Merger of US, Chinese firms is cautionary tale
17.05.12
A presentation for investors called the firm China's leading domestic developer and provider of gamma-ray technology for fighting cancer. Investors were also told about strong customer orders and a joint venture that would supply Western expertise and boost growth.
But four years after first listing its shares in the U.S., Huiheng trades on the over-the-counter market for $1.60 a share, down from a peak above $13. Net income fell to $2.3 million last year, a fall-off from a 2007 high of $9 million. And sales are so slow, the firm hopes to explore preserving food with radiation — but says it lacks cash to fund the research.
Some of Huiheng's first investors obtained a legal settlement in which the firm bought back their stock after they alleged they'd been duped into buying "essentially worthless" shares.
The firm's latest annual report is so filled with caveats that Michael Santoro, a professor of management and global business at Rutgers University Business School, said a U.S. investor would be hard pressed to "make an intelligent judgment about whether to invest in this company."
Source: USA TODAY
