panic selling to set in shortly - would expect the stock to easily dive below $12 today
to get a glimpse how ugly things will really get for the company
"From the results, I would recommend a buy only to capitalize on short-term performance until the effects of decreasing crush margins set in. Any long position in these market conditions is imprudent."
there's no Hongkong panic - the shares are down because of the recently reported earnings and some really bad news about a soon to be busted real estate loan
they are not even first to market - there are dozens of competitors and to be honest there are not too much Chinese people who even know what a stock exchange might be
just look at seekingalpha:
Hebei Real Estate - In a small note on the earnings release, the company mentioned it had an loan to a Hebei real estate developer on its balance sheet, valued at about 10.2 million USD. Management expects to be fully paid back by Q4; however, the transaction warrants attention. Not only is the loan decidedly non-core, the collateral (the developer's listed equity) isn't exactly secure (in a worst-case scenario, the collateral could be worth much less than the loan value). Additionally, the borrower is clearly having liquidity issues (interest is accruing, not being paid periodically in a more typical principal + interest payment). The loan amount is noteworthy (about 10% of total assets), and investors uncomfortable with the exposure should scrutinize the Q3 balance sheet closely.
new lows close at hand - sitting once again on giant gains - another great call
yes - given recent margin deterioration EPS for Q4 might come in between $0.00 and 0.20 and Q1 might be equally bad if not worse. If they warn for upcoming losses on the call the stock will fall back to mid single digits again.
In August investors didn't even know that the company sunk one third of its available cash into a busted property development loan. And when asked about their business model they really had nothing to say on the call.
as there are simply no catalysts to buy the shares here - margins have stayed very weak in recent weeks which will make Q4 and Q1 an absolute mess. My target remains $10 before the Q3 earnings release and $6 following the conference call.
what about the Hongkong listing ? I don't think this will ever happen given the state of the business.
it won't go anywhere as long as they are in risk of losing a large part of their cash balance in an ill-fated investment loan...
no - one third of the company's cash balance is seemingly stuck in an overdue real estate development loan with the very real possibility of losing the money entirely.
if you want to spread fear among investors look no further than at the huge overdue investment loan. Would love to know if any of the company's officers are involved into the project.
EACH AND EVERY quarterly report is unaudited as regular audits are only performed on annual numbers. There's no difference between IBM and JRJC in this case.