China Gerui Adv Mtals Grp Ltd (NASDAQ:CHOP)-Short Sellers Alert
Complaint
China Gerui Adv Mtals Grp Ltd (NASDAQ:CH
Country: United States
China Gerui Adv Mtals Grp Ltd (NASDAQ:CHOP)-China Gerui Adv Mtals Grp Ltd(NASDAQ:CHOP) - Short Selling Research , Analysis and Estimates .
China Gerui Adv Mtals Grp Ltd(NASDAQ:CHOP) Short Selling Target $ 1.50
China Gerui Advanced Materials Group Limited CHOP, -5.62% ("China Gerui," or the "Company"), a leading high- precision, cold-rolled steel producer in China, today announced that on March 4, 2015, it received a written notice (the "Notice") from the Listing Qualifications department of The Nasdaq Stock Market ("Nasdaq") indicating that the Company is not in compliance with the minimum bid price requirement of $1.00 per share set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Select Market.
The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.
History of massive revenue decline, debt problems and recent cash-poor position.
Virtually no cash left
CHOP has acquired hundreds of pieces of Chinese porcelain that company leaders hope to sell for a profit and save the struggling steel business. Â What is it ? A joke ?
CHOP is burning about $80 million per quarter and is now left with only about $2 million unrestricted cash and $50 million restricted cash - a capital raise may be.
If CHOP is able to re-enter the steel business, it will find a steel surplus, hundreds of competitors, razor-thin margins and the looming risk of becoming state owned.
CHOP has attracted very little to no recognizable institutional investment - always a bad sign.
A class-action lawsuit looms, threatening to consume the money and management attention that are greatly needed now to deal with the current crisis.
CHOP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 50.54%, which is also worse that the performance of the S&P 500 Index.
Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company.
The cash burn, business shift, lawsuit allegations, and other issues that we believe make CHOP shares worth a couple of quarters or maybe even, as one analyst said, "zero."
CHOP has been burning through a mountain of cash - about $240 million in three quarters or $80 million per quarter - the company now reports just $2.3 million of unrestricted cash and $50 million in restricted cash remaining. At the current unbelievable burn rate, CHOP must find more operating money soon.
So what happened to all that money?
Class-action lawsuit hits CHOP
This steel-porcelain business turned into a class-action lawsuit filed Nov. 26, 2014 by shareholder Aram Pehlivanian, alleging securities' laws violations. The complaint revolves around the company's use of most of its unrestricted cash to buy the Chinese porcelain.
With the low cash position and excessive cash burn, the company is likely preparing for a potentially dilutive stock offering in hopes it can hold out until the steel business returns - years in the future by their own admission.
We believe CHOP is shattering and investors should prepare for the stock to get chopped to bits - to nickels and dimes per share.
China Gerui Adv Mtals Grp Ltd(NASDAQ:CHOP) Short Selling Target $ 1.50
China Gerui Advanced Materials Group Limited CHOP, -5.62% ("China Gerui," or the "Company"), a leading high- precision, cold-rolled steel producer in China, today announced that on March 4, 2015, it received a written notice (the "Notice") from the Listing Qualifications department of The Nasdaq Stock Market ("Nasdaq") indicating that the Company is not in compliance with the minimum bid price requirement of $1.00 per share set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Select Market.
The company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and weak operating cash flow.
History of massive revenue decline, debt problems and recent cash-poor position.
Virtually no cash left
CHOP has acquired hundreds of pieces of Chinese porcelain that company leaders hope to sell for a profit and save the struggling steel business. Â What is it ? A joke ?
CHOP is burning about $80 million per quarter and is now left with only about $2 million unrestricted cash and $50 million restricted cash - a capital raise may be.
If CHOP is able to re-enter the steel business, it will find a steel surplus, hundreds of competitors, razor-thin margins and the looming risk of becoming state owned.
CHOP has attracted very little to no recognizable institutional investment - always a bad sign.
A class-action lawsuit looms, threatening to consume the money and management attention that are greatly needed now to deal with the current crisis.
CHOP's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 50.54%, which is also worse that the performance of the S&P 500 Index.
Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company.
The cash burn, business shift, lawsuit allegations, and other issues that we believe make CHOP shares worth a couple of quarters or maybe even, as one analyst said, "zero."
CHOP has been burning through a mountain of cash - about $240 million in three quarters or $80 million per quarter - the company now reports just $2.3 million of unrestricted cash and $50 million in restricted cash remaining. At the current unbelievable burn rate, CHOP must find more operating money soon.
So what happened to all that money?
Class-action lawsuit hits CHOP
This steel-porcelain business turned into a class-action lawsuit filed Nov. 26, 2014 by shareholder Aram Pehlivanian, alleging securities' laws violations. The complaint revolves around the company's use of most of its unrestricted cash to buy the Chinese porcelain.
With the low cash position and excessive cash burn, the company is likely preparing for a potentially dilutive stock offering in hopes it can hold out until the steel business returns - years in the future by their own admission.
We believe CHOP is shattering and investors should prepare for the stock to get chopped to bits - to nickels and dimes per share.
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China
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