I've followed CNGL for some time but never pulled the trigger until today. Here is my rationale for buying.
Like many companies in China, CNGL has problems with quality control in their products, whether as a result of ignorance or ethics I don't know. I live in Redneck, Alabama, and my right-wing buddies like to talk about how fast China is growing because they don't have any regulations (their words) and what a terrible thing regulations are. I follow international news on the internet, something many of them don't have, and know that the lack of a regulatory framework leads to protests all over China when people get killed from poisoning, environmental dumping, poor construction codes, etc. I also know that China does not allow executives to plead the Fifth and get a slap on the wrist in return for some PAC contributions like we do here in the states, so they can be much more heavy-handed when companies do something wrong, heck you might even wind up dead. Because of some food product scares CNGL is basically shut down on liquids production as far as I can tell. There is no clear time line for when or if production will resume. Transparency is a huge problem with this stock.
BUT, I think they are working towards getting quality control standards in place. I think they will still be financially solvent after they pay a settlement on some of their products. I think eventually liquids production will resume and cash flow will be much stronger than the current share price values (I bought at 54 cents.)
Bottom line, I think all China stocks are very risky because you have no confidence that they are conducting business safely and the government can shut them down any time. The bad news for CNGL, however, is hopefully out. I believe that the standards CNGL will have to put in place to resume production will serve them well in the future. The stock seems to be holding a bottom in the 50 cent range so I went ahead and picked some shares up. I can afford to lose what I invested. It's a small position of 3000 shares bought today at 11:58 CST. I am a long-term holder of CNGL, not a trader. I expect CNGL to go bankrupt or go up several hundred percent in the next few years.
I welcome any comments, fact checking, news good or bad, etc.
Unfortunately, the people who should be keeping us informed, Mr. Crocker and company, have always chosen to keep shareholders in the dark when the news is potentially negative. This unfortunate practice leads me to expect the worst. Which is why I'm holding, and don't have any logical reason to add to my holdings, which are considerably larger than yours. (Something I'm not proud of. I feel like an idiot.)