Personal and undiluted views
China Bubble

2426 days ago

Tom Winnifrith Bearcast 26 May - a short edition

Ok rabble, it is the last day in Greece with the Mrs. She flies home to her true love (Oakley, the morbidly obese three legged cat) later and so this is just a short message on a day when the stockmarket is showing signs of true madness. Should we all give up being value investors and buy any old rubbish and go with the flow? No. It will end in tears. Inter alia I refer to Coms, Daniel Stewart, Scotgold, Kea Petroleum and the China bubble.

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3278 days ago

Geong – Another Crap Chinese Company on AIM provides pure comedy

AIM listed Chinese joke company Geong (LSE:GNG) is always a bundle of laughs. This is a company that works on projects for 18 months, does not invoice yet books the amounts as income. I have pointed out before that its balance sheet backing is illusory, that its “profits” ho ho ho never translate into cash and that it would probably be out of cash within a year. That was in September. But today the company has served up a stormer of a statement and I have just got even more bearish. This is a classic China bubble story.

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3367 days ago

Video Postcard Number 12

Once again both the sound and picture are all okay. A pity about the window occasionally banging in the background but almost there for the latest video postcard which is fairly wide ranging.

Back in London on the first train Tuesday I plan to record my first CEO Videocast this week. Hopefully no banging windows there. And I cannot say where it will appear. But it will.

The video lasts 12 minutes

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3369 days ago

LDK Solar's Price Spike Offers Chance To Add To Short Position

Shares in LDK Solar (LDK) have spiked up to $0.86 in recent days on news that it has raised $23 million at $0.86 a share by issuing new shares to a Chinese investor. The deal looks an odd one and the math for LDK still look very poor indeed. I first advised shorting this stock at $1.38 on August 30th and reiterated that advice on September 19th at $1.25 warning then that shareholders equity will disappear by Christmas. It still will and the spike is another opportunity to go short.

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3384 days ago

Range, Sefton, Qihang etc – Revenue and FREE cashflow

You know my views on all three stocks. More on Range (LSE:RRL) later but it is still a sell with a 1.5p target after today’s news. Sefton (LSE SER) at 1.16p remains a sell down to 0.1p. At 13p Qihang Equipment (LSE: QIH) is also a sell with a target price of 0.1p. But I note BB comments about these penny share dreadfuls which just nag on about production levels and compare that to the market cap and insist that I have got it all wrong. Well here is why the BB morons need to rethink – and incidentally this applies to all companies.

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3393 days ago

The US Dollar – The Political Angle ahead of November 6

The US election looms – on November 6th America will choose whether it wants another four years of Obama or a switch to the Republican Mitt Romney. As someone who supported the only fiscal conservative in the race (unsuccessful Republican presidential contender Ron Paul) I am dismayed by the choice and – like most Americans – really do not care about the result. Turnout will not be high. But Obama will win. It is not a matter of if, but of by how much. Just look at the betting on the poll. If Romney wins from here it will be the biggest upset in decades. I hate to write him off completely but I do.

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3396 days ago

The Weekly Video - Edition 8

Hooray. Not headless and filmed in good light. I am getting the hang of this video malarkey. Filmed at Real man Pizza Company with the waiters looking on wondering what I am babbling on about, this is fun.

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3399 days ago

Qihang Equipment – another China sell

I have never written about this company before but interim results out today from Qihang Equipment (LSE:QIH)are pretty shocking and at 14.75p, the £8.56 million market capitalisation appears to be a total joke. Yup, this is another Chinese stock which brings no credit to AIM.

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3405 days ago

Geong - Numbers Just Look Wrong

AIM listed China tech stock Geong (GNG) is at 5.875p valued at just £2.13 million and according to its AGM statement it has net cash of £2.2 million and it recorded a small profit last year (to March 31st 2012) of £400,000 ( down from £2.6 million) on sales of £9.7 million (£11.3 million). So it is cheap as chips? No. Its numbers look very odd indeed to me and I would not wish to own this stock at all.

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3406 days ago

LDK Solar: Dismal Q2 numbers - Shareholders Equity gone by Christmas?

Chinese solar play LDK Solar (LDK) announced results for the three months ending June 30th, 2012, on September 17th. The figures were shockingly bad, even worse than analysts had forecast, and the outlook statement offered little prospect of recovery. At this rate it seems likely that by Christmas the company will have negative shareholder funds. At $1.25 (down 13 cents from my original sell advice on August 30th) and still capitalised at $167 million, the stock remains a sell with a target price of virtually nothing.

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3408 days ago

My Fellow West Ham fan Ben Bernanke – The Weekly Video is Live

Like me Ben Bernanke is always blowing bubbles. It is just that he does not realise that they eventually fade and die. Recorded before today’s rather dull nil nil draw at Norwich (only highlight: Nolan not booked) the weekly video is back.

Recorded in the back garden of my father & step mother’s house, forgive the relaxed attire. Step mother Helen is very kindly doing a wash.

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3412 days ago

Focus Media - New Bronte Allegations - Stonking short

China-based Focus Media Holding Ltd. (FMCN) is still the subject of a bid led by its CEO Jason Jiang and backed by big name private equity firms, including Carlyle. Some shareholders have claimed that the $27 a share bid is too low. But the offer is subject to due diligence. This company has been the subject of numerous claims about its accounts not being quite up to scratch in the past, and if the bidders walk, the shares will almost certainly collapse. I advised shorting the stock and detailed past claims on Aug. 30, with the stock at $24.51 on the basis that the downside was $2.49, but the upside could easily be $14.51.

In light of a series of allegations made by the Bronte Capital Blog within the past few hours, I would suggest that this bid is less and less likely to go through. The allegations may well be dismissed by Carlyle, but I would not bet on it. They certainly raise issues. Thus, at $24 the case for staying short has just become quite stronger.

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3414 days ago

China Crash 2012/2013 Overcapacity and bubbles - Part One

There can be no doubt now that China is undergoing a “hard landing.” But that hard landing will soon turn into a crash. Although this is not the consensus view of analysts, the experts have called the slowdown badly wrong so far and are still wrong. No amount of fiscal and monetary stimulus to the domestic economy can dodge the pending crash. That is because the crash will be driven by chronic overcapacity (driven by capital misallocation) in the production of commodity goods for export; structural weakness in the domestic banking system and the existence of vast speculative bubbles, which must at some stage burst. Hence, stimulating domestic consumption will change nothing.

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3415 days ago

JA Solar Responds To EU Threat, But It Cannot Win

JA Solar (JASO) has responded robustly to plans by the European Union to consider tariffs on Chinese solar panels as part of an anti-dumping clampdown but it and other Chinese solar companies such as LDK Solar (LDK) and Trina Solar (TSL) just cannot win and here is why.

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3416 days ago

China Crash 2012 – Socks, Walnuts and capital misallocation

I have for months argued here that the experts have got it wrong. City analysts tell you that by slashing interest rates and by investing $99 billion in new infrastructure projects China can avoid a hard landing and its economy can “land softly” before growing again rapidly next year. The experts have already been shown to be wrong and a massive crash is already underway. As I have noted before your China exposure should be precisely nil.

I shall explain where socks

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3416 days ago

The Tulip bubble of 1637 and the China Walnut bubble of 2012

We have all lived through various bubbles of which the 1991-2001 dotcom bubble was the most famous. After each bubble bursts everyone (with hindsight) says “oh, that was a bubble, we will never be that stupid again.” And then they are. I shall be sinking my teeth into New Media this autumn. But at least no-one has been mad enough, until now, to go back to the insanity of the Tulip bubble of 1637. But now… step forward China and walnuts.

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3421 days ago

Sell Trina Solar at $4.51 - Target Price cents ( another China play)

Last week in this forum I flagged up two Chinese solar stocks which were, for all intents and purposes, worthless as investments. A kind reader alerted me to a third company in the same boat which looks like a stock to short with a price target of more or less nothing. I refer to Trina Solar (TSL), which at $4.51, is capitalised at $318.76 million.

I will not rehash the arguments why I am uber skeptical about China, its slumping economy or about the macro-reasons why the oversupply of solar panels is bound to continue. Nothing has changed in that respect since last Thursday

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3422 days ago

Sell Anthony Bolton’s China Special Situations Fund- the need to have China & India exposure myth

There will be some folks who tell you that you must (I repeat must) have exposure to China or India as part of a diversified portfolio. The question such folks ask is which? The arguments are well rehearsed: demographics, GDP Growth prospects, transformation of agrarian economies, competitive advantage. There is a plausible long term case for both which i shall discuss at another time. The issue is whether holding such investments now will make you money and the answer is no. As such I suggest that if you hold units in Anthony Bolton’s Fidelity China Special Situations fund you should sell the lot now at 74p.

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3426 days ago

Two Chinese Solar stocks listed in the US to short - target price sod all

Amid the blind rush to combat global warming, solar energy was seen as a slam dunk growth industry. Investors rushed to risk speculative capital. Governments rushed to spunk taxpayers’ cash up against the wall. And now it is all ending in tears. The only way to make money from solar now is to look for stocks to short before the situation becomes near terminal. In that vein, I offer up LDK Solar (LDK) at $1.38 and JA Solar (JASO) at $0.96. In both cases, my target price is more or less nothing. I am sure that there are other shorts out there in this sector, and I will move onto others at a later point.

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3426 days ago

Short Focus Media Holding For Maximum Loss Of $2.49, Potential Gain $14.51

I have written extensively in recent months about how China is heading for a very hard landing indeed (see HERE, and HERE, but also how official statistics from the PRC are simply overcooked – that is to say wrong: see HERE. As each week goes by the evidence that the hard landing is accelerating appears to mount as does the rapidly emerging scale of fraud that has taken place in that country. As such I would personally be cutting my PRC exposure to nil.

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3494 days ago

The Great China Bubble and the crash of 2012: Fraudulent statistics unravel

One of my big calls for the past 18 months has been that when China slows it will not be a slow slowdown but a rapid, dramatic and painful mess. My timing has not been perfect. The bubble (and it is a bubble of sorts) has expanded for longer than I expected but it seems as if the avian flu infested chickens are coming home to roost.

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