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Sunday, July 17, 2005

YaSheng Group (YHGG) Consolidated statements for 2004, 2003

Results were audited (with unqualified opinion) by qualified auditers in China, but not an external auditor which is PCAOB registered. The company is working on it, expects to begin the audit in Q2 2005. Overall, this document is very straightforward and readable, but is missing a lot of details I'd expect (employees, better description of business, legal proceedings, etc.), most of this is found in other documents.

Grammar error:
At such time, and amendment to the 10-K will be filed....
Substantially all of the companies operations are in China (but a California company). Agriculture, chemicals, textiles, construction materials, livestock, new argriculture technology, genetic biology. Headquarters are Lanshou City, PRC. Company is run via China GAAP, translated to US GAAP for reporting.

farming related income: $241 million
chemicals income: $173 million
trade income: $118 million
dyes income: $104 million
beverage income: $24 million

Numbers are in US Dollars. Year ends Dec 31.

Current assets are mostly AR ($75M) and inventories ($70M) and cash ($45M). Non-current assets are PP&E ($1.1Billion), other ($49M), and intangibles (know-how, mining rights, technology xfer expense, SW) ($17M).

PP&E breakdown is mostly machinery, farm facilities, and land. Also buildings/improvements and contruction in prog ($140M). About 1/3 depreciated. Changes from 2003 seem rational.

Inventory breakdown is mostly raw materials. Also goods-in-trade, finished product.

Current liabilities are mostly short term loans ($71M), AP ($64M), and other stuff. Non-current liabilities are loans ($90M), and some other stuff.

Huge amount of retained earnings ($883M). Total equity $1 billion. Total assets $1.4 billion.

Revenues $631M for 2004 ($605M for 2003). Gross margins 19%. Operating margins 9%. Net income 9.7%. Substantially similar for 2003. EPS 40 cents (39 cents in 2003).

Operating cash flow is $203 million ($277 million in 2003). Capital expenditures were $202 million ($209 million in 2003). Why so much???? Deprec is $140 million. Could the real economics be deteriorating?

No rampant options (no apparent options?).

Depreciation lengths:
The note about accounting methods is all very standard and straight forward.

Chinese law for profit distribution covers prior years deficit coverage, 10% off for legal surplus, 5% off for legal welfare fund, any portion of earning surplus, dividend distributions. This seems to match up fairly closely with Article 8. NOTE 8 covers the expenses fairly well, all social programs.

Bizarre error in notes: liability details show years 2003 and 2003, not 2003 and 2004.

AR bad debt is written off in the year identified. Allowances method is pretty standard.

Shares of stock are consistent around 155 million.

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