JQW Share Discussion Threads

[rupe1958] 24/7/2015 15:00

paxman - The company hasn't indicated that it wants to de-list and personally I think it's unlikely they would do so at this stage. They have only been on AIM since late 2013. Until now they haven't managed to build any kind of following, despite being a very profitable and promising business - China's 75th most visited website and the world's 550th (according to Alexa.com, with £45m on the balance sheet and no debt. But I think they will give it a bit longer. This story could turn around very quickly.

If they do decide to de-list at some stage I'm sure there would be a tender offer for minority shareholdings. The complications for the Yonge family of taking the company private without mopping up a 25% minority would be hideous.

I agree that the brokers were probably very discouraging re sales to pension funds at this time.

[macnai] 24/7/2015 14:44

China is not such a great place to have a listing

[macnai] 24/7/2015 14:39

Why not do a fifty to one share consolidation and relocate the listing to NASDAQ in the USA

[paxman] 24/7/2015 12:13

Rupe, my guess is no broker would touch JQW. Why persuade an institutional client or two to buy a few million pounds worth of shares in JQW, earn maybe £10,000 in brokerage, then have Cai Yongde delist the company and then lose those institutional clients' brokerage business for ever.

So no broker news to be expected nor a new FD is my guess. Easy to appoint both if the company were to remain listed. The Europe based NEDs could run the beauty parade.

Just my guess but maybe JQW will delist in August or September.

Million pound question: If Cai Yondge does delist JQW, will he use a little of the cash to buy out the minority or just relocate the minority shareholdings to China?

[rupe1958] 23/7/2015 08:45

Paxman - I guess that the 'associates' account for the 7% odd that I can't account for. Directly-held shares by the Yonge family are about 67%.

Venuss - yes, this looks like another bit of really clumsy corporate communications. They flagged up the imminent appointment of a new broker at the finals, and we've heard nothing about it since then.

Logan Boon, the CFO, was in charge of this. He was intending to return to the UK to finalise it before an announcement. He has since moved on from JQW (to another Yonge operation?), and it's possible that the broker appointment has been delayed by the company until his successor is appointed.

On the other hand it's also possible that they have failed to appoint a broker because (a) maybe the broker wanted more money than they were prepared to pay or (b) maybe the brokers all said that in the current post-Naibu environment it was a waste to time trying to sell shares in small Chinese companies to UK pension funds, who are much keener to buy shares in 'Pets at Home' (mcap £1.5bn)and other exciting domestic growth opportunities.

We should hear more about the broker appointment in a mid-term trading statement in August or at the half-year figures in September. I wouldn't be amazed to read that the broker appointment has been 'postponed'.

[venuss] 22/7/2015 23:24

It's unfortunate that it has taken so long to appoint a UK broker.

Wondering why it has taken so long given they were in the "latter stages" in April. Did the intended on pull out?

I should think a decent broker would want to give clear guidance of the start of solid and regular dividends.

[paxman] 22/7/2015 16:40

'Shares not in public hands
In the terms of AIM Rules published 13 May 2014 and insofar as it is aware, at 25 June 2015, 75.3% of the Company's AIM securities was not in public hands.'

That's from JQW's Shareholder Information page on their website.

So Yongde family plus associates = 75.3%.

[rupe1958] 22/7/2015 15:52

Paxman -

You are reading way too much into the company not paying a final dividend for 2014.
The company's view was that they had already paid a divi of 5.3p for the financial year 2014 (about £10m, and roughly 50% of profits), and they thought that was enough.

I understand their point, but it was all very badly handled from a communications point-of-view.

Your idea that the Chairman has deliberately held on to exactly 75% of the company so that he can de-list at his convenience seems very far-fetched.

Apart from anything else, according to my notes, the Yongde family owns more like 67%. How do you make it 75%?

[paxman] 22/7/2015 13:28

Rupe1958 - Everything you say makes sense but if we look at what the Chairman Cai Yongde has actually done:

Pay no final dividend - company is very cash rich + a dividend was wanted by minority shareholders + a high yielding company might have attracted income funds as investors + a dividend would have reassured the market. So what did JQW do? They paid NO dividend.

Keep his and his associates shareholding at just above 75% so giving him total control over delisting if he chooses. If JQW really wanted to attract institutional investors, CY and associates would have sold down under 75% so reassuring potential investors that any delisting would have to attract more widespread support.

My guess is JQW listed on the basis that if the share price went up they could sell some shares at a higher price but if the share price went down - as happened - they could delist if they chose. i.e. heads we win, tails we think we don't lose.

If they delist would they pay a premium? They should to ensure access to public markets in the future but so far their decisions have been very sub optimal for both the company and its minority shareholders so frankly I wouldn't bet on them making the correct decision this time.

Unfortunately with JQW, what they say and what they do are not supportive of each other. Maybe it's strategy or maybe some people just get things wrong.

[rupe1958] 22/7/2015 09:39

amoore - why should a falling share price force the BoD to de-list? Or do you mean because they are vulnerable to being bought out?

[amoore70] 22/7/2015 09:36

If the share price keeps falling they may have no choice in the matter.

[rupe1958] 22/7/2015 09:26

Paxman- you're probably right that it's AIM rule 41 (which allows de-listing on a 75% vote, with no obligation to buy out minorities) that's the main thing keeping fund managers out of JQW right now.

But I think the chances of UK investors being left with an untradable asset here are quite small. If Cai Yonge decided to de-list without buying out the 25% minority, JQW's reputation would be damaged and the company would never be able to list on another exchange. They would also have an angry minority of investors to deal with, which they wouldn't want.

If the BoD decides to take the company private I'm sure they would use the company's very large cash balances (probably £45m at this point) to make a tender offer. Probably at something like 20p. That would cost about £9m, or about a fifth of the company's cash pile.

I've owned shares in several Chinese companies on AIM that have de-listed because the Chinese owners have become exasperated by the absurdly low rating on AIM- West China Cement, Prosperity Minerals and China Shoto. There has always been a tender offer, usually at a generous premium to the share price

But the current situation is that the company has stated no intention to de-list. They have gone to some trouble and expense to get listed on AIM, and I reckon they will stick with it for a while longer in the hope of building a following.

There's no sign of institutional interest at all right now, but with regular dividends and the passage of time that might change. The value here is amazing.

[amoore70] 21/7/2015 19:30

Oh dear I take it by your bitter tone you are one of the ones who has lost a packet on this stock.

[midasx] 21/7/2015 16:28

Can I ask why you are here amoore?

Do you have nothing better to do than warn shareholders on a B/B you have no interest in because you have no position?

[amoore70] 21/7/2015 15:54

Well said Paxman. People really need to wake up and smell the coffee with this one. I cannot see how this has any happy endings for shareholders. Hope I am wrong but the more time goes by I am glad not to be involved.

[paxman] 21/7/2015 15:36

The problem is if you buy shares in JQW, although you're buying shares in a cheap company, it's effectively an unlisted Chinese company.

The chairman and his associates as per the web site own:

' In the terms of AIM Rules published 13 May 2014 and insofar as it is aware, at 25 June 2015, 75.3% of the Company's AIM securities was not in public hands.'

So they've kept 75.3% in their own hands. Over 75% gives them the option to delist at any time - it doesn't matter what the minority shareholders want or how worthless the delisting terms are. They have the absolute right to delist.

So JQW should be described as 'a currently AIM listed company with a delist option at management's discretion'.

You have to question their claimed intention to remain listed when they have deliberately kept their percentage just over 75%.

My guess is this is why no new broker has been appointed and no institution is buying shares.

[ravi_singh1] 21/7/2015 15:31

Yeah go fill your boots some more koolade, what could possibly go wrong with this?

[koolade] 21/7/2015 15:09

Stupidly cheap now folks. Just look at the market cap vs the performance metrics!!

[simon_64] 21/7/2015 14:10

They should have paid a divi this year, would be many times the current share price

[mike111d] 21/7/2015 12:49

It could but I can't see a catalyst at this stage.

[43rick] 21/7/2015 12:47

It was well under 8p 4 months ago - and then it went to over 20p. Could be moved up substantially on very small volume.

[amoore70] 21/7/2015 12:40

Under 8p now, got to be a worry.

[paxman] 21/7/2015 12:31

Delist in August?