Any explanation why this company is so undervalued?

Water Cooler Investing
#1

I bought some shares of China’s New Borun (NYSE: BORN), because it was priced at $33M while it has 270M as shareholder’s equity. P/B ratio of 0.1x. I thought it’s a good opportunity.

It’s been roughly 2 weeks. I didn’t lose my patient, but I am still wondering why this company is priced so low? It went on public in 2010 and never issued a dividend. Can this be the reason? Also, it’s not in an English-speaking world; it does not have any good story (it produces edible alcohol).

I am just sort of curious of why this is happening. Any thoughts are welcome!

#2

No offense, but you probably should have known the answer why before investing.

#3

old articles. allegations of fraud. thing about fraud. price becomes pointless.

https://seekingalpha.com/article/236141-china-new-borun-investors-race-to-exit-as-concerns-mount

https://seekingalpha.com/article/232553-how-china-borun-has-exaggerated-its-financial-performance

#4

Yeah, I was going to say, probably because the Chinese lie on all their accounting statements anyway…

#5

LOL you are absolutely right.

#6

Thank you Blop. These articles are very helpful! I will try to dig in a bit more.

#7

That would be bad if what I am seeing is fake. If the reports were fake, do you think SEC will take care of it?

#8

Take care of it as in pursue the company? Maybe. Take care of it as in mitigate your losses? No