Clae - sorry to do this to you, but these are the questions I would be asking next week if I wasn't on that plane, and these would be what I would also ask at the CC next month. Cheers. CB
The reason LPH's pps is currently trading well below book value, is because the company is currently being judged "guilty by association", with regards to the significant instances of accounting irregularities and outright fraud being uncovered, at many other companies in the China small cap / RTO space.
I am mystified at why LPH is not getting out in front of this crisis, by providing its shareholders and the greater investment community at large, with the clarity required to rise above this "crisis of confidence".
With that in mind I have a number of questions:
a) Given the outstanding reported and forecasted financials, there is NO obvious reason to dilute further. Suspicion of fraud in this space, is significantly increased when a company attempts dilution financing, when it is not required under typically recognized business practices. Why doesn't LPH simply announce they will 100% finance this important acquisition, and not consider any dilution financing at any price??
b) A top 6 auditor, combined with SOX 404 compliance would immediately put to rest any question of sketchy accounting and issues of ownership (who owns what) at LPH. Why is the company not immediately announcing and unequivocally fast tracking this, in order to be considered a viable investment for institutional investors?
c) There appears to be no references to either Shanxi Jiangtong Chemical, or Haujie Petroleum, in any typically available databases. Who exactly are these companies? Where exactly are they located? Why are they selling their petroleum storage assets? Why is the PRC involved in the sale as announced in the PR?
d) At last earnings report, there was $86MM in cash advances provided to suppliers for future purchases and supply at preferred pricing and availability. Can you itemize and quantify which suppliers were/are in receipt of these funds, and where they are located?
e) Who are the current Directors of LPH?
f) Your predecessor at LPH, has recently been implicated in, and disciplined for a number of allegedly fraudulent activities. He is also currently the CFO of a company who has since been accused of misleading and defrauding shareholders. Are you concerned over what may come to light during his tenure at LPH? What actions are you currently undertaking to ensure there are no surprises that come to light during his tenure at LPH?
CB, thanks for taking the time to detail your questions. Depending on the number of questions the moderator will allow each person, I hope to cover your A and B questions.
Concerning your C question, I think I already got an answer to that. It may not be a good answer, but it is Redchips' answer. Last week when I called RC, I asked Mike, for the sake of investor's confidence, why LPH did not release more info regarding the acquisition. I cannot quote his respone, but it was along the line that LPH has competitors, not only for this acquisition, but for other, future acquisitions. And to, at this point in time, release any more details than what have already been given, would be counterproductive, giving the competitors an edge.