[UPDATE – Ping Luo buy rated stock Wonder Auto (WATG) also failed to filed its 10K on time]
Ping Luo, perhaps the high priestess of Chinese reverse-merger garbage, must really need a hug after the past week.
It turns out that Global Hunter‘s former ace China analyst is pretty much a moron. On the 15th of March she “suspended coverage” on China Media Express (CCME). Sadly for her, and any investors unwise enough to hear her siren song, the shares were halted the morning of March 11th.
The halt came a mere three weeks after Ping issued perhaps the silliest analyst report to ever be issued, even by a shop as neck deep in reverse-mergers as Global Hunter. Her February 17th defense of CCME is destined to be a classic. Read it here. A small taste of the Charlie Sheen-esque “truth torpedoes” within:
Met with management and Starr. We felt management was eager to prove the legitimacy and validity of its business. The company has been open and cooperative with our due diligence work. We believe the company is currently assisting Deloitte in completing its annual audit, and has been actively collecting third-party verifications. In addition, we visited Starr‘s Shanghai office again. We believe Starr has done comprehensive DD and been closely monitoring the company. Our impression was that Starr continues to believe in CCME and is likely to remain as a long-term investor.
Of course, Deloitte did not seem to agree that management was so forthcoming. According to CCME‘s own press release announcing the resignation of Deloitte:
The DTT resignation letter stated that DTT was no longer able to rely on the representations of management, and recommended that certain issues encountered during the audit be addressed by an independent investigation. DTT’s letter also stated that these issues may have adverse implications for the prior periods’ financial reports and that, in their view, further investigatory procedures would be required to determine whether the prior periods’ financial reports are reliable.
And Starr, the great hope of every misguided stuckholder’s fallacious arguments from authority? Perhaps not such a long-term investor anymore, either. On the 16th of March, Ying “Dorothy” Dong, of CV Starr Asia, resigned from the CCME board and sent a withering letter of her own to China Media.
Another Ping Luo stock, ShengdaTech (SDTH) was also halted on the 15th of March, and remains halted. SDTH is not able to file its 10K. ShengdaTech announced:
it had appointed a special committee of the Board of Directors to investigate potentially serious discrepancies and unexplained issues relating to the Company and its subsidiaries’ financial records identified by the Company’s auditors in the course of their audit of the consolidated financial statements for the fiscal year ended December 31, 2010.
Ping did not suspend coverage of that name, according to Bloomberg, she says buy.
A third Ping name, Harbin Electric (HRBN) did manage to file its 10K complete with a Frazer Frost audit. Still, even Frazer had to admit that there were serious internal control issues at HRBN including:
1- Control activities related to bank reconciliation.
2- Control activities related to the reconciliation and classification of notes receivable.
3- Control activities related to the calculation of provision of income tax.
4- Control activities related to valuation of inventory allowance.
5- Control activities related to inventory recording.
And yet, the Pinger still rated Harbin a buy. Let’s take a look at the the complete Ping Luo Coverage Universe, who knows, there might be some low hanging fruit still left to pick. With Ping guiding us, how can we lose?
SIHI SinoHub Inc buy 03/15/11 CHLN China Housing & Land buy 03/15/11 CCME China MediaExpress H suspended coverage 03/15/11 AMCN AirMedia Group Inc accumulate 03/15/11 CMFO China Marine Food Gro buy 03/14/11 ZOOM Zoom Technologies In buy 03/07/11 WATG Wonder Auto Technolo buy 03/07/11 VALV Shengkai Innovations buy 03/07/11 CAST ChinaCast Education C buy 02/17/11 CADC China Advanced Const buy 02/16/11 SOKF SOKO Fitness & Spa G buy 02/14/11 CELM China Electric Motor I buy 01/31/11 QKLS QKL Stores Inc buy 01/24/11 CVVT China Valves Technology buy 01/24/11 SDTH ShengdaTech Inc buy 01/24/11 HRBN Harbin Electric Inc buy 01/18/11 CRTP China Ritar Power Cor buy 11/22/10 CNYD China Yida Holding Co buy 11/22/10 CHC China Hydroelectric C accumulate 11/12/10 CAAS China Automotive Sys accumulate 11/10/10 CSKI China Sky One Medica dropped coverage 09/02/10 JRJC China Finance Online dropped coverage 09/02/10 SGTI Shengtai Pharmaceuti dropped coverage 09/02/10 CDII China Direct Industrie dropped coverage 04/01/09 JNGW Jingwei International dropped coverage 03/31/09 BEST Shiner International I dropped coverage 03/24/09 FEED AgFeed Industries Inc dropped coverage 12/30/08 CHGS China GengSheng Mine dropped coverage 11/19/08
Not a quality company in the bunch. And not a single sell rating either. Ping, what exactly qualifies as “analysis”, “research” and “due dilligence” in your world? On second thought, don’t bother answering, your February 17, 2011 CCME report speaks volumes.
A quick check of the Global Hunter Securities website shows her name is no longer to be found under the “Equity Research Professionals” section. Is GHS doing some damage control and dropping her? And your author thought Kevin Theiss had a bad week!
UPDATE – WATG filed an NT-10K stating:
“financial statements as of and for the years ended December 31, 2008 and 2009, included in its Annual Report on Form 10-K for the year ended December 31, 2009, as well as the financial statements included in its Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30 during each of the years 2008 and 2009 should no longer be relied upon due to a cutoff error regarding timing of revenue in such periods. Additionally, the Company is still evaluating the impact of the cutoff-errors on its financial results for the year ended December 31, 2010 and on its internal control over financial reporting as of December 31, 2010.”
Would’ve loved to have been a fly on the wall during the meeting when she got fired.
Also, started reading the Asensio book. Good stuff! One of the stocks he mentions in passing during the boner pill chapter made me perk up: VVUS? Vivus. That sounded familiar. Turned out I had a tiny position in my IRA, which I promptly dumped since once a garbage company, always a garbage company it seems.