How is HPJ going to pay back its HUGE short term loan?
The company has a very risky balance sheet. As of 3/31, A/P exceeded A/R by over USD $15M. Short term loans, notes payable, and accrued liabilities, etc. exceeded USD $55M vs. $30M cash, including the restricted. So the company has to come up at least USD $40M. In comparison, its projected income for the whole year is from $2.5M to $4M. How could the company possibly pay back such a high debt?
um well let's see. First, they are supplying all mass transit Chinese buses with EV batteries. Second, they are selling SONY about a billion batteries for their electronics OEM batteries, and Um... oh yeah... they are now into solar across the board with battery storage except for actually making the panels. I think that is enough money revenues for THREE companies. It will take a short while for all these things to show up on the bottom line, but right now its looking like a Chinese Microsoft to me. That is, these are all recent developments. This past year... the Chinese mass transit award, the Sony contract, and their working on the solar arena.
Given the current gross margin status, there is no way to pay back short term loan. It has to be rolled over. If no bank is willing to lend to the company, it will go bankrupt. But HPJ borrowed to expand its Li-ion battery business and so far the revenue growth is impressive and there should be banks willing to deal with it.
So my conclusion is, yes, it is a very risky stock but it is not drowning. Recent stock price decline may be a good reflection of this risk.
There is no proof of significant shorting of the stock-what happened could also be an orderly sell-off by big investors and accelerated in the past two days with individual panic selling.