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SmartHeat Inc. (HEAT) Message Board

  • parksplaza parksplaza Mar 21, 2011 11:05 AM Flag

    did they get hit with fraud?

    why the tankage?

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    • The simplest answer is that Chinese small caps RINO,CCME, and, as of late Friday, SDTH have had major issues within the past few weeks.

      HEAT doesn't seem to have any issues (besides being out of favor right now), though. Insiders hold significant portions of the company's stock, institutions as a whole increased their holdings by 15% in the last quarter, and Fidelity added significant portions as well.

      As to accounting issues, I highly doubt Barclays would have exercised their overallotment option without taking a good look at HEAT's books. And, for everyone singling out accounts receivable as suspicious, you're just showing that you haven't done any DD.

      S&P Compustat company report:

      Additional Summary Items: HEAT does a better job of collecting its accounts receivable than nearly any other company in the Industrial Machinery
      group. In 2010, the average number of days its accounts receivable were outstanding was 157. However, this was 1 days slower than the accounts
      receivables collection during the previous year.

      HEAT 10-k

      Our accounts receivables remain outstanding for a significant period of time, which has a negative impact on our cash flow and liquidity.

      Our agreements with our customers generally provide that 30% of the purchase price is due upon the placement of an order, 30% upon delivery and 30% upon installation and acceptance of the equipment after customer testing. As a common practice in the heating manufacturing business in China, payment of the final 10% of the purchase price is due no later than the termination date of the standard warranty period, which ranges from 3 to 24 months from the acceptance date. We may experience payment delays from time to time, which range from 1 to 3 months from the due date. While these payment delays are very common in the heating manufacturing industry in China and historically our collections have been reasonably assured, such delays cause capital to be tied up in inventories, which may result in pressure on our cash flows and liquidity. In 2010, we had accounts receivable turnover of 2.98 on an annualized basis, with days sales outstanding of 123 and inventory turnover of 4.26 on an annualized basis. In 2009, we had accounts receivable turnover of 3.6 on an annualized basis, with days sales outstanding of 146 and inventory turnover of 6.2 on an annualized basis. The low accounts receivable turnover and high days outstanding is due to the seasonality of our sales and postponement of payments from certain customers. The low inventory turnover in 2010 compared to 2009 was due to increased inventory on hand for the readiness of the high production season with an increased number of large orders in 2010. Approximately 74% of our revenue is generated in the third and fourth quarters.

    • no! they are influenced by other chinese companies being hit with fraud !!

      There is no way HEAT is a fraud ! to many evidence showing that heat is not only legit, but one of the most promising chinese small caps !

      • 1 Reply to investor2228
      • Investor222... wrote "to many evidence showing that heat is not only legit, but one of the most promising chinese small caps ! "

        HEAT may very well be legit, but one can not say there is a lot of evidence that this company is one of the most promising chinese small caps. If there was that much evidence, it wouldn't be tanking while the over all market is rising considerably.

        Invest with your head. And remember, the market can be irrational LONGER than you can stay solvent.

 
HEAT
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