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SPECIAL REPORT
Where in the World is Ying Yang?
In a surprising twist of events, China Green Agriculture (NYSE: CGA) CFO, Ying Yang, resigned in late April on the heels of a much-promoted visit to New York City to celebrate the company’s ringing of the Opening Bell on April 11. According to the company filing with the SEC, Ms. Yang resigned for unspecified reasons, but indicated she would continue to consult the company. A spokesperson for the CGA said she was offered a position she could not refuse as CFO of Kingtone (Nasdaq: KONE), which began to trade on the Nasdaq in mid-May.
Some in the sector are suspect and speculating there was friction and Yang was asked to leave. Indeed the timing, with Yang playing such a big role in the Opening Bell celebration is questionable. Yet, it’s hard to imagine she could make the transition so quickly to Kingtone with its listing coming so soon after her arrival.
In an email with CBK, Yang acknowledged there could be misconceptions, but pointed out that CGA and Kingtone share the same Chairman, Mr. Tao Li, who is also the President and CEO of CGA. The companies have their offices in the same building. “My decision to resign as CFO but continue to support them [CGA] as a consultant might sound sudden to the street,” Yang wrote, “but Mr. Li had asked me a while back if I was interested in working for Kingtone and taking the company public.”
In the U.S. it’s not uncommon for a CFO to develop an expertise, focusing on working with companies as a certain stage of growth, whether it be taking a company from $10 to $50 million, getting it ready for an offering, or coming in post-IPO to deal with Wall Street. Although very rarely would a CFO leave so shortly after listing on the NYSE. But it is not a stretch to think someone like Yang, who can make humic acid seem like such an interesting topic to investors, press and the like, might want a new challenge.
She seems genuinely enthusiastic about Kingtone and outlines the similarities and differences between the two companies, pointing out that both, “…have almost ten years established operations in China with strong management teams, proprietary technology and leading margins. One has a solid growth in the agricultural industry with acquisition opportunities going forward and one has a rapid growth for mobile enterprise solutions in both public and private sector with 3G rollout in China. ”
For those who wonder about the choice and timing she has this to say, “Trust me, it was not an easy decision, which is also why the resignation just happened a couple of days before Kingtone’s IPO roadshow.”
CGA’s new CFO, Ken Ren, will have a challenge replacing Yang, as she was one of the best-known CFOs in the China-based/U.S. listed sector of companies for both her financial savvy and presentation skills. A native of China, Yang received her undergraduate degree from the University of International Business and Economics in Beijing and moved to the U.S. to get her M.B.A. in finance from the University of California Irvine.
Yang is one of the rare, true “crossborder” C-level executives, with roots in China, fluency in both Mandarin and English and an understanding of the similarities and differences of how businesses operate in both the East and the West. Taylor Zhang of China XD Plastics is the only other CFO of this ilk who comes to mind. She joined CGA in September 2008 and worked from her home in Denver. No doubt, Yang would have had her pick of jobs if other top-listed China-based/U.S. listed companies knew she was “in play” so Kingtone better have a B-list for possible CFOs come 2012, in case 24 months is her “itch” point.
Public relations seems to be a missing art among the China-based/U.S. listed company sector and, indeed, it seems Kingtone, and its bankers Roth and Maxium, missed an opportunity to aggressively publicize Yang’s CFO appointment in the days leading up to its listing on Nasdaq.
On the other hand, CGA’s IR firm HC International was quick to set-up meetings with investors and press in New York to meet Ren in mid-May [who is also fluent in Mandarin]. Ren has never served as a CFO for a company, public or private and, at age 33, will be one of the younger CFOs among companies listed on the New York Stock Exchange.
Prior to joining CGA, Ren served as a capital market analyst for the Federal Home Loan Bank in Des Moines, Iowa. Prior to that he was an investment associate at an asset management subsidiary of Wells Fargo and has also worked for GMAC-ResCap and Commerzbank. He received a Ph.D. degree in Operations Research in 2006, and a M.S. degree in Computational Finance in 2004, both from Purdue University.
It will probably take a few quarters and investors’ conference for Ren to establish his own identity as a CFO and lose his “rookie” status when it comes to CGA. To make the proverbial sports reference, Ren is like the quarterback who will someday be replacing Peyton Manning. Yang helped set a standard for CFO’s in the China-based/U.S. listed sector. If Ren has as strong as arm and as keen as vision Yang, then CGA should also be keeping a short-list of candidates for his position because he will be in much demand.
In the meantime, the next time Yang is in Xi’an, Mr. Li may want to stop by Kingtone and offer her a board position on CGA. It could not hurt.
As of Friday, May 28, CGA was trading at $10.70 during after hours trading, down from its 52-week high of $18.70, but up from its 52 week low of $6.25 from a week earlier (when the entire market drop precipitously.) KONE closed on Friday at $3.11, down from its opening day price of $4.00.
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DEALS
Songzai to Acquire Coal Mine
Songzai International Holding Group, Inc. (OTC BB: SGZH) has entered into an agreement to acquire the Erdos City Dongsheng District Liujiaqu Coal Mine located in the Inner Mongolia region of the PRC. The annual production capacity of the mine is expected to be 1.2 million metric tons in 2011 with continuous growth thereafter. The extracted coal is to be sold on a raw product basis as thermal coal for power generation, cement rotary kilns and other industrial and home heating uses. Songzai expects $50 million in revenues during its first full year of operation in 2011. Songzai is engaged in coal production and sales by exploring, assembling, assessing, permitting, developing and mining coal properties in China.
PEOPLE
Key Rodman Personnel Decamp to Global Hunter
New York-based Global Hunter Securities has expanded it China sector practice, hiring Barney Monte and Joe Giamichael. Monte will lead the firms’ China investment banking group; Giamiachael will lead its China research team. Monte most recently was head of the China investment banking group at New York-based investment bank Rodman & Renshaw. He previously was vice president of Akin Bay Company, advising clients on cross-border mergers and acquisitions in China, and also was an analyst with HSBC Securities. Giamichael most recently was director of research and senior China analyst at Rodman & Renshaw. He previously was managing director of CJS Securities, focusing on small cap companies in a number of sectors. Global Hunter currently provides research coverage and monitors more than 50 China-based companies whose securities trade on U.S. exchanges.
Chen Moves into CEO Position at New Energy
Shenzhen-based New Energy Systems Group (OTCBB: NEWN) has promoted Mr. Nian Chen to Chief Executive Officer. Chen replaces Mr. Fushun Li, who resigned as CEO on May 14, 2010, but will remain a board director. Chen was founder of Anytone, which New Energy acquired in Dec. 2009. Since he has been serving as the vice president of the Anytone division. Prior to joining Anytone, Chen served for more than five years as vice president of Shenzhen Vogue Industries Co., Ltd., a manufacturer of portable electronics. Chen received his M.B.A. from The Management Institute of Hubei Province and his undergraduate degree from Huangshi Institute of Technology. New Energy Systems Group is a vertically integrated original design manufacturer and distributor of lithium ion batteries and backup power systems for mobile phones, laptops, digital cameras, MP3s and a variety of other portable electronics.
New CFO at China Valves
Kaifeng-based China Valves Technology Inc. (Nasdaq: CVVT) announced on May 24, that Ms. Ichi Shih has stepped down from her position as Chief Financial Officer for personal reasons. The company’s board has appointed Mr. Renrui Tang as interim CFO until a permanent CFO is found. Tang has 17 years of experience from working with China Valves and is currently the company’s finance director. The company has also appointed Mr. Jy Ng as financial controller to assist with accounting and financial reporting duties. Ng has seven years of experience in financial auditing and SOX 404 compliance from Andersen Consulting and PricewaterhouseCoopers. His latest position was manager of the Assurance Division at PricewaterhouseCoopers.
Hollysys Downsizes Board by Four, Replaces Chairman
Beijing-based Hollysys Automation Technologies Ltd. (Nasdaq: HOLI) has reduced the size of its board from nine members to five and appointed company CEO and cofounder, Dr. Changli Wang, Chairman, effective May 26, 2010, replacing one of the rare female Chairpersons for China-based/U.S. listed companies, Li Qiao, who has resigned from the board. Like Qiao, the other three members to leave the board are/were non-executive, independent members including, Kerry S. Propper, Leonard Hafetz, and Kiam Fee Yao. No reason for the reduction or resignation was given in the company press release. Watch for more on this turnover in a future CBK “Week in Review.”
Bernstein Increases Staff in China
Bernstein & Pinchuk LLP has hired 15 additional senior staff to its Beijing, Guangzhou and Hangzhou offices to keep up the pace with its growing client market in China. Recently it has secured new audit engagements in the advertising, consumer goods and industrials sectors.
IN BRIEF
* Xianyang-based Biostar Pharmaceuticals Inc. (Nasdaq GM: BSPM) has begun the assembly of a new production line for its Zushima product, having completed Chinese Military Drug Administration clinical trials. Zushima is a traditional Chinese herbal product used to relieve pain through a topical application to affected areas or closed wounds. Zushima spray can also be used in the treatment of certain rheumatic conditions. The product was classified as “Specially Needed Drug” by the Chinese Military Drug Administration, which will also be available to the public.
* Shanghai-based China-Biotics (Nasdaq: CHBT) announced a number of its probiotics strains appear on the expanded probiotics list for food industry recently approved by the Ministry of Health in China.
* Wuxi-based Suntech Power Holdings Co., Ltd. (NYSE: STP) recently received official certification under the UK Microgeneration Certification Scheme (MCS) for its most popular models, a pre-requisite for selling solar panels in the UK market. The certification will enable customers and value-added resellers in the UK to utilize Suntech’s solar panels for reliable electricity generation.
* Harbin-based China XD Plastics Company Ltd. (Nasdaq: CXDC) is establishing a new research center “Harbin Xinda Macromolecule Material Engineering Center Co. to be operational in early 2011. The center will provide technical support for the company’s recently expanded modified plastic production base and enhance its research and development capabilities for modified plastics in new applications, such as new energy vehicles.
* HC International has published its latest newsletter: www. hcinternational. net
