BBC--possibility for a quick 5-6% gain in the next week

[AvivaSimplex]

BBC is a Chinese company that makes organic fertilizer. Over the weekend, there have been some rumors posted on some Chinese-language sites that the CEO was going to resign, and that earnings would be down 30%. Oddly, this 30% drop was attributed to the government building a road in front of their factory, and the CEO's resignation was just some brief statement along the lines of "I can't follow the SEC's requirements."

BBC's IR is denying these rumors. If they are true, it's very weird that something like the CEO's resignation would not be accompanied by an SEC filing and a press release.

BBC is down 6% today. If these turn out to be false, which they probably will be, it should bounce back pretty quickly.

[AvivaSimplex]

Position disclosure: I didn't buy this myself because the government took all my spare cash today.

BBC looks like a pretty good long-term play, too. Their product is in demand because it lets farmers label their produce as organic, which doubles its price. They're growing at 40% per year, but their forward PE is only 17.

[skierdude1000]

Doesn't look like a solid investment...

some things I noticed at quick glance

sales only $31 million

PE of 37

[Sniper]

Aviva, do you have links to the news/rumor you mentioned?

For anyone wondering what this company is (from their PR material)...

A Delaware company, Bodisen is headquartered in Shaanxi, China's agricultural hub. In January 2006, Bodisen was ranked the 16th fastest growing company in China by Forbes China. The Bodisen brand is a highly recognized fertilizer brand in China. Its environmentally friendly "green" products support the mandate of the Chinese government to increase crop yields for the purpose of decreasing China's dependency on food imports. Utilizing proprietary agricultural technologies, Bodisen sells over 60 packaged products, broken down into 4 product categories: Organic Compound Fertilizer; Organic Liquid Fertilizer; Pesticides & Insecticides, and agricultural raw materials. Bodisen's organic fertilizers are government certified as "organic" and can be absorbed by plants within 48 hours and enrich soil conditions without the damaging effects associated with chemical fertilizers. Bodisen's products address grains, vegetables, and fruit crops and have been proven to increase crop yields by 10% to 35% while being environmentally friendly. Among China's population of 1.3 billion, approximately 900 million are farmers or have agriculture related jobs whose incomes depend on their crop yields. With approximately 600 (and growing) nationwide distribution centers, Bodisen has experienced rapid growth.

[hawk59]

1) Do you read Chinese? If not you are getting hearsay about the contents of a message board from some Chinese guy that you do not know.

2) If you are wrong about this news story thing then the stock might go down.

3) The stock went from 5 to 22 in a very short time period. So if you are right about this news story thing then it is not going to go up 5% to make up for today's loss because the influences on the price are much greater than this news story.

[AvivaSimplex]

[ QUOTE ]
Aviva, do you have links to the news/rumor you mentioned?

[/ QUOTE ]
It's all over the yahoo message boards. Here's the original post:
http://finance.messages.yahoo.com/bbs?.m...07&mid=3225

It links to a message posted on a Chinese stock message board, and you can get the gist of it by using google's language tools.

The rest of the board since then has been hyping/debunking the rumor. There are various explanations, including SEC rules about restricted stock, or hacked websites. Read through those messages if you're interested.

Obviously use your own judgment about whether this is real or not. IMO there is only a very tiny chance it's true.

[Groty]

Thanks for the heads up...I'm going to take a look. BTW, congrats on that Silvercorp call a few weeks ago. I think it's nearly doubled since you suggested it.

[AvivaSimplex]

Update: this tanked further than I thought. Down 9% more today. The company issued a couple of statements designed to deal with the rumors. It seems they're partially true. According to them, the CEO is taking a temporary leave of absence to recuperate from surgery earlier this year. They confirmed that there was road construction in front of their factory recently, but reiterated that 2nd quarter sales were still on track and shouldn't be affected. The market's negative reaction, I think, was because they didn't flat out deny the rumors.

Also, to elaborate on what I wrote earlier about hacked websites: BBC has an official english-language website, bodisen.com. There is another website, ylbds.com ("Yang ling bo di sen") which, according to some people on yahoo, is their chinese-language website. Press releases appeared on that site, and those releases were apparently the spark for these rumors. Bodisen emphasized in its official press release today that its official site is bodisen.com, and it doesn't recognize any other sites. It's not clear if ylbds.com is really their site, or possibly their old site that got hacked, or some site that someone put up to start the whole thing.

So, there are two possibilities. One is that this is an orchestrated short attack which cleverly exagerrated real issues with the company to sew doubt in the minds of investors. The other is that the company is really not on the level, and for some reason is leaking bad news on its Chinese web site and not on the English one.

This may be a bit cloak-and-dagger for some here. Even if BBC is the innocent victim here, they are somewhat guilty of not being able to counter the negative publicity quickly and effectively. That they can be manipulated to drop 15% in two days will probably scare some investors away for quite some time. On the other hand, it may be a chance to buy a stock with a forward P/E of 15 and 40% growth for the foreseeable future.

Groty, thanks for reminding me about silvercorp. My face is a little red after my rec dropped 9% the next day. Hopefully no one bought at the open.