SEATTLE, July 2, 2012 /PRNewswire/ -- L & L Energy, Inc. (NASDAQ: "LLEN") ("L&L" or "Company"), a Seattle-based company with a five-year track record of profitable coal operations in China, announces that it will use an equity interest swap with Union Energy as part of the acquisition of the LuoZhou Mine.
In June 2012, Union Energy entered into two MOUs to sell controlling interest in two of its mines to L&L. One of which, the LuoZhou mine ("LuoZhou, the Mine"), is scheduled to begin full production in fall of 2012.
DaXing Co., L&L's recently established wholesale subsidiary in Guizhou, has entered into thermal coal contracts with large end users including, Datang Power Co. By acquiring LuoZhou and the Lashu Mine in near future, both of which produce high quality thermal coal, L&L will increase the available thermal coal for its wholesale operations, further increasing efficiency.
Back in 2011, PUDA was accused of fraud. Their board of directors did exactly what LLEN is doing now. Unfortunately for PUDA, it didn't turn out so well for investors. The stock was halted, and now trades (well, not really) for .05. I can't post a link, but here is the story. Google-search it based on the text if you want more info.
TAIYUAN, China, April 11, 2011 /PRNewswire-Asia-FirstCall/ -- Puda Coal, Inc. (NYSE AMEX: PUDA) ("Puda Coal" or the "Company") today announced that its Board of Directors has unanimously ratified the Audit Committee's decision to launch a full investigation into the allegations raised in a recent article alleging various unauthorized transactions in the shares of a subsidiary company, Shanxi Coal. The Audit Committee has retained professionals in the United States and China to assist it in its investigation. The full board, including Mr. Ming Zhao, the Chairman of Puda Coal, has agreed to cooperate in the investigation.
The last 4 earnings releases showed EPS of .21,.42,.18,.27, for a total of $1.08. At the current price, that's a p/e ratio of about 2.5, give or take. Why so cheap? Plenty of reasons. But one reason that isn't talked about much on Yahoo finance: The financial statements show that most of the profits turn into either PP&E or Construction-in-progress. The cash never builds up. Perhaps the statements are correct. After all, LLEN has been buying and building mines. However, I can't help but remember that Worldcom also showed profits, and a low p/e ratio. But it turned out that there was fraud. Eventually, it was proven that they posted fake fixed assets to their books in order to inflate reported earnings. Their books, by the way, were audited by a Big-6 accounting firm. Arthur Anderson, I believe.
Most companies with such a phenomenal earnings and growth record would have a p/e of 15, perhaps higher. Why is the p/e 2.5? I don't think it can be attributed entirely to shorts that are manipulating the stock. I hope its not fraud... Would be nice to get assurance from KPMG or the like as their permanent auditor.
Not a sermon. Just a thought.
Yes - when should we expect LLEN to start paying the dividend they alluded to in the recent press release.
L&L's press releases on the topic of KPMG's work seem inconsistent. At one point, they were going to do an audit, and later they referred to the work as a review. Reviewed financial statements are significantly less assurance than an audit, and a CPA firm cannot and will not ever give an unqualified opinion on statements they reviewed. Did KPMG audit one period and review another? Or is L&L issuing factually incorrect press releases? Anyone know?
My God! Someone should proofread L&L's press releases. There are several grammatical errors on the latest one. It doesn't help the company's credibility. Furthermore, the press release itself doesn't make sense. If L&L is doing an acquisition of a large coal mine, how come their 'strategic partner' is doing the acquisition, only to sell it to L&L when they can afford it. Why do they need L&L?
I bought WCRX only a couple of months ago, thinking I'd wait a year and probably get a long-term capital gain. So with the buyout by ACT, would this be treated as a sale for my WCRX stock?
Janney Montgomery Scott... Oh yes, that's the firm that downgraded BKE last year right before the big runup. They did the same thing in 2010. Given their track record, this may be a screaming BUY signal for ARO
The price of LLEN should not take a hit if they issue stock to fund profitable expansion. The stock is already dirt cheap (unless of course there is an element of fraud in their non-big-4 audited financial statements) In fact, the lack of raising funds has held back the growth rate of LLEN and therefore held back the p/e ratio and stock price. What kind of real company would borrow $1M from their CEO if they had the ability to raise funds via bank loans or secondary offering?
LLEN has not pursued getting a more reputable audit firm. I am guessing that this is because they are afraid of what might be challenged in their financial statements. At one point, management said that a big 4 firm would not accept them as a client because they are too small, but that is BS. With all the transactions that don't smell quite right (sale of Ping Yi for example), constantly 'rotating' their mine holdings, borrowing money from shareholders, etc. etc. etc. It makes sense that they don't want a large experienced CPA firm looking at their books.
Long or short aside, does anyone have any comments about the merits of these arguments?