China Taisan Technology Group Holdings

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Frankly, this is one of the S-chips that I have a bad feeling about. We shall see with time if it is correct to think this way.
The AGM took place last Friday, April 29th. Here are my impressions of it, it would be nice if more investors can make a write-up about their impressions as well.

Basically the meeting was very vibrant with about 40 attendees, most of them are not professional. Here are the new things I learned from the meeting:

- At the end of May and the end of July there will be two reports by two different SGX committees about accounting practices in S-Chips, China Taisan included. They hope that the report will help to restore the investors confidence in the company's financials. In addition, to strengthen the auditing process they now have their own team of internal audit instead of outsourcing this activity (see page 26 to the report, principal #13). To sum up: They are aware of the mistrust and they will do their best to address it.

- The vertical integration is going to be up on the value chain, i.e make the whole clothe, be it a shirt or pants. They believe that it will help them to get more business from retailers and some retailers now are not so fond of buying the fabrics separately and then paying for another company to turn those fabrics into products.

- The CEO and the Chairman never sold stocks of the company besides the TDR when the Chairman distributed 100M of the stocks he owned. He said that he distributed it in Taiwan, he country where he has a lot of connections (some with the people who bought those stocks) and he will never risk his reputation over there with accounting frauds.

- There is a very an activist investor that is invested in that company, "ONG KIM HUAT FELIX". He is on the board as chief adviser and he works along side with the investor to push the company towards a more shareholder friendly practices.

- The Accountant from the accounting firm who does their reports was there and ensured that there are no problems and so on and so forth.

- They will consider increasing the dividend or doing buybacks if cash flow will keep on coming at current levels.

- There is a problem with getting the permissions for the land that they want to acquire so they focus on increasing capacity at the current factory.

I has about 10-15 minutes one-on-one with the CEO, I emphasized how smart it is to do buybacks now at 20% below book value. When he said that people also told him to do buybacks when the stock traded at 9c and he didn't and the stock kept going up, so I told him that its not the same situation due to share_price/book_value ratio which now makes more sense for a buyback.

There was also an interesting discussion about how independent the independent directors are and there were a lot of concerns fired at the management about its practices and about avoiding accounting fraud. I will try to upload a recording of the meeting for the benefit of all participants.

Yang Li
The management has embarked on a share buy-back program. Used up about $450,000+ for the 3 past days. The tone of the -->

"China Taisan embarked on a series of share buy-backs since last Friday (16th Sep 11) with a purchase of 1 million shares at an average price of 11.4 S$ cents. Since then, another 3 million shares were acquired at prices ranging between 11.1 S$ cents and 11.4 S$ cents."

Price as of now is S$0.113. P/E ratio about 2.3x, P/B ratio about 0.51. Net cash per share at about S$0.107. Seems to be an extremely undervalued stock. The main problem here is whether the figures in the financial statements are reliable. The company is in a highly competitive industry with little moat to speak of. Also, the latest report shows a 2Q revenue and profit drop of 35% and 75% respectively.

Any comments?

Any update on china taisan?
Good results, don't ask me whether cash is real or not. However I can tell you if the CEO or chairman defrauds, I doubt he can ever go back Taiwan
Request for Trading Halt : Pending for an announcement and on going concern basis.
Specuvestor: Asset - Business - Structure.

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