Is Yongye International The Next Chinese Fraud?

Yongye International, Inc. YONG shares are down around 4% today, but there are grumblings that the company may very well be the next Chinese fraud, and traders should pay attention. The company trades at less than 4 times 2012 earnings, indicating there is an extremely healthy dose of skepticism surrounding the company, and its ability to continue on at the rate it is going. Just this morning, Absaroka Capital initiated coverage on Yongue International with a $1 price target. Here is a link to the report provided by ZeroHedge. In the note, Absaroka notes some major concerns, such as the recent transaction to acquire the Wuchuan Lignite Coal Project. Absaroka says it not a legitimate deal, and looks like a scheme to bilk funds from the company. The company's main fertilizer product, Shengmingsu, was not developed at Stanford University, as the company so claims. Absaroka says the company may be manipulating earnings, from the company's relationships with its two largest suppliers. The deal for Hebei Customer List, which cost $32.2 million, appears to be another attempt to manipulate earnings. There are other factors that Absaroka mentions. This is something to note if you are a shareholder of Yongue International, and if you are not, you may want to consider looking deeper into the company as a potential short idea. The company, together with its subsidiaries, engages in the research and development, manufacturing, and distribution of fulvic acid based liquid and powder nutrient compounds for plant and animal feed used in the agriculture industry.