.comment-link {margin-left:.6em;}

Sunday, July 17, 2005

YaSheng Group (YHGG) 10-Q

For the quarter ended Sep 30, 2004.

checkmarks, ok.

AR way higher, inventories way lower, PP&E way lower than the 2004 year-end numbers. AP way higher, short term loans higher.

Again, they spend about all of their operating cash flow on capital expenditures.

Straight-line depreciation (shorter of useful life or term of lease). Long term assets are reviewed annually for impairment. Advertising costs increased from $1.9million to $2.9million for 9mo 2004 vs 2003. Farming related stuff is not taxed, everything else is taxed at 33%. Max loan maturity is in 2007 at $40.9 million.

Employee welfare fund 14% of payroll. National and community insurance agents 20% of payroll. Unemployment 1% of payroll. Housing surplus reserve 10% of payroll.

In 2004, YaSheng acquired 54% of Nicholas Investment Co on a stock swap basis. The company is now a reporting US public company. Seeks to be listed after audit.

100,000 acres of farmland owned by YaSheng. Working on new technologies for agriculture production, working with Israel Netafim, Mexico's International Wheat and Corn Improvement Ctr. Improving yields and qualities. 2,500 acres of hops, 5,300 acres of fruit orchards (apple pears), apples, grapes, etc., 6,000 tons of potatoes, etc. Process 30,000 tons of super grade malt and 2,000 tons granulated hops. Long term contracts with Qingdao Beer, Yanjing Beer, Zhujiang Beer, etc. Major shift to modern agriculture methods. 10,000+ head of cattle, 10,000+ pigs. 100,000 kg eggs for markets in Lanzhou.

Algae propagation, extraction for natural carotene. 1,500 kg used in food, beverages, natural medicine.

Large mirabilite and industrial salt production. ISO9002 sodium sulfate (85% exported), ISO9002 low-iron, low-carbon sodium sulfide plant (largest in China). Also textile dying, cement production, food processing, beverage production, electricity production.

LanZhou Vinylon Co, Ltd, formerly "first class" state-owned company, produces chemical and synthetic fiber. low-elastic polyester, water-soluble industrial insulating fiber, and vinyl fibers. ISO9002. domestic and export. $15 million.

Gansu Tiaoshan Liquor Co., Ltd. 5,000 tons. ISO9002.

New agricrops with 50% yield increase compared to last year. Result of harvest will shift into Q4 this year.

Company was able to shift $3 million in shipping charges to customers, supposedly due to increased demand.

$2.6 million reduction in G&A due to restructurings.

Will open distribution center(s) in Western Europe as in Victorville, Calif.

No legal proceedings.

Anything strange about the deal with Nicholas Investment? The following statements put out by Nicolas at the time of the merger smell funny to me: "Nicholas Investment Company, Inc. is a closed-end fund with a 2004 first quarter net profit of $1.2 million and net assets of over $1.8 million for the same period. The company has acquired 100% of Javelin Holdings, Inc. a small business consulting and investment banking firm, and 95% of SINO UJE a non-stocking distributor that sells and services western-manufactured high-tech products to markets throughout China"


``We are pleased to have finalized the acquisition of Nicholas Investment Company by YaSheng Group and look forward to demonstrating the substantial upside potential of Nicholas' subsidiary companies for YaSheng and its shareholders. There has been significant progress in mapping out the future of Nicholas and its subsidiaries as subsidiaries of YaSheng, including its assistance with YaSheng's North American expansion plans and the growth of Nicholas' subsidiary SINO UJE's distribution of high tech products in China.''
I hope I'm not misreading this, Nickolas is a small company that was used by YaSheng to get listed in the US. Perhaps during the purchase process, Nick management went out and purchased something with Nick money (possibly something they wanted to unload personally). Yeah, that's definitely possible. Also, if Nick people can help with the expansion in the US, then so be it, YaSheng would already have those assets and people, so why not? Just as long as they don't trust them with too much.

I guess this could be shady on Nick's part, I don't know. I don't see it as shady on YaSheng's part unless I'm misunderstanding something (which is possible). I've been in that situation on a small scale where you go along with someone's deal and they toss in a few minor things to benefit themselves. Doesn't give you a warm fuzzy feeling, but you might still go along with it (kinda like having to toss a candy bar into the grocery basket in the checkout line to placate your kids).
yeah, it's probably no big deal. Just looked like some weirdness on Nicholas' part...a 1 qtr net of $1.2 million on $1.8 mill in assets? Where do I sign up for that? I'm probably prejudiced because the top guy at Nicolas, Steven Peacock, has the same name as the slimy floorwalker in the classic British comedy "Are You Being Served". Anyway, impressive pop in YHGG today on some volume. Hey, it wasn't me!
I was buying today, but it wasn't all me.
Post a Comment

<< Home

This page is powered by Blogger. Isn't yours?