Sunday, 1 September 2013

And Minzhong responds .....

The response by China Minzhong filed at the SGX website can be found here, with annexures here, here and here.

The quantity of the response is good, 19 pages filled with information. Certain points look convincing, but others leave questions, at least to me.

For instance:
  • Page 3, Glaucus claimed that Hong Kong Yifenli Trading Co. was incorporated only in November 2009, Minzhong responds by showing sales contracts. But when was Yifenli then incorporated, and would it not have been more convincing to show the incorporation papers?
  • Putian Daziran Vegetable Produce Co did not report any cost of goods sold according to Glaucus, Minzhong responds again with sales contracts, but did this company file them with the SAIC?
Interestingly, again a discussion about EBITDA, Minzhong responds that its definition of EBITDA is different from the one used by Glaucus. That can happen, since EBITDA is not defined by GAAP (Generally Accepted Accounting Principles). Another reason not to use these "bull shit" (Mungers words) numbers anymore. I hope that the Malaysian companies (who started to use these EBITDA numbers more and more often) take note.

And there is even a Malaysian twist to the story, quite a few of the vegetable contracts that are shown are shipped to Klang.

Interesting to watch how events will unfold, the suspension of the shares will be lifted from tomorrow onwards (at least Minzhong has requested that), how will the share price react?

Also, what will the answer of Glaucus be, it is hard to believe they will not come with a response from their side.

And lastly, will the SGX order (for instance) an independent investigation in the case, with the documents supplied by Glaucus and Minzhong to start with? To clean the air for once and for all?

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