS	Comments / Guidance
AKRK	n/a	0.03	0.02	See filing
CAGM	n/a	0.06	0.06	Dilution more than offsets 25 percent increase in net income company prepares for long term growth
SHNL	n/a	0.04	-0.01	See filing
KNDI	n/a	0.06	0.01	See release
HSYT	n/a	0.05	0.02	See note
CRTP	0.11	0.10	0.09	See note
CWS	0.13	0.12	0.08	See note
QING	n/a	0.15	0.15	See filing
CKGT	n/a	0.07	0.07	See note
SPU	n/a	0.14	0.04	GeoTeam makes EPS adjustment
HFGB	n/a	0.08	0.04	See investor alert
NUIN	n/a	0.24	0.12	GeoTeam makes EPS adjustment

Disclosure: Long AKRK HFGB SPU CWS AKRK CAGM

China Earnings Recap, August 19, 2010

Thu, 19 Aug 2010 19:27:00 GMT

Most Recent Quarterly Earnings for Some U.S. Listed Chinese Companies

	EPS Estimate	Reported Non-GAAP EPS	Prior Year Reported Non-GAAP EPS	Comments / Guidance
VLOV	n/a	0.13	0.14	maintains guidance
DL	0.04	0.04	0.07	See note
CEDU	0.08	0.11	0.10	See release
AUTC	0.56	0.54	0.38	Raises revenue guidance
YGE	0.19	0.25	0.14	See note
FN	0.39	0.43	0.13	See note

Disclosure: None