Origin Agritech Ltd. (SEED), a producer of genetically modified seeds, may buy back its shares after they fell 57 percent this year amid concern among investors about Chinese companies that trade outside the country.
Origin’s shares are worth $6 to $7 each in the current “down market” and are “a good value,” Chief Financial Officer Irving Kau said yesterday in a telephone interview. Origin fell 37 cents, or 7.5 percent, to $4.57 as of 4:29 p.m. New York time on the Nasdaq stock market.
Sino-Forest Corp. (TRE), a Toronto-listed Chinese timber company, has plunged 75 percent since a report by Muddy Waters Research published June 2 said it overstated production. Among Chinese companies trading in the U.S., Rino International Corp. said in November its financial statements weren’t reliable and China MediaExpress Holdings Inc.’s auditor quit in March.
Those companies, like Origin, were created via reverse takeovers. The Bloomberg Chinese Reverse Merger Index of 78 U.S.-listed companies, including Origin, declined 45 percent this year.
“There is probably more than a fair share of bad apples, but there are good apples also,” Kau said. “Everyone gets painted with the same brush. It’s not an efficient market.”
Origin’s financial statements are sound and it’s received no inquiries from the Securities and Exchange Commission, he said. Hong Kong-based accounting firm BDO Ltd. has been the company’s auditor for six years, he said.
Distance and language barriers make it harder to allay the concerns of investors, most of whom don’t speak Chinese and haven’t visited the company’s facilities, Kau said. The company hosted 15 investors from Credit Agricole SA yesterday and Morgan Stanley is bringing 20 investors for a tour of the breeding facility next week, he said.
Sino-Forest, which is based in Hong Kong and Mississauga, Ontario, has said the Muddy Waters report is inaccurate.
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