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Yongye International, AŞ Message Board

  • plarger plarger Jun 19, 2013 9:10 AM Flag

    Time is running out...

    The buyout group is running out of time. Fairly soon, Yongye's quarterly numbers will be compared against the first of the current revenue recognition numbers and it will be very difficult for management to continue to try to make the numbers look "not so good". In addition, the cash is building and they have already pre-purchased enough materials to last the year. Their quarterly numbers are going to go through the roof because they already took the expense by pre-buying materials. If this buyout doesn't happen in the next few weeks, it is going to be nearly impossible after we get another couple quarters under our belts.

    Sentiment: Strong Buy

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    • I agree the value is building as each month passes, so that the offer - which was a lowball one by any measure - looks lower and lower as time goes by. If enough time passes, the SC should have the business valuation updated.

    • I agree that year over year comparison will start looking a lot better than in previous quarters due to the fact the Q2 last year was already with some significant revenue recognition delay, the fact that their shipments are growing significantly will still penalize their revenues year over year but a lot less. If they are also able to collect some of the over $100m of delayed revenues which have been growing way too fast, some of these invoices are way over 180 days, then the picture could even be a lot better. Overall if they managed to increase these delayed revenues by 25% or about $25m-$30m, their $650-$680m of shipments in 2013 would translate in about $620m-$650m of revenues or a revenue growth of over 40% year over year (because last year was depressed by those first time delayed revenues build up of over $100m). Yes you are right time is running out as Q2 should be the first quarter showing a closer picture of the true YONG's performance.

      Sentiment: Buy

    • I'm long from before the halt and also added on Monday. I don't think they will announce any decision of the Special Committee too quickly after their last "no decision yet" update on Monday. Otherwise, they could risk more lawsuits by those who sold who could claim the Special Committee was closer to a decision than was disclosed. For appearances, I think at least 60 days will pass. There's also the possibility that there's a genuine stalemate between the SC and the buyers, with the SC being influenced by its advisors and lawyers not to take $6.60 and founder/other buyers digging in heels. To me, this is the biggest risk right now of transaction not materializing because such a "no deal" announcement would tank the share price despite the strong underlying valuation fundamentals. As the founder has proven to be no friend to SH's, I don't think many will want to hang in if the transaction blows up so cheap valuation metrics won't serve to support the share price as they would for a more SH friendly company. Nonetheless, I think a transaction at $6.60 or higher within the next 6 months is a good bet which is why I added more on Monday under $5 to lower my cost average to $5.36. At least I'm "green" today for the first time in a long time, so that's some progress.

      • 2 Replies to worthylion
      • It’s true they haven’t supported the sp with PR and it appears Wu et al are trying to grab the company at an unreasonable price, but I don’t think Wu deserves too much bashing yet as there’s no unreasonable (like $6.60) accepted offer. Wu has done a good job running the company. The lack of PR is due to the BO being planned for a long time. What I hope to see is the BO fall through, Wu switch gears, forget a buyout, and operate as a normal, sp supporting CEO. Start paying dividends. Everyone, especially Wu, would benefit greatly long term. Wu probably has enough money to survive for a year or two until YONG is more widely accepted as a good investment. Then look out, $20, $30 etc. If the deal goes through at $6.60 I will join the Wu bashers. There’s a lot of people on this board that want the deal to go through, even at $6.60, because they got in a short time ago in the 3’s or less, but no way is $6.60 a good deal, for any of us.

      • I agree that it is difficult to know when the SC will give an answer to the Buy Out partners but I would expect them to have after so many months come up with a decision and certainly shared it with the Board, i.e. with the Buy Out partners as well as they are part of the Board but that they have been and are still in the negotiation phase (meaning trying to get a higher price than $6.60/share) . Yes they have not yet a decision as they need to know if the Buy Out partners are willing to go to a higher price. If their answer is not, then the SC will say they reject the current offer, if the decision is yes and the Buy Out partners are willing to go higher the SC will announce that they have agreed on a Buy Out at the higher price. They just stated the truth when they said they didn't have yet a decision and they do not have to wait 60 days to announce anything, they could do it tomorrow. The missing element is the financing, we need to first hear that the financing is back in place for at least the $6.60/share but if there is an agreement on a higher price, they would want to secure the funding before announcing it, so when we hear about ABAX being on board, it will be interesting to hear if for the same amount or higher. We could in fact hear about ABAX and the SC decision on the same day.
        We just have to continue waiting as we have now for a very very long time but I am willing to wait and would still fight a $6.60/share offer.

        Sentiment: Buy

    • and 1.5 million shorted shares aren't going to get the cheap exit they were hoping for....paying interest on shares they couldn't trade must've been fun. Right Rickie?

      Good to see you are still around. Cheers!