(31-05-2014, 05:03 PM)CityFarmer Wrote: [ -> ] (31-05-2014, 01:29 AM)Greenrookie Wrote: [ -> ]...
So, I guess we have 3 scenarios
1) case dismissed after legal challenge or investigation
2) Ren gets away with the alleged illegal profits confiscation and a fine. No criminal prosecution.
3) Ren gets criminal persecution and company is banned from
Involving in HTM trades.
So whether YZJ is a steal or falling knife depends on which is the likely scenario. If it is 1), u get a smart rebound.
2) impact is hard to justify
3) will mean a very severe write down in the company's HtM assets.
Will trading be halt pending the 3 outcomes is anyone guess.
I don't intent to read from 3rd parties news reports. Speculative news reports are in high demand now.
I do focus on direct comments from related parties. May be one article in ST today, which the reporter has directly clarified with YZJ CFO.
CIMB said in a note to clients that it had spoken to Yangzijiang's chief financial officer, "who is not very alarmed and said that the chairman has a lot of investments in China on a personal basis", and felt that this was still under probe and should not affect Yangzijiang.
The chief financial officer also "doesn't think it is 'that' serious", that Mr Ren will be charged and reprimanded, the CIMB note added.
"We believe there should not be any impact to Yangzijiang's operations but (are) unsure if any of the investments in structured products have similar issues. But for now, none (have been) reported."
The above are extracts. St didn't directly speak to YZJ CFO. UOB KH also posted their comments based on their interpretation of the newswire report.
I used to be an analyst. The way analysts work especially with stocks they have favourable rating is to gradually downgrade based on events that is unfolding otherwise their individual creditability will be at stake and their relationship with the co will be ruined.
I remember the best part of career came when I shot down a Indo backed company that shot to fame during the power crisis in Philippines in the mid 90s. Back then, there was no such efficiency as internet where you can quickly access information. I was lucky that I got in touch with one key person who had access to power produced by power barges (apparently a temporary solution to the crisis back then) and realised that power barges owned by the then darling stock was causing pollution and was ordered to stop.
The darling stock that shot up 10x fell around 50% over few days upon the issue of my SELL Call. Following a angry phone call from the CFO of the company, I no longer have access to the company for update. A year later, when I move on to the buy side as an analyst, the head of research of a foreign broker (who subsequently became a high office politician) even recommended the company on their house's conviction Buy lists. It was quite obvious then that the head was not aware that I was the junior analyst that shot down the darling.
Personally, in view of the dynamic situation here - a rather complicated situation that involves Chinese law and order which none of us here have good understanding let alone interpretation, it is best to let the situation settle before making any moves.
The change in China's leadership last year and the recent anti-corruption drive appears to have some drag on selected people and business in China. I do not have very pleasant experience with Chinese companies apart from very very few of them and hence I am urging extreme caution here.
YMMV
GG