We are not talking a pristine well established public company but as small private companies being taken public to try and find a bit of liquidity for early investors to exit - it seems pretty run of the mill just with a Chinese flavour - well that's the argument for the positive anyway.
None of the registry stuff overly concerns me (yet). Is the cash really there - that's more significant question (for all businesses)
A concern is that the minority holders don't seem to be in sync with the Mr Xu (who's escrowed for another 18 months) that's a story I would like to know more about, because he is pivotal to future minority holder outcomes.
Craft,
2. Yes. That's the same reasonable conclusion that I've reached.
4. She's the one who got the IPO over the line. Only a related party or assocaite of the company would invest $2.8m in this kind of float... and I would be surprised to find such person in Australia.
5. I like the hedging this with a long in IMF
. But have a read of the Eratat Lifestyle story. It's quite fascinating.
http://www.themalaymailonline.com/m...-eratat-lifestyle-ltd-where-has-the-cash-gone
6. RMB deposit interest rates in China. It's not high but it is not zero.
http://www.sc.com/cn/en/save/deposit-interest-rates.html
7. Page 11 of annual report shows director remuneration. The two Australian directors were appointed 2 July 2013 and paid $5007 and $3750 to the end of Dec 2013. The Prospectus had the higher numbers as you stated. It is entirely possible that they are paid more after listing since workload has increased. All I am saying is that don't expect them to have spent too much time checking the financials in the Prospectus. Read the Eratat story above and you will find that the Singaporian Board there has no idea what the Chinese management team is doing. And that company listed for over 4 years.
8. Yes it is the stated Policy. But since insiders (I am including Ms Hong's holding here) control all except ~8m shares, the vast majority of money paid out as dividend stays with the insider anyway. So the 0.06c dividend resulted in ~$5k going to the new holders. Also, for a company to pay only 1 month's worth of dividend (as opposed to 6 months or 12 months' worth), it is implied that the sellers sold their share ex-div. But there was no dividend paid in 2013 according to the annual report. Did they forgo their 2013 dividend? In 2012, dividends paid was $7.6m.
The cash holding (if there) being larger than debt is not itself an issue. Someone like RCG and SFH have more cash than they do debt. They do however have net interest revenue (as opposed to net interest expense).
A few other things that I can't work out...
9. Customer receipts are remarkably similar to revenue, implying customers make cash payments. Yet receivables is almost a quarter of yearly revenue, implying customers get 90-day payment terms. However there may be an accounting reason for this.
10. Cashflow from investing activities, purchase of PPE from 2013 to 2010 were RMB 0.226m, 2.286m (labeled as Purchase of franching rights in MegaRich's annual report, but possibly misplaced in the Sunbridge's annual report as payment for PPE)，7.25m and 2.05m. The investor presentation claimed that the company is constructing a new 8 storey building for head office, due for completion in June 2014. Yet they've not spent much on finishing the job.
Some of those dozen odd original minority holders now have a market to dispose of their shares and are selling at what appears to be low prices. They are probably more familiar with the company then the buyers - so that should be heeded but does that necessarily mean something fishy is going on? or are they exiting maybe a long term holding at the first real opportunity for their own personal reasons?
There are few possibilities.
1. The minority holders have serious problems themselves unrelated to the company, and are genuine distressed sellers. This may be the case if one or two of them were selling, but the registry showed that 7 of them have been selling to various extent.
2. The minority holders have really wanted to exit for a long time, so clutching at any liquidity they can get. This sounds crazy considering that their dividend from 2012 is about 25% of the current market value.
3. The minority holders know something, and that something isn't good, and it's coming soon. Pure speculation on my part.
4. Something more elaborate at play?
On the other hand... the company appears to have real operations. i.e. there are clothes being made and places to buy them. It's the numbers that need to be scrutinised. Also, I am taking numbers from one part of the accounts to scrutinise other parts of the accounts, so it may or may not be correct.