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RINO Plunge Accelerates As Sell-Siders Join The Bash Fest
A week ago we presented a comprehensive research piece by Muddy Water Research, that slammed the Chinese company, essentially calling it a scam, and slapping a token price target of $2.50 on it. Some took this as nothing but a glorified book talking attempt by the two-man research outfit. Yet this morning's horrendous earnings release and outlook cut seems to be validating the bear thesis. And now, adding fuel to the fire, is Canaccord analyst Michael Deng who has just downgraded RINO from Hold to Sell, stating the obvious, namely that "Fraud allegations are difficult to clear." With countless Chinese IPOs having recently gone public on the NYSE, is the world's once most reputable stock exchange about to be deemed the stomping ground for an endless supply of Chinese boiler room names as more and more Muddy Waters' type reports emerge dissecting how the NYSE allowed fraud after fraud to take advantage of its gullibility?
From Canaccord note:
Investment recommendation
We are moving our recommendation on RINO to SELL from Hold and placing our target price Under Review, after reviewing the Muddy Waters report and information available to us. We believe these allegations are difficult to dismiss, and RINO’s real business could indeed be significantly smaller than its reported financial statements suggest. Therefore, given the significant potential downside, we recommend investors SELL the stock.
Investment highlights
- The Muddy Waters report claims that they contacted nine FGD customers disclosed by RINO, and six of them denied hiring RINO. Our findings from checking with one of these steel companies, Yueyufeng, also contradict management’s explanation. Therefore, we have serious doubts about the existence of some of the customer relationships claimed by RINO.
- The value added tax (VAT) records revealed on the internet and the SAIC numbers shown in Muddy Waters report could reflect the real revenue level of the company.
- RINO reports significant lower inventory level than its Chinese industry peers. We think RINO may have recorded the raw materials delivered to its construction sites directly into costs, a practice that may lead to overstatement of revenue.
Of course, the question of why Canaccord, or anyone else who may have at some point had a buy rating on the company (Deng had a Buy on RINO until 10/29/2010 with a $25 PT), did not do its own due diligence on RINO in the first place, and now is shamed by a two-man outfit into admitting they pumped companies on a completely clueless basis, is obviously moot.
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Meanwhile, China in my judgement shows the best promise for investment. The next 50 years will belong to China.. and precious metals.
From RINO's website, under their management team: Prior to RINO, Mr. Epps served as VP and Senior Business Development Officer for the CIT Group's International Trade Finance division.
From CIT to RINO...one ponzi to another.
+1
Cannaccord has a major problem with due dilliegence. Does anyone remember the Non bank backed ABCP problem they were involved in. Why would anyone take Cannaccord's word for anything? They are worse than GS.
In all fairness, even the most conservative desks like RBCCM and CIBC had that shit on their books.
chinese are best scamers!
They only counterfeit and perfect the scams of others.
Little Ones have Learned Well. Do on to others before they do on to you.
In a word........YES
The Ponzi junkie, and it's collaborator aka the NYSE, needs more and more smack just to keep the pain at bay. It's no longer about getting high. Now it's all about holding off the DT's and the very real potential of death.
http://en.wikipedia.org/wiki/Delirium_tremens
Taking a massive effort daily now to keep the beast from crashing and burning, ever more smack needs to be injected just to ward off a plunge into death throes!
At some point, dope is no longer the limiting factor as much as finding a decent vein.
When all else fails and every surface vein has collapsed, there always the intravenous port. Oh wait, that's right. Isn't that what QE 2 is, a direct injection straight to the heart, lungs and brain of the financial system?
Mainlined smack of the purest and highest quality, straight from the Fed. It just doesn't get any better than that, right?
http://en.wikipedia.org/wiki/Port_(medical)
Where's Dick Grasso?! We didn't have this frou-frou when he was extracting 200 large from a non-profit.
Don't worry...they'll just "merge" with some Gaijin companies they've had their eye on...wouldn't want those billions in equity to go to waste now.
...at the barbarian's gate?
That would be "gwai loh" in Chinese (Cantonese), not "gai jin" which is Japanese for white foreign barbarian. Meanings are similar though.
And anyone is surprised that Chinese companies have been fudging their numbers should understand it's a carry over from communist days when factory managers would be promptly shot if not meeting their quotas for production.
Plus the NYSE and NASDAQ are floating turds when it comes to recognizing complete garbage IPO's. I'm pretty sure the conversation for application goes along the same lines as picking up a street hooker.
"Got money? You're IN!"
I am puzzled how ZH is putting its own reputation at risk by taking a pretty shady outfit ike muddy waters at face value and even worse, promoting their so-called report on RINO. The report itself is very long on claims and pretty short on factual evidence. Of course, a fraudster can still be right accusing another fraudster. But past experience (just google orient paper, muddy waters and rick pearson) suggests that the professional merits as well as the motivations by these 2 and a half so-called, uhm, analysts at MW are pretty dubious, to put it mildly. I have no way of knowing whether RINO is a fraud or not. However, that ZH generously and happily provides an outfit like MW a platform to foster their selfish agenda, is not a good sign at all and unfortunately, testfies to detereorating quality standards of a portal that once was by far my favourite for unbiased AND high quality financial information.
A true virtuous circle, chinese ipos backed by fraudulent accounting used to buy us ponzi bills
No shares available to short according to IB.