Disclosure: The author has a short position in one or more of the shares mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Back in August I suggested that Mayair Group (MAYA), which purports to provide clean air solutions in China might not be so different from other AIM listed China plays.
Of the two UK NEDs, one, Jaques Franck Dossin was also on the board of Camkids and JQW, and the other Martin Bloom, helped list Renesola on AIM and then the NYSE where it has proved catastrophic for investors. Its auditor is Crowe Clark Whitehill, the go to firm for a lot of China frauds.
The company also announced a plan to build a new factory to meet increasing demand, a ploy used by Naibu and others which conveniently explains away the eventual disappearance of real or imagined cash.
Now it has issued a mild profit warning, another trait I have noticed in many China scams shortly before the balloon goes up. Exactly why they find it necessary to do this is a bit of a mystery, if your numbers are fake why bother to sound a note of caution?
Maybe its pressure from the auditors (In Crowe Clark Whitehill’s case this seems a bit farfetched) or simply a bit of kidology: we must be for real because we have just warned that we have hit a bump in the road just like normal companies do. After all, if the numbers are to be believed, the stock still looks cheap on the usual metrics.
If this all sounds a bit circumstantial then so be it. Mayair may seem like the blue chip of this dreadful and discredited sector of the AIM casino. Its share price has only fallen by 40% in less than two years, a remarkable performance against its peer group. But don’t be fooled. Its Admission documents reads wearily similar to all the others and the chances of it going the same way are very high.
The stock has rallied since its initial fall on the profit warning and this represents a good selling opportunity.
This article first appeared on the Nifty Fifty website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website ahead of the next TWO share tips from Tom & Steve within four weeks and ahead of a new shorting idea from Lucian Miers next week click HERE
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