Zhongmin Baihui Retail Group

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My take on this - if price is consistently moving up without a corresponding increase in VALUE, then the best advice is to avoid at all costs! Confused

Business Times - 25 May 2011

Hock Lock Siew
Zhongmin Baihui - real or false demand?


CHINA stocks listed here, or S-chips as they are popularly known, have had a rough ride over the past year, what with a well-publicised string of accounting and corporate governance failures that have hit many in the segment. As a result, most S-chips have suffered and their shares wallow deep in penny territory, trading well below 50 cents, and in many cases, below 20 cents.

Yet there is one S-chip which stands out, not just because of its jaw-dropping performance this year - which makes it by far the local stock market's best performer - but also because its stock price appreciation defies logical explanation.

We're referring here to Zhongmin Baihui Retail group, a Fujian-based department store operator which listed on Catalist in January, offering 30 million shares which were all placed out at 30 cents each.

For the year ended Dec 31, 2010, Zhongmin's losses widened from 6 million yuan in 2009 to 9 million yuan, yet incredibly, the company's shares have rocketed more than 500 per cent since listing, yesterday adding a stunning 25 cents or 15 per cent to close at $1.97.

This gravity-defying feat has come without the company making any significant announcements other than lease agreements for department stores and routine matters relating to the company's annual general meeting.

The stock's massive outperformance hasn't gone unnoticed by regulators. After the company's results were released on Feb 28, its shares, which had climbed to 40 cents at that date, continued to soar. This prompted an April 26 query by the Singapore Exchange (SGX), by which time Zhongmin's shares had hit $1, more than triple their offer price.

The company's reply to SGX was that it had no knowledge of any reason for the interest in its shares. Since then, in little under a month, Zhongmin's shares have almost doubled.

So what's going on? According to Bloomberg's financial service there are no analysts that cover Zhongmin, so it's unlikely that the shares have benefited from a sudden burst of interest from the research community.

And it's not as if the market as a whole has performed well since the start of the year - since Zhongmin was listed on Jan 19, the FT ST China index has dropped 10 per cent while the Catalist Index has lost some 11 per cent.

Of course, it is possible that there exists a logical reason for Zhongmin's spectacular outperformance. The company could be a takeover target, for instance. Or parties which have as yet not been identified could be accumulating the stock in advance of a big announcement - although in view of the company's April 26 reply, this latter possibility is admittedly remote.

There is, of course, the less-than-palatable explanation that something funny is going on, especially since the IPO involved a relatively small number of shares that were all placed out. Readers with memories that extend back to 1998 will recall the case of Mid-Continent, whose shares were placed out to only a handful of parties, resulting in its price going ballistic soon after listing. Needless to say, this came to a painful end soon after the authorities intervened.

Then there was the case of the loss-making property and construction counter Leong Hin, whose shares quadrupled after listing some 10 years ago despite the company reporting widening losses. That stock was later found to have been cornered and manipulated and the parties subsequently dealt with.

Let's hope that history isn't repeating itself.

My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
The end of manipulation?
As of this writing, the share price has crashed 20% or 40 cents from $1.97 to $1.57. SGX has also queried the Company.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Yesterday (24-May2011) closing was $1.97 => let's use $2 instead for below excercise)

What the impact, assuming Zhongmin share price plunge 50% today (so left $1), and a further 50% tommorrow (left $0.50 ) ?

I see 3 major groups of Shareholders here
Group-1) the Pre-IPO shareholders: Only 6-persons (all Directors or their immediate relatives) and they control 166.32m shares
Group-2) those 346 placees who got hold of ALL of that 30m new IPO placement shares at $0.30 each
Group-3) those who buy the shares after it started trading from 21-Jan-2011.

even if share price should drop to ZERO, Company get suspended, delisted or whatever,
as Major owners of the Company, they will still benefits
coz their Company got an extra S$7.3m from IPO of new shares
==> that's some RMB 37 millions more to play with !!! plenty of $$ for one departmental store to play with !!

Group-2 - even for those who had NOT already cashout yet, just dumping at $0.50 => they still make huge 66% margins.

Group-3 : whether you are innocent or simply greedy, if not careful, you may soon turned into permanent BABYsitters !!!

The Company wishes to state that an article titled "Zhongmin Baihui - Real or False
Demand" published in The Business Time on 25 May 2011 might possibly explain the
trading activity on 25 May 2011. Save as disclosed above, the Company is not aware of
any other possible explanation for the trading.
(25-05-2011, 03:06 PM)Bennie Wrote: Got "REPLY TO QUERY REGARDING TRADING ACTIVITY"

The Company wishes to state that an article titled "Zhongmin Baihui - Real or False
Demand" published in The Business Time on 25 May 2011 might possibly explain the
trading activity on 25 May 2011. Save as disclosed above, the Company is not aware of
any other possible explanation for the trading.

This kind of reply should be framed up for reference. Completely pointless! Might as well not say anything. A simple article in a newspaper would cause an avalanche of trading volume? Huh
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
Jul 11, 2011
If anything goes wrong, we can't run away: Boss

Exec chairman spends about half his time here, unlike other S-chip heads

THINK of an S-chip boss and you would likely conjure up a China-based businessman with a strong accent who spends most of his time on the mainland - but there can be exceptions.

Enter Mr Lee Swee Keng, executive chairman of newly listed Zhongmin Baihui Retail Group.

He defies this mould completely: A Singaporean born and bred, sounds like a heartlander when he speaks Mandarin and Hokkien, and spends much of his time here.

'So investors can find us here. If anything goes wrong, we can't run away,' he said with a laugh, at the company's premises off Lavender Street.

Mr Lee was referring to the spate of high-profile accounting and corporate scandals affecting S-chips - China companies listed here - that have collectively eroded investor confidence.

He has steps in place to help maintain governance in Zhongmin Baihui, which runs a chain of department stores on the mainland.

Mr Lee spends about half of the work year in China to personally keep tabs on the operations, with the other half here.

Chief financial officer Jeffrey Kan also frequently travels to China to check the accounts. The company's books and accounts are organised and there is an established internal system for processes, said Mr Lee.

The firm was incorporated in Singapore in 2004. This means that unlike some S-chips which are registered overseas, it must have a registered office here. It is also subject to the Companies Act here.

While some S-chips have had problems with rogue legal representatives for their Chinese subsidiaries, Mr Lee ensures control as he is the legal representative for Zhongmin Baihui's units.

Under Chinese law, this representative has entensive authority to execute agreements, transfer assets and provide guarantees on the company's behalf.

The $7.3 million net proceeds from Zhongmin Baihui's initial public offering in January are still in Singapore and will be moved to China only when there is a need for investment funds. The company's eight-member board comprises equal numbers of Singapore and Chinese nationals.

One reason why Mr Lee has been able to crack the Chinese market is the help given by his relative, Mr Chen Kaitong. Mr Chen, Zhongmin Baihui's chief executive officer, is based in China. The duo, who are distant relatives, have been business partners since 1993 when Mr Lee visited his ancestral village in Fujian province.

Mr Chen, who was in the textile business, teamed up with Mr Lee to start a department store in the province that year. The business has grown steadily since.

Zhongmin Baihui owns and operates a large underground retail mall in Xiamen City, the commercial centre of Fujian. It also manages six other stores in China.

It says it can tap on the growth of the retail segment in China, where the government is encouraging consumer spending to drive the next lap of growth.

The firm's stores are in cities and near major transport hubs - a strategy similarly employed by larger retail and mall players to capitalise on the heavy flow of human traffic.

In five years, it aims to own or manage 300,000 sq m of shop space compared with 90,000 sq m now.

Zhongmin's share price dropped sharply in May after a media comment that its price appreciation since its listing 'defies logical explanation'. Amid a trying time for new listings, the counter is many times above its offer price, even after the fall.

The Business Times article added that the firm's losses widened from 6 million yuan (S$1.14 million) in 2009 to 9 million yuan last year.

It also raised the possibility that the stock price could have been manipulated as only a small number of shares were placed out.

But Zhongmin Baihui has dismissed the possibility. Director Low Chui Heng pointed to statistics compiled by the firm that showed it had 398 shareholders in May, from 264 in March.

'The number of shareholders has been growing,' he said. 'Here's the evidence that the stock has not been cornered.'

The company also says its losses last year were due to accounting policies, adding that its cashflow is positive.

Mr Lee said he will 'likely give out dividends, as a Singaporean', adding that the firm will look at its performance before deciding on the timing of the possible payouts.



About the company

ZHONGMIN Baihui Retail Group listed on the Catalist board on Jan 20.

It was the year's first listing but fell below the radar of many investors because the initial public offering (IPO) sold shares only via placement, with no public tranche.

The firm sold 30 million shares at 30 cents each to raise $9 million. Net proceeds after deducting costs were about $7.3 million.

Amid an uncertain time for new listings, the counter has consistently stayed above its IPO price of 30 cents. It closed on Friday at $1.53, more than five times the IPO price. Its market capitalisation is now about $300 million.

The firm owns and operates a large underground mall in Xiamen, the commercial centre of Fujian province, and manages six stores under its brand in other parts of China.

These stores occupy about 90,000 sq m. The firm wants to grow to own or manage 300,000 sq m within five years.

By the end of the year, it will open a store near Nanjing's high-speed railway station, as well as another new store in Xiamen. The expansion will continue next year and beyond.

Chairman Lee Swee Keng holds over 25 per cent of the firm, while chief executive Chen Kaitong owns 24 per cent. About 100 employees from China are also shareholders. There were a total of 398 shareholders in May.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
27 November, 2015 - Broker's Report : Zhongmin Baihui started at ‘buy’ by PhillipCapital with $2.10 target price
SGX urges caution when dealing in Zhongmin Baihui Retail Group Limited shares
Quote:Singapore Exchange (SGX) urges investors and potential investors to exercise caution when dealing in the shares of Zhongmin Baihui Retail Group Limited (ZMBH).

The share price of ZMBH remained steady from 26 October 2015 to 4 February 2016, despite a decline in the broad market. In particular, despite the STI falling 11.25% between 4 January 2016 and 4 February 2016 (relevant period), ZMBH's share price remained relatively stable.

SGX's review of the trades in ZMBH shares during the relevant period showed that a small group of individuals was responsible for over 90% of the on-market buy volume of ZMBH shares. This group of individuals appears to be connected to each other.

SGX is reviewing the trades in ZMBH shares and will take the necessary actions.
Specuvestor: Asset - Business - Structure.
Another Share manipulation case similar to koyo International? Share price is likely to come under pressured when trading resume.

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