Monday, June 14, 2010

Fujian Zhenyun FZY (SIN: 5KT)

This S chip recently had a auditor expressed disclaimer of opinion. (I.e, auditors cant verify the numbers). The point of contention was a RMB 36.6mil that was transferred from receivables to prepayment of deposits. Sounds familiar?

Now this firm had cash of RMB 185 mil and yet had debt of RMB 13.4 mil. Total receivables grew 29% yoy and inventory grew 15% even when sales was rather flat at 2.8%.  I was not able to spot any problems with revenue and expense recognition, any off balance sheet or capitalized items. The financials excluding the observed trends have been decent and cash flows were in fact appearing safe and recurring.

Besides the above, FZY also had regular dividends from 2008 with a current dividend yield of 2.9% at $0.38 stock price. The dividend have been postponed from 15 June to July. The price have since fell to $0.24 this morning.

It is best to stay away from this counter until the doubts have cleared in the postponed AGM.



JM said...

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MTH Investments said...

Hi JM, I have your blog in my links since some time back. Sure I look forward to exchanging ideas and discussing investments.


Great stock pick.

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