Author Topic: SORL-SORL Auto Parts, Inc  (Read 10596 times)

Hielko

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Re: SORL-SORL Auto Parts, Inc
« Reply #20 on: January 24, 2016, 01:59:24 AM »
I can't believe you think VRX(they definitely have their problems though) is a fraud, but you put this forward as an investing idea. I just love this. You have a company(all rough/rounded numbers from yahoo finance) that has like 200M in assets net of liabilities, 237 M in revenue, 22.5M in op cash flow, all with a 41M market cap. Those are just ridiculous numbers that make for ridiculous metrics.  You think the company isn't fraudulent. How could anyone not buyback shares at those prices? Obviously they don't believe the numbers either, or they just hate shareholders. I don't believe anyone is that bad at capital allocation. It doesn't even take business sense to see that getting  $70(plus assets, plus a profitable business) for $40 is a deal of a lifetime. A 12 year old could see that is a great deal, but apparently the Chinese management that can make and run a large profitable business has no clue that their company is cheap. 

Yeah, its a fraud. As ItsAValueTrap has alluded to, most accounting firms don't have to walk away from lots of Chinese frauds because they wouldn't get approached or wouldn't accept auditing them in the first place. That this firm has had to walk away from frauds doesn't look good on them at all.
No, it is not a fraud. What would lead you to believe that? As I said, chinese managements are not exactly financial wizards- if this was a company run by western management, they would have bought back shares by now. I don't think chinese managements are even aware of share buybacks
I think most Chinese management teams have an excellent idea of capital allocation. They just use their wizardry to line their own pockets...


ccplz

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Re: SORL-SORL Auto Parts, Inc
« Reply #21 on: January 24, 2016, 03:15:35 AM »
Obvious fraud.

Next.

Schwab711

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Re: SORL-SORL Auto Parts, Inc
« Reply #22 on: January 24, 2016, 11:41:54 AM »
The actual settlement for DYP hangs on my wall above my study area to remind me not to waste time on crap like this. AXP is at 10x earnings and MCO is at 12.5x EBT. You don't have to climb Everest to get decent returns.

johnny

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Re: SORL-SORL Auto Parts, Inc
« Reply #23 on: August 29, 2017, 12:40:20 AM »
UPDATE!

Quote
On May 5, 2016, through its principal operating subsidiary, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with the Ruili Group, a related party under common control, pursuant to which the Company agreed to purchase the land use rights and factory facilities located at No. 2666 Kaifaqu Avenue, Rui’an Economic Development Zone, Rui’an City, Zhejiang Province, the People’s Republic of China (the “Development Zone Facility”). In exchange for the Development Zone Facility, the Company agreed to transfer to the Ruili Group the land use rights and factory facilities of the Dongshan Facility owned by the company, plus RMB501,000,000 (approximately $76,533,000) in cash.

The cash consideration in the amount of RMB481,000,000 (approximately $73,478,000) was paid to the Ruili Group in installments before June 30, 2016, and the remaining RMB20,000,000 (approximately $3,016,000) will be paid within 10 days of completion of the required procedures for transferring the title of the facilities and the land use rights as specified in the Purchase Agreement. As of the filing date, the Company has not obtained the land use right certificate nor the property ownership certificate of the Development Zone Facility.

Well this at the very least shuts down my earlier intimation that the cash didn't actually exist.

Janeo

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Re: SORL-SORL Auto Parts, Inc
« Reply #24 on: December 03, 2019, 07:22:32 AM »
Hmm any idea why SORL is trading at a relatively decent spread against the go pte offer? Approvals required seems limited. Looks low ball-ish but there's no large SH out there to block it from what I can tell? Or is it due to the Chinese factor? Curious to hear any thoughts on this.

writser

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Re: SORL-SORL Auto Parts, Inc
« Reply #25 on: December 03, 2019, 08:08:25 AM »
Or is it due to the Chinese factor? Curious to hear any thoughts on this.

Probably that, combined with maybe a lack of information, fear of dissenters messing with the deal, and maybe some concerns about the equity commitment ... Still, the vote requirements look relatively relaxed (Delaware), insiders own ~58% and coughing up ~$40m shouldn't be that big of a deal for a company of this size. Downside is probably somewhat limited (famous last words). I own a few shares. I'm a bit cash-strapped but it looks like a reasonable risk/reward. Not exceptional for a Chinese going-private though, the HPJ spread (a somewhat similar situation) was much bigger at certain points.
« Last Edit: December 03, 2019, 08:19:16 AM by writser »
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

Foreign Tuffett

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Re: SORL-SORL Auto Parts, Inc
« Reply #26 on: December 03, 2019, 08:11:58 AM »
I bought some yesterday, and agree that the "Chinese factor" is largely responsible for the spread.

Hielko

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Re: SORL-SORL Auto Parts, Inc
« Reply #27 on: December 03, 2019, 09:17:44 AM »
But this one has perhaps a bit more hair on it than some other Chinese deals. A non-binding going private proposal got cancelled once before in 2016 due to "market conditions" so perhaps they are not the most committed buyers. Break-up fee relatively small. And there some some stuff with taxes and the IRS as well. But still, spread is pretty big so you get at least decently compensated for those risks and perhaps more than decently.

writser

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Re: SORL-SORL Auto Parts, Inc
« Reply #28 on: December 03, 2019, 11:05:11 AM »
But this one has perhaps a bit more hair on it than some other Chinese deals. A non-binding going private proposal got cancelled once before in 2016 due to "market conditions" so perhaps they are not the most committed buyers. Break-up fee relatively small. And there some some stuff with taxes and the IRS as well. But still, spread is pretty big so you get at least decently compensated for those risks and perhaps more than decently.

The reverse termination fee is indeed not super high (though it isn't even always there in the first place). $1.1m on a 40m deal (excluding the 58% already held). I hadn't seen the IRS issue (I assume you mean the stuff in exhibit A of the merger agreement?). Obviously a net negative but doesn't look like a deal breaker and the issue is explicitly mentioned in Article IV and VI as an exception to the usual deal risks.

I'm not really worried about a non-binding proposal getting cancelled in 2016. I don't know where I read it (perhaps I'm even making it up!) but when an American buyer submits a non-binding proposal the deal is basically done, whereas Chinese buyers basically seem to think: well, this looks potentially interesting, let's suggest this proposal and see what happens next. Different culture I guess - I've been burned by that before. A definitive deal can take years, can be at a different price or can never materialize. But once a definitive deal is there I'm not that much more worried.

Still, I agree more or less with your assessment: a bit more hair and a bit less upside than what you'd like to see (as, for example, with HPJ). I only have a very tiny position. If it drops another 5% I'd be far more interested.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.