I've been long this stock for a couple years now and remained patient mostly because of the incredibly low valuations and positive cash flows combined with the simple and straight forward nature of their business.........however this cash situation is really starting to smell fishy. I wasn't able to listen to the conference call yet but I really hope there were some strong satisfactory explanations as to how/why there was $48M in cash accrual adjustments (receivables, inventory and $31M more "advances to supplier") yet they remain $23M short of the purchase price of the new facility?
Any analyst looking at this has to be concerned with only $7M cash on hand out of the $190M current assets they are claiming. I understand this is China and business is done somewhat differently over there but there needs to be much more transparency regarding the $87M deposit and $90M advances to suppliers.......that's basically all of their cash and we don't even know where it is. This is starting to become eerily similar to RINO's financials before they were exposed when the cash flow situation fell apart. First the accounts receivables ballooned and at the same time they created a line item on the income and cash flow statements for "earnings in excess of billings" and it was only another quarter or 2 before they admitted the whole thing was basically a big fabrication
It's by no means the only thing but cash is the name of the game and now Longwei has a lot of unfilled promises and only $7M in cash on hand. I'm in at about $1.93/share but I'm pulling the plug if they can't give me reason to believe the red flags aren't signs of fire
They are trying to buy the assets with no dilution. That is a huge order. If they do borrow to make it happen, it will be at a favorable rate, otherwise we will grind along and pay off acquisition with cash. This totally makes sense and it is in shareholders best interest. Once this acquisition takes place and dividend arrives, this will be a giant among its peers.