China Minzhong Food Corporation

[CY09]

Hi all,

iirc Mr. Guo Rong owns only 2.82% of CMZ. So if it was indeed fradulent, it is wiser to just run away instead of finding so much money to buy. One impt aspect of CMZ is that it has toned down its expansion plans, as a result cash outflow due to investing activities will reduce. Thus free cash flow generated from the business is pretty high. In fact for FY 14, FCF (excluding o/c changes) was about 700M RMB. That is about 24% FCF/Yield on share price. TTJ (which I am currently trying to purchase) only has a free cashflow yield of 20.9%. This point may indicate how undervalued CMZ might be.

Btw another interesting thing i found is that Sing Holdings CEO, Mr. Lee Sze Hao actually owns a small stake in CMZ.

[Wildreamz]

Trying to buy back.before salim realised books are cooked?? If so good why sell to salim last time??

-- via Xperia Z1 with tapatalk

Knowingly add more stake to a fraud to cover up the fraud, seems completely counter-intuitive to me. The more logical approach is sell out and "retire".

Correct me if I am wrong.

(vested)

[brattzz]

there's too many angles to consider!
Will be interesting to see what happens over the next few years?!!

Not Vested as i cannot understand what is going on at all!

[portuser]

Lin Guo Rong now owns 0.82% of China Minzhong.

Based on the announcement, Salim will sell 52.94% to Lin and keep 36.05% of Minzhong.

Lin will need $497m to buy from Salim and another 10.19% from other shareholders.

[sykn]

You're right; I'm vested but I also cannot understand what's going on!

The previous time Lin probably sold out because of the bad name caused by the short seller's rumour mongering. Salim had to step in because he already had a stake and the price went down by 50% when Glaucus stepped up his attack.

But this time, why did Lin want to pay the same price to regain control of the company? I'm scratching my head; the only lame reason I can think of is that Lin knows the company is worth much more than what he's going to pay Salim. If Salim also knows, why does he want to sell? Perhaps (not sure), he wants the use the cash for something else and feels that his remaining 30% is safe in Lin's hands at the helm. But I am vested, so am naturally biased. Glad to hear other views from VBs.

there's too many angles to consider!
Will be interesting to see what happens over the next few years?!!

Not Vested as i cannot understand what is going on at all!

[Bluechipfan]

Some people as long it is S-chips then no matter what, be it ostensibly positive or negative, it must be bad. Something good must be fraud, something bad they say 'i told you so'. Totally no objectivity to speak of. In this case, it could be a strategy move to sell the company back then to Indofood after the share price plunged following the short attacks. The company brought in reputable party to stabilise the dire situation and now dust is settled, the owner wants to buy it back. He is even willing to do so at a higher price maybe he knew the prospect of the company is good? He buy back to prevent exposure of fraud? Wah kau, he needs real money to buy back the shares you know? You think all this paper exercise only??

[leeeta]

You're right; I'm vested but I also cannot understand what's going on!

The previous time Lin probably sold out because of the bad name caused by the short seller's rumour mongering. Salim had to step in because he already had a stake and the price went down by 50% when Glaucus stepped up his attack.

But this time, why did Lin want to pay the same price to regain control of the company? I'm scratching my head; the only lame reason I can think of is that Lin knows the company is worth much more than what he's going to pay Salim. If Salim also knows, why does he want to sell? Perhaps (not sure), he wants the use the cash for something else and feels that his remaining 30% is safe in Lin's hands at the helm. But I am vested, so am naturally biased. Glad to hear other views from VBs.

there's too many angles to consider!
Will be interesting to see what happens over the next few years?!!

Not Vested as i cannot understand what is going on at all!

That's why dont believe this short sellers too much. They are in it to cause fear and sell down to earn a profit and we together with the company are poor victims.

I ask you, if CMZ has cooked their books, why didn't Salim sack the whole mgmt and replace them with their own? Why keep Lin and company? Makes no sense to me... If I am the majority shareholder and boss of the company, I will sack all these cheats...but funny Salim did not. Why? And there are lots here who condemn just because they are s-chip. Yes I agree, there are s-cheats in SGX and this is why we have to be more careful in our investments but dont lump all as s-cheats coz not all are.

There must be interesting developments coming up for CMZ..how valuable it is or who is backing?..only time will tell.

[brattzz]

ok lah ok lah, time will tell! no worries, let keep track of this co.!!

[specuvestor]

yea no one would use real hard cold cash to cover fraud. Even Satyam was trying to use overvalued assets to cover the fraud

I think Salim was white knight for the GO when fear was abound... now Salim stake back to square one. It could just be their cooperation is meant to remain at around 30% interest and not synergised as thought.

As discussed, we shouldn't discard an asset class or sector just based on generalisation. But it will take much more effort to figure out S-chips, so depends whether it is worth the effort.

The primary issue with short sellers is that it is much easier to destroy repute and credibilty than to build it up. You can be honest for life but one lie that is being caught can overwhelm all. This asymmetrical nature means short sellers should rightfully be regulated more.

The key for Minzhong should be that Indofood network and organic demand synergies minzhong sales. So far it doesn't seem to have happen yet which puzzled me

[amperex]

You think all this paper exercise only??

Good question.