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China New Energy – AGM confirms placing fears

By Nigel Somerville, the Deputy Sheriff of AIM | Friday 7 July 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

ShareProphets AIM-China Filthy Forty play China New Energy announced its AGM today. As I suspected HERE the company’s full year results revealed a bit of a need for cash and the AGM notice (HERE) confirms that the company is leaving the door wide open on that score.

The balance sheet included RMB 13.9 million of cash, but with RMB 11.2 million of that restricted and even after a placing in February raising £702,132 we are told that net cash sat at RMB 13.6 million at the end of April – in other words cash had reduced in four month despite raising more money. At that rate there will be more needed pretty quickly.

And then there were receivables, which included RMB 50 million of unimpaired but overdue payment.

And in the full accounts it turns out that there is a material uncertainty raised as to the company’s ability to continue as a going concern. Whoops – I didn’t see that in the RNS version. I cannot think why they left that bit out, can you?

And so the AGM notice contains a special resolution giving the directors authority to a lot up to 40% of the existing capital.

You have been warned…..

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