Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Bodisen Biotech- is it quite literally a case of where there‘s muck there’s brass?

I see that shares in Bodisen Biotech the Chinese organic bio-fertiliser group fell c65% today. Dual listed (AIM & American Stock Exchange) Bodisen has had a torrid time over the last few months since being admitted to AIM in February 2006 at a price of 730p, at which point it was valued at £130 million resulting in it being the largest Chinese Company on AIM. The shares were priced at over 1000p at one point so the fall really is a big one!

Apparently Bodisen has been unable to provide the desired information to the American Stock Exchange within the applicable time period. Accordingly, it now expects to soon receive notice from the Amex indicating the latters intention to strike the Company's shares from listing on that exchnage.

The Company's failure to file its Annual Report on Form 10-K with the SEC by the due date could also serve as a basis for the Amex to commence delisting proceedings.

All a bit of a mess!

In the past, I see that many analysts have drawn attention to Bodisen’s awful cash generation-and it does appear to be truly awful! Cash generation and effective working capital management appear to be common problems for rapidly expanding Chinese listed businesses. From what I have seen, if you are looking to invest in small cap businesses with exemplary cash management forget about China, it’s the wild wild east out there.

Given the more onerous regulatory demands of listing in the US Bodisen’s decision to attract investment over there appears total madness. A Chinese venture of Bodisen’s size is simply at the mercy of the bulletin boards.

With regard to its AIM listing surely it’s another example of where the effective monitoring of the company’s AIM broker and nomad is of key importance to UK shareholders. How else can UK retail investors be expected to invest in a Chinese company if the UK broker isn’t keeping a close eye on things. This is where they should be earning their fees.

So what’s in store for Bodisen now and how does the underlying business look?
I look forward to having a look at the Annual Report, when it’s finally available, and to receiving further clarity on all the shareholder shenanigans.

Let’s just hope that where there’s muck there’s brass- quite literally!


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