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hi dzwm87,
Thanks for doing the audit. This practice (of putting depreciation into COGS) is definitely not fradulent in nature but more of 'what does it imply?' (ie. Are they trying to hide certain things?). This is similar to agri companies using 'adjustment in fair value of their biological assets' to boast their net profits, or more recently, banks revaluing their debt liability downwards because they determined that their own creditworthiness has reduced. As i am not accountly-trained, i have my doubts on any deviations out of the norm.

If you have read the Anonoyous Analytics report on Chaoda (you can find it in this thread too), one of the points bought up by them is that such practices (leasing of farmland from local authorities) are susceptible to corruption. The current ongoing Wukan debacle is just one example. According to certain news reports i read, such protests are the norm in China (minor/major protests amount to ten of thousands a year) but most of these news just doesn't get filtered down to us.

Although the current Wukan debacle is NOT the same as CMZ's farm leasing methodology, but i think it has shown us that it is a risk that has to be factored in (well, personally i have to admit that i'm only finally convinced of AA's claim on the susceptibility of the business model to corruption now)

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(20-12-2011, 01:26 PM)mrEngineer Wrote: [ -> ]This is my impression of GIC based on feedbacks i gathered from work that they have too many investments to handle due to their extremely large portfolio. Therefore, it does not mean anything if GIC has a stake in the company. I would even doubt the due diligence efforts on their investment decisions

hi mrengineer, as nick mentioned, GIC already made their $ during IPO...haha..Due diligence or not, the guy who got CMZ in already got his/her job done (and most prob, bonus guaranteed!)

There is a GIC member who is a non-executive director on the board. But i agree with you, it doesnt mean much.

Anybody actually did a comparison study with its industrial peers?

I took a quick look at some of its China peers (COFCO, Haitong Food, Xinjiang Chalkis - all from Minzhong's IPO) .. to my horror, the industry is making a loss for 1Q FY2011 (Jan to Mar 2011).

Historical margins from 2007 isn't as high as what Minzhong or Chaoda enjoys.

This analysis is getting interesting

COFCO has a lot of other business.

COFCO is a competitor of Wilmar in grain and oil seed related business.

COFCO also has substantial property development business under its subsidiary.

(20-12-2011, 04:09 PM)freedom Wrote: [ -> ]COFCO has a lot of other business.

COFCO is a competitor of Wilmar in grain and oil seed related business.

COFCO also has substantial property development business under its subsidiary.

Yup, but was referring to COFCO Xinjiang Tunhe (which is the comparable peer to CMZ)

COFCO XT was making a loss from FY2010 but it was mainly a victim of a poor tomato market (oversupply and falling tomato prices)

COFCO XT only ventures in tomato products, beat sugar products & apricot concentrates - quite different from CMZ.

Looking at the other peers for now

CMZ has broken 0.70 support and last done at 0.68 - have a feeling there is still more room for CMZ to drop.

Just dug deeper at all the cornerstone investor.. even at last done price of S$0.69, GIC is still making a whooping S$67m gain.

This is so because GIC has already sold a fair bit of vendor shares to cover its original average cost of S$0.28. In fact, the remaining cost (post-vendor sales) incurred by GIC investment stands at only S$3.86m - which given GIC's stronghold, the amount of loss won't be too much of a collateral damage even if the entire equity is wiped out within CMZ (i.e. share price at zero)

Believe we should now take GIC's stake in the business with a pinch of salt.

Whether GIC is a cornerstone investor a not, it is barely important. The key question is how an investor can do the necessary due diligence to be reasonably convinced that the financial statements have correctly reflected the company actual financial status.

I could not.
Even at this price, none of the directors are showing any support to the share price. Such fantastic PE and yet, all the directors that come with all sort of track records are not interested to have any personal interest in it.
Well, it is kind of sarcastic isn't it.
So, I stay aside and see show.

On Sept 2011, CMZ CEO Lin Guo Rong did made an open market purchase at $1.03 for 200 lots amounting to a total consideration of approx. S$200,000.

GAM Group has also up their stakes in June 2011.

Prudential invested more during Nov 2011 as well.

Director did show support to the plunging share price though the amount considered isn't significant at all. I think at current sentiments, unless CEO buys up CMZ with half of its net worth, I doubt the market will be convinced

To me, the concern will be whether CMZ pays dividend - I don't think the business model alone can't allow any dividend to be paid. Looking at China Green (904.HK) and even the fraudulent Chaoda Modern (382.HK), they have been paying out dividends all these while.

(21-12-2011, 11:52 AM)dzwm87 Wrote: [ -> ]On Sept 2011, CMZ CEO Lin Guo Rong did made an open market purchase at $1.03 for 200 lots amounting to a total consideration of approx. S$200,000.
GAM Group has also up their stakes in June 2011.
Prudential invested more during Nov 2011 as well.
Director did show support to the plunging share price though the amount considered isn't significant at all. I think at current sentiments, unless CEO buys up CMZ with half of its net worth, I doubt the market will be convinced

Thanks for the info!
I suppose Prudential is only doing bargain hunting and may not actually know the inside out of CMZ.
Now the price is less than 70cts and no reaction from any of the directors.
Actually, why not especially if you know that the earning is for real. .
Unless, there are other factors involved.
If I am the CEO and I know my company's earning is real, I will buy like no tomorrow

Those who can run business well aren't necessarily good investors as well. Sometimes market sentiments might get into the better of them as well.

Being naturally risk-averse, they might not fully grasp the concept of value investing and at times might prefer to be satisfied with their director remuneration, rather than going "All In" on shares stake. At times, they might put in a side-bet which in this case could have been the $200K bet made by CMZ CEO.

Or on the other hand, their expenses are already so high, they do not even have much spare cash for investment

CMZ Management only own 7% of the Group (and their cost price is really low). I highly doubt they are wealthy enough to make a sustained repurchase of the stock. This is not the same as YZJ whose boss's wealth is tied to the Company and in his interest to ensure the share price does well. There are advantages though - it is unlikely the CMZ boss have sufficient clout at Board level to push their own agenda but this remains to be seen. Appreciate your views.