If Ms really belieaved in yongye why the onerous conditions?

For the people buying in yongye thinking Morgan stanley involvement is hope that the company is real, regardless of history of repeating itself.  Where the same investors who kept the faith in chinese media express, because hank greenberg was involved, and kept on buying. Their motto was why would hank buy into a fraud, so it must not be a fraud.  As we all know now it was a fraud.  Even with all his experience and having dorothy dong an experienced china investor on the board, it amounted to nothing.  As I mentioned before on ccme, hank had all the same protections, as morgan stanley.  Except in the end, they werent able to extract their money out of the company.  Now onto Yongye, and morgan stanley.  If morgan stanley really belieaved this was an extraordinary company, why would they cover their ass, by putting in so many fraud protection measures.   in the case of fraud, Morgan will not only get their money back, but with 30 percent interest, and if was a minor fraud they will get their principal plus 20 percent back.  http://bit.ly/iDxcKm  This includes a whole host of post closing requirements, where they have to open the mine by the end of the year. and if not Ms can get their money back plus 20 percent and earnings where they have to be 120 percent higher then the previous year. http://bit.ly/lROGcp  If morgan stanley really belieaved it wasnt a fraud and they have done indepth research, why is this deal done so that they are the first tobe paid plus percentages more, ahead of everybody else.  And why is everything structured, so that they are protected in case of fraud. As in the case of of chinese media express, the smart money thinks they have their bases covered, till reality sets in, its not easy getting your money back.  Why do I keep harping on this, it's because people do not learn from history.  It was only 3 months ago people were going crazy because they said the only reason they invested in ccme was because of greenberg, he was smart money.  As I describe in a previous post, indepth research in china especially with private equity is completely diffrent from here in the west.  It depends on relationships, guanxi rather, then traditional western ways.  I am not going to rehash all of the obvious concerns and red flags, other investors have posted them here http://bit.ly/ih32Ql and here http://bit.ly/kHkOl0 .  An obvious red flag that homer sun doesn't know whats going on is his from his own comments " In addition to product efficacy, we are impressed by the Company's strategy and execution to develop an effective sales network directed at an underpenetrated segment of Chinese demand."  http://bit.ly/j7T5Ys  Really, they are selling a product that is underserved, fertilizer is one of the most competitive markets in china.  And at last measure they have over 500 compeititors in china thats according to their latest 10k. http://bit.ly/hxdvVx  And then dont people find it wierd the ceo is now buying 3 million dollars worth of shares, after he paid 3million dollars to a mysterious hebei distributor that we still dont know who it is.  http://bit.ly/lqEyJH In the end nobody here should be angry if history repeats itself, they were warned, and nobody should be angry at Morgan stanley, they were warned.

Homer d'oh, 50MM into Yongye, probably not to smart money, and investors are now 2nd in line

So Yongye went up on news that morgan stanley private equity closed its deal for 50MM of prefered shares in yongye, and making current investors 2nd inline tobe paid back in liquidation. And put up the fact that Morgan stanley has all the protections in case of fraud, which would make them seem pretty smart. and homer claims that his company has done extensive due dilgence on yongye, and gave them their thumbups and millions of dollars. Investors should be relieaved.  When will shareholders learn, from the chinese media express or sinoforest case, do not leave your investing thesis up to others.  In the case of ccme, investors bought in because hank greenberg was involved, why would he invest in a fraud or sinoforest why would paulson the man who made the big short on subprime invest in a obvious fraud?  The reason is that what many investors here fail to realize is that investing and research in china relies on what the chinese called "Guanxi", http://bit.ly/mfbnWB  personal relationships and semi honour system.  And you put in the simple known fraud techniques http://bit.ly/iWVgr2 you have a receipe for disaster.  Business in china relies on guanxi, and Morgan stanley private equity is no exception. You can't get business done with guanxi in china.  My simple question is why would Yongye need 50MM, if they were producing so much cash and has so much ample cash in the bank 44.5MM. Does that make sense.  a future lesson for homer is that , 50MM isn't much to a large pe firm like morgan stanley, but take it from paulson and greenberg, the reputational damage is large.  And thinking you have the legal ability to retrieave any of your money back from china courts is more a pipe dream.  take it from greenberg. Is Yongye any safer to investors now Ms in involve, I don't think so, and with Ms involve bringing in the spotlight onto Yongye, its even more riskier as more eyes are onto the books of yongye.

The mysterious 5 percent holder from Hebei list deal??? how they could skirt the law

One of the weirdest questions about yongye is who was the mysterious hebei distributor that yongye gave 3.6 MM shares to and  3MM in cash.   http://bit.ly/iXzihl    The first problem is that they refuse to tell us who the distributor is, and 2nd the filer refuses to file a form 13d, people who own 5 percent more of a company.  They have 10 days to file.  Yongye response is that they aren't responsible for the filings of distributor.  and to quote them," In any event, as far as we know, none of the individuals who received our shares in exchange for the sale of the Hebei distributor ended up owning more than 5% of our stock."   http://yhoo.it/iylGm6   The distributor in hebei wasn't an individual but a bunch of people? Or hebei distributor ended up distributing the shares.  But in their own filing they never said group of people, they said a distributor which is a company.  So the distributor ended up owning those shares, and was a 5 percent holder, and had to disclose to the sec a 13d.  It does not matter, what happened eventually, the  distributor was a 5 percent holder, they had a legal obligation to disclose it 10 days after the deal was finished.  The reason everybody is concern  is we dont know who they are , and what connections to the company they have, are they friends or family, we deserve to know.  Apparently this hebei distributor got so big, they had to buy him, or her or them, or what lol.   The company responded, by saying they are legally safe because they told the auditors who the distributor was. Now which apppears tobe a group of people.  Im sorry but telling your auditors doesnt satisfy anything. As we all know from the ccme scandal, rino, and etc the auditors job isn't there to do the due diligence of the investing public, they can't do the deep or even remedial checks, they just can't afford to check every claim, in reality it's an honour system.  So just telling the auditors, does nothing for us. Alittle note to homer sun who said he did extensive due diligence with morgan stanley on yongye.  I hope you personally were involved, and did not allow other people do your research.  As with the case of maurice greenberg in ccme or caryle group in china forestry. I hope homer, just does the indepth research and not rely on his china contacts and friends *guanxi*, and since the agreement allows him to ask for non public information, ask who were the hebei distributors, and then do a background check.  ask for everything that would be on the 13d filing.   Why is this so important, because this hebei deal is with a series of deals that doesnt make sense, from paying for car loans to distributors and employees, to owning apartments.  This company prided itself in being very open, so why wont they tell us who the distributors, and now apparently multiple individuals, who combine own more then 5 percent of the company.

Question on giving distributors vans to not lower prices? If they are selling so much why the crazy deals?

Ok guys part of the more wierd yongye story.  Ok so yongye refuses to give out the names of their distributors, ok so I decided to dig more into it.  Ok so I found out they giave distributers a free vehicle if they in their word NOTE 10 – OTHER ASSETS

During the three months ended March 31, 2010 and December 31, 2009, the Company entered into agreements with certain distributors, including sub-distributors (the “Distribution Agreement”), pursuant to which the Company provided the distributor a free vehicle in exchange for the distributor agreeing to comply with certain sale conditions during the term of the agreement of five years. The sales conditions included (1) meeting the annual sales target set by the Company; (2) not selling the products at a price lower than the price stipulated by the Company; and (3) selling the products only in Company’s approved territories. To the extent the distributor fails any one of these conditions during the term of the agreement, the Company has the right to have the vehicles return back to the Company.

 

 

This is completely wierd, if their product is selling out like crazy, why would they need to give away free cars to distributors.  This is an out of the ordinary practice, I dont know of any company giving away free cars to distributors.

Rodman and Renshaw suddenly dump coverage of $yong tonight this was followed by roth

ok guys what did roth and now rodman saw in china about $yong that scared the hell out of them.  rodman just dump coverage all together.  Its no longer theory that roth saw something, when 2 seperate analysts get scared as hell, its time to ask questions what did they see.  Btw rodman had yong at strong buy with a 14 price target.  now everything is unreliable.

Termination of Coverage Effective immediately, we are terminating coverage of Yongye International Inc. (“Yongye”) to allocate resources more efficiently within our coverage universe. Upon termination of coverage, any of our prior financial projections on Yongye should not be considered reliable.

http://bit.ly/h7mECO

Whose China Wuchuan shuntong and Wuchuan santong???? The 2 biggest suppliers to Yongye

So I decided to look up more info on China Wuchuan shuntong and Wuchuan santong, I just wanted to know more about the biggest suppliers of humic acid to Yongye.  Since we dont know much about their distributors I wanted to know more about the suppliers of humic acid, the commodity that their fulvic acid the main ingredient in shingmengsu is made from.  Also I wanted to know, more about the company yongye is paying 38 million to wuchuan shuntong for an undeveloped mine.   Guess what their isnt much information on both of them, I couldnt even find a telephone number to contact them.  I just want to know the basics, who are the owners, how long they have been in existence, and who do they distrubute to. Nope nothing, they arent even on alibaba or hktdc.com.  Which brings up the red flags again. Does anybody out there have the addresses wucuan shuntong or wuchuan santong, just in case I missed it, I went on baidu, and google nothing?
here are the searches for both of them
http://bit.ly/fIxcwy
http://bit.ly/gORLDn
http://bit.ly/hjTMtj
http://bit.ly/eg11TC

http://bit.ly/enHWdU 10k

Yong gives guidance, no clarity, and no numbers again and begs bigger questions

So wu at yong gave out a press release, saying everything is great, hebei strong sales, and traditional markets growing, in contrast with roth own on the ground research. He answered nothing, gave no clarity in any of the questions asked by people who wanted more answers.  it also begs the questions why the big discrepency from on the ground research by roth and the company.  if roth can find big discrepencies, how long does wu think before the sec or kpmg will investigate further.

Why did Yong owned an apartment????

Why did Yong even owned an apartment and why did they bother selling it to itself?

Some of the transactions Yong did

As of December 31, 2009, accounts payable to related party were $880,026 and represented the payable for the purchase of inventories from Inner Mongolia Yongye. The amount was repaid during the year ended December 31, 2010.

For the year ended December 31, 2009, the Company sold fulvic acid plant based products of $2,221,936 to Hubei Longshangxing Xinnongcun Fuwu Youxiangongsi, which is 51% owned by Inner Mongolia Yongye.

As of December 31, 2009, the amount due to a related party was $1,663,191 which mainly represented the payable for the Acquisition from Inner Mongolia Yongye (See Note 3). The Company repaid the amount during the year ending December 31, 2010.

For the year ended December 31, 2008, the Company borrowed $1,617,293 from Yin Ping, the wife of the CEO, $762,524 from Inner Mongolia Yongye and $10,000 from Kim McElroy, a director of the Company who resigned in April 2008. The amounts were repaid in full as of December 31, 2008.

 

During the year ended December 31, 2010, the Company sold three vehicles with net book value of $135,191 and an apartment with net book value of $102,263 to Inner Mongolia Yongye. In addition, the long-term loans of $144,513 that were secured by these assets were assumed by Inner Mongolia Yongye. Upon disposal, no gain or loss was recorded and the Company received cash of $92,941.

Yongye Nongfeng and Inner Mongolia Yongye entered a series of lease arrangements to lease land, buildings and equipment to and from each other as follows:

·

On June 1, 2008, a land lease agreement was entered into in which Yongye Nongfeng would lease land of 74,153 square meters from Inner Mongolia Yongye from June 1, 2008 to May 31, 2009. On June 1, 2009, upon the expiry of this agreement, Yongye Nongfeng and Inner Mongolia Yongye entered into another lease agreement in which Yongye Nongfeng would lease a land of 79,920 square meters and a production building from Inner Mongolia Yongye from June 1, 2009 to October 10, 2009.

·

On September 28, 2008, a building lease agreement and an equipment lease agreement were entered into in which Inner Mongolia Yongye would lease a building and certain equipment from Yongye Nongfeng from September 28, 2008 to September 27, 2009. The agreements were terminated on June 1, 2009 upon Yongye Nongfeng obtaining the fertilizer license from Ministry of Agricultural.

·

On March 15, 2009, an equipment lease agreement was entered into in which Inner Mongolia Yongye would lease a set of production equipment from Yongye Nongfeng from March 15, 2009 to May 31, 2009. The equipment lease agreement was not renewed upon expiration.

Pursuant to these agreements, both Yongye Nongfeng and Inner Mongolia Yongye did not charge any rental to each other for the lease. Additionally, the estimated rental income to be received and the rental expense to be paid by the Yongye Nongfeng are not material to the Company’s 2009 results of operations and therefore have not been included.

Roth said people werent adopting Yong's product and found cheaper products

LOL ok Roth said people werent adopting shingmengsu, a mystery product you can't find anywhere online,even though all of their competitors are online, and on blackmarket sites.  But yong is getting killed by cheaper competitors. Yong's sells for 174$ Us per package enought to treat one farm. Ok the ceo said if you spend 40 yuan you can make 400 yuan.  What is there a cheaper product that makes you 1000 yuan for every 40 yuan.  I really want to know what scared Roth capital analysts so bad they downgraded huge with a big price decrease.  What did they see on their on site visits that scared them?

oohhh man Roth capital one of $yong bookrunner downgraded huge after site checks

LOL this must be the end of the world, roth capital analysts finally did at least a site check and didnt like what they saw. They were one of yongye's biggest supporters, they were yong's book runner and as early as last march 16 had a buy with 15 buy target.  they did a site check and less then one month later downgraded with a 5.80 neutral.  Ok what happen in less then one month.

My rebuttal to Yongye rebuttal, and some questions for Yongye

So I decided to debate Yongye response to a seekingalpha article lol, I cant even start how odd it is for a listed nasdaq company ceo to be even looking at seekingalpha, not to mention respond to one, but here we go. Here's there response. http://bit.ly/fJD3NH

1)You say your distributers quarter fluacuate and are variable, but you are in the farming business which is a traditionally seasonal business.  In fact its the orginal seasonal business.  Its basically plant,seed, sow, and begin again.  If farmers receiave their product late or in wierd variable periods, how could they possibly use your product, it should be consistant. And you say you work closely with farmers and distributers, and your the ceo of a business that depends on them so why would you say "Our distributors' buying habits are their business."  Its your business and ours to know why, and the reason you depend on them, and for good business maybe help them unvariable it.  It's common sense.

2)In the past your company said each support staff works with stores and even on the farmer level to quote your 10k " We overlay this sales and support network on top of our store and distributor network in a way that our sales and support staff are project managers who oversee three to ten stores each depending upon their region and capability level", and your support staff help farmer educate on the use of your product, organize education forums with professors, also at the same time giving support to stores.  I don't understand how you can have so few workers, doing all of those jobs, and giving support to even distributers.

3)You say you rely on contract manufacturers.  Why not give out the numbers of contract workers.  And the production process is supposivly a trade secreat, and would need a level of skill work.  And with the production process increase from 2k to 35k , and to multiple facilties, wouldnt you need a far larger work force at least to handle the production process.  In 2008 you had 60 workers in 2010 189.

4)You say we shouldnt know the name of the distributers, that the audit firm knows who they are.  You said this company stands for corporate governance, if shareholders are fretting over unknown distributers, and in a age where chinese reverse merger stocks are under scrutinty and in the sake of shareholder governance shouldnt you tell shareholders. 

5)You gave away 5% of the company to an unknown distributor.  Again under shareholder corporate governance, we deserve to know who you gave it to.  It is great you told the auditor, but they are not the owners of yongye shareholders are the owners.

6)The problem is that we don't have much information on these multiple related parties to yongye or their principals.  Like i said yongye saids it stands for corporate governance,we deserve to know more about the relationships.


LOL thats my rebuttal.......I just want to know more.

Basic analysis of Yongye by Rabmanducky

So I decided to do a basic analysis of yonge *yong* to see, what I can find out by this company. This was inspired by all of the back and fourth by people writing about yongye and I wanted to see what I got.  So basic story my conclusion was that I didn't like yongye at all, the numbers didn't make any sense, their managment comments and action didn't make sense, and I couldn't find its product on the net. Even thought I could find all of their competitors and their product was suppose to give you yields of 10-30% and returns in 10's of multiples on your cash. You would have expected a black market. Note this is my own analysis, and for my own personal use, and it could suck and be wrong, I'm not an analyst. I'm doing it from a simple investor point of view so take it as is and do your own due diligence. Please read the disclaimers, in the pdf first and on site. I would love comments and debate about it. Do not take any of my numbers as gold do your own due diligence.

https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B8BuaymgN8YbZDU5ZjAxZTItYWE1NC00YjkzLTkyYjUtMzRiZDY5ZTMxOTNj&hl=en&authkey=CMzphZAM

 

I was told google docs was hard to see so i put it in scribd too.

http://www.scribd.com/doc/52572284/yongye