Tuesday, June 28, 2011

Advanced Battery Technologies Inc (ABAT.O)

ABAT : Dived from USD4 level to current USD1.

Advanced Battery Technologies: An Egregious Chinese RTO

taken from : click HERE.

I am short Advanced Battery Technologies (ABAT) for the following reasons:

1.The Chairman appears to have transferred ownership of ABAT’s key subsidiary to himself without explanation or compensation;
2.ABAT leads investors to think that it makes cutting-edge electric cars, when in fact it produces cheap scooters and bicycles;
3.ABAT claims unrealistic margins in what it admits is a commodity space;
4.ABAT claims to have increased revenue from $4.2 million to $97.1 million from 2005 to 2010 while DECREASING its employee count;
5.ABAT claims distribution relationships which appear to be fake;
6.ABAT is a serial issuer of equity at low prices;
7.ABAT spent $20 million to acquire a company linked to the Chairman without disclosing the relationship;
8.ABAT spent $22 million or 7x sales to acquire a failing and possibly related company;
9.ABAT issued 11 million shares to the Chairman and other individuals to repay a “loan” which appears to be entirely fabricated;
10.Despite a parade of auditors and multiple restatements, ABAT still has material weaknesses;
11.ABAT’s RTO promoter, John Leo, is behind a number of suspicious Chinese reverse mergers, most notably CYXI;
12.No fundamental institutions are significant shareholders.

In short, I think that the financial statements and management of ABAT cannot be trusted and therefore the stock is worth zero!

Going below USD1 today, touched 0.96. I am still watching her. Interestingly, its very low PE attracted my attention. So, when a low PE stock trading lower(extremely oversold), what should we look for? Is it a good buy? Why? Why not?

Note : Green-stocks are not in play and many needs the supports from gov's funds. Once that dries up, they will face a slow 'death'. So, the risk is high.

China Biotics' Fraud Casting Doubt on All Chinese RTOs : read more here

The above article is interesting as to why there is high risk attached to China's stocks. Perhaps there are only few bad apples but they are giving investors' world a bad name on China's stocks. That reminded me of some low P/E China's stocks traded in KLSE.


1 comment:

Edwin said...

Finally you have added google ads..

Wise choice my friend..