We're all racking our brains in an attempt to explain why our stock has dropped over twenty per cent since the first of the year. We all know that China has a surplus of copper so we're in the wrong business. No, that can't be the reason because in fact China has a shortage of copper and that this condition will likely persist for the forseeable future. Perhaps the compasny has stagnated and management can't come up with a growth plan. No, they doubled capacity from 09 to 10 and expect to double capacity again in the latter part of 11. Just as importantly the company recently announced that earnings for the year will increase by fifty per cent. Additionally, this figure keeps getting adjusted upward. Well perhaps it's too much debt with too little cash on hand that might become problematic in the future? No, that's not it either. In fact the debt is extremely small, perhaps two million and that the company has about three bucks a share in cash on hand. Well I guess their cooking the books. I haven't heard of anything pertaining to liwa regarding inaccurate reporting of finances but I'll deal with this later. So what the heck is causing the share price to drop?
This market madness is not company specific. There are many Chinese micros trading on NY Exchanges that are performing beautifully, incredible top and bottom line growth suffering the same fate. If they were US companies they would be sporting PE's in the high teens and beyond given their growth records. Let's look at the largely media created Boogie Man. The financial reporting is unreliable. Limiting the Chinese micros to those listed on a NY Exchange. Although there have been a few instances where the numbers have had to be amended I can't cite any that were caused by fraud or theft. These are rapidly growing companies and some mishandled warrants, writeoffs and other items incorrectly. No small matter but correctable and already corrected in some instances. Keep in mind that the number of companies involved has been small but you'ed think it was an epidemic the way all of the companies are being treated.
My opinion, this space, the Chinese micros, has been manipulated by the Cramer and Friends types and their buddies in the financial press. They have been assisted by lazy analysts and normally honest reporters that are unwilling to do their own research. They locked onto the unreliable numbers angle, it worked, so they continue the game. At some point in time, I know not when, the game will change. They will cover their shorts, go long and the story line will be that the financial reporting problem has been resolved and oh, have you seen those unbelivably low PE's, PEG's and those incredibly high compounded growth rates. Not much that we can do about these band of thieves. The SEC, forget it, too busy watching porn.
I only post on boards when I have skin in the game. I own six of these companies and the way I'm coping is by purchasing additional shares. Of the six liwa has the best metrics in my opinion. Prior to writting this post I put in a limit bid for 1K at $7.78 to add to my previous purchases. I'm asking a favor of those that decide to sell, please use limits so they don't use your sale to rape the rest of us.
You're right about the fear Stone but so far it looks to be irrational fear. If so there is a lot of profit to be had when the fear abates, as it will. I beleve those with cajones will do well by this company,
I'll tell ya what's going on. The shorts are playing a dangerous game thinking that investors are out to lunch and they are quietly pushing the stock down ready to jump back in any time to cover. You saw that big spike moments ago ? That was nervous shorts.