There is no one building up a scenario where the warrants do get exercised (implying the stock price exceeds 25 cents) in 2 years' time?
Then the warrant conversion $ can be used to help repay the principal of RMb134m, which implies that the effective interest rate at the end of the day is far less than the 30% you guys are overly focused on.
This outcome will play out if SHK and Eratat do have a solid game plan to significantly raise the business value of Eratat. This is plausible, given that Eratat chose this bond/wrt path instead of a plain vanilla bank loan.
It follows that the key question(s) to ask of Eratat is : What is the Game Plan with SHK?
any price below 20 cents is not good for issuing of shares.
skeptic, the share is not worth nothing lol as u claim lol. It has a proven business and a sustainable operation in place, which can generate a billion dollar RMB revenue lol.
if the company has a way to make back the interest, then why bond issue cannot be accepted?
which is the fear of people who question why they resort to such desperate means to raise cash when they supposedly already have so much.
- thanks for spreading the fear, skeptic. U really live up to your name.
anyway, i hv called the IR a couple of days back. when the Q2 result out, there will be a briefing in aug,likely to be second wk or third week near national day. More details will be released on their bond issue. as of now, they can't reveal much. so just wait bah.
Del wrote: This outcome will play out if SHK and Eratat do have a solid game plan to significantly raise the business value of Eratat. This is plausible, given that Eratat chose this bond/wrt path instead of a plain vanilla bank loan.
It follows that the key question(s) to ask of Eratat is : What is the Game Plan with SHK?
exactly, del. i built up a scenario be4 but of coz, it may sound too good to be true...
anyway, for ppl who are skeptics on Eratat, whichever path the company take, they will try to pinpoint a fault.
if issue rights/placement, ppl complain issued price too low.
if issue bond, ppl complain interest too high
if no fund raising, they say no growth/no expansion plan
to them, the management is dumb, not a rational person, must be a fraud etc...
"Eratat has been paying dividend every year since its listing in 2008. Cumulative amount of dividend paid to date = RMB 61.8 million according to my calculation.
To my knowledge, SAFE regulates the conversion of the RMB into foreign currencies. Therefore, SAFE approval is required for Eratat to remit after tax profit in RMB from its PRC WFOEs into SGD to Singapore for distribution as dividend to its shareholders. The company must generally provide tax payment certificates, an audited financial report, a board resolution approving the distribution of profits, the foreign exchange registration certificate, and a capital verification report in order to obtain clearance for an overseas profit payment. SAFE may also request additional documents
Since Eratat has been paying dividends every year, it must have gone through this process every year. It is impossible to get through this process with fake documents IMO. – especially on the tax payment certificates – therefore, credit must be given for this. If the amount of tax paid is “real”, the profits as reported are likely to be “real”.
Sorry to say this and no offence intended but you seem to have trouble understanding things beyond face value, beyond black and white.
I am not proposing that Eratat does a rights issue. I am only saying IF Eratat does a rights issue, the fact that it would mean Lin committing so much of his own money into the company (30 million for a rights issue of 100 million) would confirm his commitment to the business. ***This is an offshoot of doing a rights issue, it doesn't mean that I'm advocating it***.
In fact I brought this up in response to peak's point that if Eratat was truly a fraud, they would to a rights issue. This is patently untrue because a rights issue for 100 million would require Lin Jiancheng would need to come up with 30 million of his own money to subscribe to shares. If he's willing to do that, he cannot be a fraud. Therefore citing the lack of rights issue as a form of assurance is an invalid argument.
That doesn't mean I'm advocating a rights issue. There are many other considerations as well when deciding whether to make a rights issue. I'm not debating whether a rights issue is the right move for the company. I'm debating whether a rights issue would prove they are a fraud - which was Peak's point. My point is that it won't, in fact it suggests the contrary. Do you finally get my point?
So by belaboring this point you are essentially fighting a scarecrow.
The same assurance effect would apply if Lin bought millions of dollars worth in Eratat shares directly. This would of course be much better than a rights issue. But this of course goes without saying, so no one is debating this point. The only disappointment is that Lin hasn't done anything like that so far.
Anyway keep us updated when you get news from IR. If they have a good reason to justify 32% interest rate, then I certainly have no objections to it. But to justify this kinda of interest payments, they better be damned good reasons.
Until they come up with a satisfactory explanation, let me quote a comment on ValueBuddies forum to summarize my sentiments:
"If buying a stock requires such in-depth understanding, interpretation, postulation, guesstimation of the company's intention of issuing the bonds, it is probably too much for me."
it's not so much about proving a fraud or not. Rights issue or placement at this point of time do not bring much value to the shareholders because of the excessive dilution.
at this point of time, i do not know what gameplan Eratat and SHK had. if i know, i will have post it on this forum to share with all the eratat investors.
but then the management are not dumb. so i do think they must have figured out a way to justify for the interest payment.
of coz, i still believe they will do some sharebuyback in the future. but when, i dunno.
we just have to wait for further details to be announced. Wait for the august quarterly briefing. just one month more. I can wait...
Skeptic wrote: Newbiestock,
Sorry to say this and no offence intended but you seem to have trouble understanding things beyond face value, beyond black and white.
I am not proposing that Eratat does a rights issue. I am only saying IF Eratat does a rights issue, the fact that it would mean Lin committing so much of his own money into the company (30 million for a rights issue of 100 million) would confirm his commitment to the business. ***This is an offshoot of doing a rights issue, it doesn't mean that I'm advocating it***.
In fact I brought this up in response to peak's point that if Eratat was truly a fraud, they would to a rights issue. This is patently untrue because a rights issue for 100 million would require Lin Jiancheng would need to come up with 30 million of his own money to subscribe to shares. If he's willing to do that, he cannot be a fraud. Therefore citing the lack of rights issue as a form of assurance is an invalid argument.
That doesn't mean I'm advocating a rights issue. There are many other considerations as well when deciding whether to make a rights issue. I'm not debating whether a rights issue is the right move for the company. I'm debating whether a rights issue would prove they are a fraud - which was Peak's point. My point is that it won't, in fact it suggests the contrary. Do you finally get my point?
So by belaboring this point you are essentially fighting a scarecrow.
The same assurance effect would apply if Lin bought millions of dollars worth in Eratat shares directly. This would of course be much better than a rights issue. But this of course goes without saying, so no one is debating this point. The only disappointment is that Lin hasn't done anything like that so far.
Anyway keep us updated when you get news from IR. If they have a good reason to justify 32% interest rate, then I certainly have no objections to it. But to justify this kinda of interest payments, they better be damned good reasons.
Until they come up with a satisfactory explanation, let me quote a comment on ValueBuddies forum to summarize my sentiments:
"If buying a stock requires such in-depth understanding, interpretation, postulation, guesstimation of the company's intention of issuing the bonds, it is probably too much for me."
