Olam -- sell

Just about 10 pages into the 100+ page report of Muddy Waters, I think I have come to the most important portion that sums it all up: What do you all think?

Olam frequently books non-cash accounting gains (“NCAGs”) in its income statement.
The two primary non-cash accounting gains Olam records are negative goodwill and
biological gains. Both types of gains incentivize companies to spend money on asset
purchases, and the possible result is that – as in Enron Corp’s case – the asset quality
becomes less important than the potential to recognize accounting gains. The rub is that
these non-cash gains cost real cash. Furthermore, a majority of Olam’s negative goodwill
comes from its own upward revaluation of asset values, rather than comparisons to the
book values of the assets at the time Olam acquired them. In other words, much of
Olam’s negative goodwill has come not from acquiring assets below their book values;
but, rather by revaluing them at the time of the acquisition.

Trading Halt --- wonder how long Olam will take to craft a  rebuttal to Block Head.

Read the report, Conclusion - Muddy Waters is really good at investigating.
It appears that they is really a goner. Capex is crazy, why should someone buy a flour mill and then scrap the machinery and buy new one, rebuilt a full plant? In the first place they should not even buy. Just like buying a old car without any intinsic value, then starts to change engine, body parts and every other things. The resulting price is equal to a new car.
Oh, tomato plants in US, it should be lelong, they went double up the prices to buy the bankrupted company.
Best of all, they bought from crooks and tried to cover up.
Well done, Muddy Waters, we need some of these people, then analysts who cover stocks and then suddenly stop issue reports, when the client do not pay them any more fee.

Hello Burned, I agree that it is a great piece of investigative work. If only those PRC reporters who write newspaper reports on QingMei & Dukang had at least a fraction of those skill sets and energy and comprehensive approach...... Sigh. 

QM looks like a goner. Was vested when it first touched 5cents. Never touch again, when I read the chinese article on QM.
When a management is not replying to queries , something is really wrong. O is quick to reply. Yet QM refused to acknowledge.
DK is a little different. DK is a make it or break it thing. Too much competitions in the same arena. They are just another brand. Not even like a luxury brand, just another brand. Can make some money. But they are quite innovative. DK still got chance.
 
 

UOB rates it as a going concern.
Better avoid. It is going down to the drain. Intra day shortist beware, another trading halt means you got to pay fines to SGX. No more scrip to borrow anymore. Take note.
Not vested.