Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Tom Winnifrith Bearcast 20 December 2 - the TW AIM PLC Death List Christmas Update

On 13 June I started my 21 stock Death list portfolio - 21 shares heading for zero or being booted off the market - see HERE. On 23 August I got my first kill and so Afren (AFR) was replaced by Daniel Stewart (DAN) HERE. I have now had four more kills and nearly all those that have survived have seen their shares tank. Now I update with 4 new entrants given that I have had four more kills and I review the original entrants that cling on. The stocks mentioned are: Worthington, JQW, Jiasen, Camkids, China Chaintek, Trap Oil, Mosman Oil & Gas, Monitise, Outsourcery, Magnolia Petroleum, Arian Silver, Sareum, Avanti Communications, Daniel Stewart, Mariana Resources, Sefton Resources, Golden Saint Resources, Sovereign Mines of Africa, Afren, Wandisco, Tungsten, Blur, Auhua, Afriag and InternetQ

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Comments

Andy

20 December 2015, 04:35

I think you may have Auhua wrong.

I have looked carefully into the background of Chen Anxiang (CEO). He is an engineering man who built the company from scratch. Many of the designs and techniques used by the company are designed by this man who has a solid background in engineering. He has no other interests other than Auhua and leads many clean energy committees and research projects. He is SO different from the scammers and share flippers that pollute the AIM.

There are certainly some apparent red flags. The recent resignation of David Sumner’s could be seen as one. However, I believe he was fired. He was brought on board to assist in fund raising for expansion and I think it likely he was responsible for the disastrous placing at about 4p during the summer which decimated the share price. I would have fired him for that too.

The biggest issue of course is the receivables on the books. I do not believe this to be a result of fraudulent accounting. It is more likely am issue with a sudden slow down in the housing market in China. The builders have huge amounts of stock on their hands. It is government policy in many areas that clean energy is installed into these buildings. I think Auhua is trying to maintain market share and is therefore forced into offering very long payment terms in order to keep the business going. The hope is that at some point the market will move (and government policy is trying to make this happen) and the bills can be paid.

It is a matter of opinion when the housing market will move of course.

I do believe that the company is in a precarious position. But this is reflected in the share price. It has severe cash flow issues that will need to be overcome. But that doesn’t make it a fraud. It makes it a company with cash flow problems.

I think this particular Chinese company is an exception to the China norfolks. If it solves it’s cash flow issues, then it may well be the largest riser of 2016.