China Tracker - Details for Fuqi International (FUQI)


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 Fuqi International
Shares Outstanding (MRQ): 27.63 mill
New Shares / Dilution (TTM): 6.38 mill30.03%
Cash (MRQ): 173.17 mill0.00%
Account Receivables (MRQ): 73.83 mill0.00%
Account Receivables (Q/Q): + 13.78 mill  
Long-Term Debt (MRQ): NO DEBT
Revenue Growth (Q/Q): 26.13% 
Revenue Growth (Y/Y): 35.77%
Net Income Growth (Q/Q): 90.76% 
Net Income Growth (Y/Y): 189.19%
EPS Growth (Y/Y): 122.40%
Net Margin (Q/Q): 14.8% (9.8%)5.00% 
Net Margin (Y/Y): 14.8% (6.9%)7.80% 
EPS | P/E (2 MRQ Projection): $2.070.00 
Price/Sales (2 MRQ Projection): 0.00
Price/Book (MRQ): 0.00 
Auditor: Marcum 
* operating cash flow data not (yet) included
 
 Forward Projections (Fiscal Year)
EPS | P/E (Estimates updated 2010-10-31): $1.450.00 
 Basic Facts and History (show more)
Reporting Type: U.S. Company (10-K Filings) 
Going Public: IPO on 2007-10-23 
IPO Price: $9.00 (-100.00% since IPO)

 Business Outlook

COVERAGE TERMINATED (Going Dark)
Recent Chain of Events:
2012-07-26 -- Last SEC Filing
2011-07-30 -- CFO Resignation
2011-03-29 -- Delisting from NASDAQ
2009-11-09 -- Last Quarterly/Annual Report: Q3/FY2009 ended September 30, 2009

(Source: Trading China, 2012-09-30)

After identification of the cash transfer transactions by the auditor, the Company's management and finance team began to gather information and documentation related to the cash transfer transactions. The auditor subsequently brought this matter to the attention of the Audit Committee of the Board of Directors of the Company, which was requested to expedite the investigation. The Audit Committee determined that Company counsel, with assistance from the Company's finance team, should investigate the cash transfer transactions further and report regularly to the Audit Committee. On January 20, 2011, the Company retained a People's Republic of China ("PRC") law firm to determine whether any violations of PRC law occurred as a result of the cash transactions.

On February 11, 2011, the Audit Committee received a letter from Marcum pursuant to Section 10A(b)(1) requesting that the Audit Committee conclude its investigation into the cash transfer transactions to determine whether the cash transfer transactions violated applicable laws in the U.S. or the PRC. Following receipt of the letter, the Audit Committee engaged special investigative counsel at the Company's outside law firm to undertake the investigation requested by the auditor. The law firm retained a forensic accountant to assist it in the investigation.

The Audit Committee shared with Marcum preliminary findings of the investigation. On March 16, 2011, the Audit Committee received an additional letter from Marcum requesting that the investigation be continued and expanded. On March 22, 2011, the Board of the Company received a letter from Marcum sent pursuant to Section 10A(b)(2) of the Exchange Act further requesting that the Audit Committee's investigation into the cash transfer transactions be expanded to resolve issues noted in the letter. On March 22, 2011, the Audit Committee held a special meeting at which it approved the continuation of the investigation into the cash transactions, and on March 23, 2011, the Board also held a meeting and approved the continuation of the investigation.

The Company currently believes that the cash transfer transactions will not have an impact on the balance sheets and statements of income for the affected periods; however, the transactions are expected to be reflected in the Company's statements of cash flows and disclosed in the notes to the financial statements for the affected periods. Although these transactions began during the last month of the third quarter of 2009, the Company's publicly filed Quarterly Report for that period did not include disclosure regarding the cash transfers because they were not identified until 2010. The restated report for that period will include such disclosures.

The Company has disclosed the cash transfer transactions to the U.S. Securities and Exchange Commission ("SEC"). At this point, the Company is unable to predict what actions any government authority may take in response to such disclosure, and there can be no assurance as to how any resulting consequences may affect the Company's business. Any determination that the cash transfer transactions violated existing laws or regulations in the US or China could result in fines, civil and criminal penalties, interruptions of business, modifications of business practices and compliance programs, equitable remedies, including injunctive relief and other sanctions that may be taken against the Company, Mr. Chong, or other personnel.

(Source: PR Newswire, 2011-03-28)

The Company appeared before the NASDAQ Hearings Panel on November 11, 2010, subsequent to which the Panel determined to continue the listing of the Company's common stock on The NASDAQ Stock Market subject to an extension through March 28, 2011, by which date the Company must file all delinquent reports with the SEC. Under NASDAQ's rules, the extension through March 28, 2011 represents the maximum length of time that the Panel may grant the Company to come back into compliance with its rules. Since the Company is not able to make all such filings by March 28, 2011 and no further extensions are available, the Company expects to receive a delisting determination from the Panel in the very near term indicating that the Company’s common stock will be delisted from The NASDAQ Stock Market.

(Source: 8-K Filing, 2011-03-25)

    see all Business Outlook notes

 Analyst Coverage (show less)
2011-03-28Roth CapitalDowngradeSuspendedn/a
2011-03-28Merriman Curhan FordDowngradeTerminatedn/a
2010-12-31Rodman & RenshawDowngradeTerminatedn/a
 

Effective immediately, we are discontinuing research coverage of FUQI to better allocate resources within our coverage universe. Effective upon the termination of coverage any of our prior financial projections on this stock should not be relied upon. Our last rating on FUQI was Under Review.

2010-09-30Roth CapitalReiterationNeutral$7.00
 

Yesterday FUQI announced it had received a delisting notification from Nasdaq due to its failure to timely file SEC periodic reports, which is due to the restatement process that has been underway for several months to correct the accounting for inventory and cost of sales. As previously reported, we recently touched several different aspects of FUQI's operations and based on these checks, we concluded that its wholesale and retail businesses are fully functional. However, with information lapses on wholesale growth, new store openings, forward gross margin levels, the balance sheet and the SEC investigation (management is fully cooperating but there has been no additional insight into the specifics), it is hard to be anything other than cautious about the stock. Thus, even though our "back-of-the-envelope" calculations come up with a tangible book value of ~$7.60, we think the stock remains range bound until the restatement happens and until there is greater clarification regarding the SEC investigation. Accordingly and based on yesterday's ~12% stock price increase, we retain our Neutral rating and $7 price target.

2010-09-20Roth CapitalReiterationHold$7.00
 

We are lowering our FY10 estimates based on our belief there will be additional margin pressure related to the restatement process, SEC investigation and a more competitive environment due to rising gold prices. Our revised FY10 estimate is $1.10 versus $1.20. As for the SEC investigation, management could not provide any additional color other than it is fully cooperating with the SEC. We are lowering our price target to $7 reflecting the earnings change.

FUQI is currently followed by 3 analysts. All 3 give the stock a neutral rating.


    see all Analyst Ratings

 Recent Financings
2009-07-22Priced$105.89 mill4.50 mill shares$23.53
FUQI
Retail/Consumer
SCORE
6
UNDER REVIEW
READ: Score Cards Explained
SAFETY/RISK SCORE
EXTREME RISK
DETAILS: Safety/Risk Model for FUQI
Current Price:  n/a
F10k Day (2007-10-23): -100.00%$10.47
2009 Close: -100.00%$17.95
2010 Close: -100.00%$6.38
2011 Close: -100.00%$1.15
High (2012-02-28): -100.00%$1.46
Low (2012-06-29): -100.00%$0.55
Exchange:
Market Capitalization: n/a
Total Shares: 27.63 mill
Float: n/a
Avg Volume: n/a
Last Quarter: 2009-09-30
Revenue (MRQ): 127.19 mill
Net Income (MRQ): 18.79 mill
all financial data provided without warranty