I can understand your skepticism. I re-read the memo and the news release again and would like to address several of your points.
You indicated that HRCT is saying they can basically get a guaranteed value of 80 mill for 30 mill. I actually am not familiar enough with the language being used. The memo indicates that the 'total consideration' is 80 mill, 'comprised of HRCT shares and warrents' and that CIH is to submit to HRCT a company evaluation showing 'a minimum price of 80 mill'. 'Consideration' can mean payment, compensation, or fee. I'm not sure how it is commonly used, but is it possible that this is saying that in addition to an upfront infusion of 30 million, HRCT will be making payment of 80 million?
I agree that the use of 6,000 per customer looks way to high given the wage levels in China. As to the number of users, growth to 1 million in 3 years sounds reasonable. Further growth to, say 100 million in 5 more years sounds less likely but maybe not that far out given a population of some 1.2 billion currently.
Other than perhaps their overly optimistic projections, can you explain why you believe management is incompetent? I don't know a much of the history of this company, but noticed they, unlike many BB stocks, are showing significant revenues from their other operatons, some which I think are in China.
Thanks, Ted |
