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Tianyin Pharmaceutical Co., Inc. Message Board

  • peterolof peterolof Jun 23, 2011 11:30 AM Flag


    I think that everyone would agree that, using any valuation measure, this stock is absurdly cheap. So I've thought about all the possible reasons that this stock continues to drop (China microcap, unreliable accounting, warrants, hedge fund manipulation, poor PR communication, loss of dividend). But now it appears that the company is really making an effort to communicate better w/ shareholders (multiple recent press releases), show their confidence in the future of the company (buy-back), and prove that their accounting/earnings are reliable (restate earnings). And on top of that there is the bonus of the macrolide contract confirmation and possibly a lower tax rate again. But to my dismay the stock price has not risen significantly.
    I initially bought at 2.75, then doubled down at 2.25. Can someone please post a LEGITIMATE reason why I should not buy more at these levels.
    Thanks in advance for any INTELLIGENT comments.

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    • Talk about arrogance. Cant answer the question, so we can understand your biased point of view. Lots of half truths with you clowns.

    • The only basis on which I could agree with you on your corporate communication point is on your use of the word "try".....and that would be kind. They may be trying, but they are terrible at it. First, they announce a stock buyback only days prior to announcing the restatement. At best, that is very poor form. Second, while they have announced the restatement...they actually haven't made the restatement (see my post re: 3 business days...and do yourself a favor and ignore Medici's mindless rants--he has a cloying, Sarah Palinesque ratio of confidence/naivety). The company has known about the accounting issue for months. They definitively concluded they had to restate 2 weeks ago. They've done all the math associated with the restate down to the penny. The amount of space dedicated to the issue in their past filings is quite small. Thus, the amount of time it would/should take to make the restate should be expressed in hours. In short, the 10Ka and the 10qa's should have been filed immediately. There is no good explanation for the delay. You say you think they have proven that their accounting is reliable. They have done no such thing. Again, the kindest explanation is that they are simply engaging in a harmless act of corporate keystone cops. The result is there is actually more uncertainty about their numbers right now than there was before the non-reliance announcement. Why? Before the non-reliance announcement, we investors had audited numbers upon which we could rely with footnotes that explained the accounting issue very well. I read those financials, read the footnotes very carefully....and reached my own conclusion that the core operating numbers were outstanding and the accounting issue (whether they got it right or got it wrong) was meaningless and totally immaterial. But now we are missing nearly 2 years of financials. There was/is no need for this uncertainty. I can assure you that you won't see any big institutional buying until they refile. The Wellingtons of the world don't get paid to take big, illiquid positions in companies whose last reliable financial statements are from the 12 month period between June 08 and June 09--a 1 year period in which the company generated $500k of free cash flow. In order for your reliability statement to be true, they need to not have a non-reliance filing as the current ruling document as it relates to their numbers. I believe your statement will ultimately prove to be true (which is why i'm not selling what I own), but for now it is just an educated guess. You (we) shouldn't have to be in the position of making educated guesses when it comes to numbers. So, as I said, I strongly believe that their corporate communication and housekeeping is terrible. And that's the most positive, optimistic way of looking at it.

      As I said in my other post, if you buy the stock now....I think you will make money on it. But for as long as we remain in this non-reliance period, I think you would only be making an educated, gut bet as opposed to an investment.

      Once they refile the numbers and get this behind them...I would suggest that they get rid of the auditor. I can't stress this enough. The company presumably generates $20 million of EBITDA. They can afford to hire one of the big 4 american firms. Pay them handsomely to do it. One of the reasons why BIDU and CTRP have always had strong investor followings (even when they were very small like TPI) is that they had good accounting firms that people know and trust. I'd way overpay to get a Deloitte & Touche (or the like) seal of approval on TPI's numbers. It would easily be worth 3 multiple points of EBITDA in my opinion. TPI should be doing everything it can to shout on high that they are not like the others. The single best way to do that would be to hire a new, gold plated audit firm.

    • Run a future value calculation on your computer or calculator to see how long it wil take at 20% growth to get sales to 500 million and net income to 100 million. If you have that amount of patience, then I would tell you to take the bet.

      One of the other BIG issues is liquidity. THIS IS A MICRO CAP STOCK AT 40-100 Million.

      For someone to buy 20,000 or even 100,000 shares its no big deal, but for an institution that manages more than a couple hundred million, it would be very hard to accumulate enough stock to make a performance difference to their fund.

      Only patience will win out. They need to grow the company significantly in the next five plus years.

      • 1 Reply to medici1248
      • Peter and Medici,
        Think you guys are right on.
        Think FMV(under normal valuation analysis) is in the $6-8 per share level. A "premium" value could be $10-$12. Unfortunately, given all previous reasons stated, trading now at deep "discount". If one has belief in future of Country, economy, Company(as I do), then best to buy at "discount" and sell at "premium"(what a genius I am, huh? Ha). Present growth rate of revs and BV of 25%+/- will continue for next several years+(I think), ultimately with time accounting will improve, the "bad" will go away, and this stock, along with many of the other China micros will trade at least at FMV and eventually a "premium"(given better fundamentals in China vs. ROW). Thus, my target of $20 by 2015(growth rate of 25%+/-) will double every 3 years and "premium" bid. Whether you buy at $4, $3,$2, or $1.40 is not material if you believe in the "story", as I do. Yes, would be great to acquire your full position at $1.40, but not practical, and really did not think "discount" would be this great. As others have stated, too, just will take time. My plan is to hold at least until 2015, and more likely out to 2020(if I live that long). Think the "longs" will ultimately be happy with the investment now. Would not try and "trade" this one, nor use any debt to acquire shares. GL.

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