CBPO’s strange web presence

CBPO is a Chinese reverse merger with a market cap of $2.45B.

The WHOIS record for Ctbb.com.cn shows “山东泰邦生物制品有限公司” under the registrant name.  This translates to “Shandong Taibang Biological Products Co., Ltd.” according to Google Translate.  According to CBPO’s SEC filings, “Shandong Taibang Biological Products Co., Ltd.” is a 83.76% owned subsidiary of CBPO.  That is weird because the SEC filings suggest that CBPO is the owner of Ctbb.com.cn.  Many of the 10-Ks such as the YE2014 10-K say something to the effect of:

In addition, we had registered three domain names as of December 31, 2014, namely, http://www.chinabiologic.com, http://www.ctbb.com.cn and http://www.taibanggz.com.

So if CBPO registered ctbb.com.cn, why does the domain registration show “山东泰邦生物制品有限公司” under the registrant name?  Why is the site registered to a partially-owned subsidiary?  Is this another case of multiple personality disorder?

The operating subsidiaries do not seem to have their own independent websites

CBPO is a holding company.  In my mind, the holding company and the operating subsidiaries should all have their own websites.  I would expect that the minority shareholder(s) of the operating subsidiaries do not want to pay for the web design costs of the holding company.  (Of course, I could be wrong.  Perhaps the minority shareholder(s) don’t care.)

I tried looking for the websites of the operating subsidiaries.  Searching for “山东泰邦生物制品有限公司” with Google and Baidu seem to bring up ChinaBiologic.com and Ctbb.com.cn among the top results.  As mentioned before, the SEC filings suggests that CBPO (the holding company) owns both of those domains.

This is really weird because there is a co-mingling of websites.  Ctbb.com.cn and ChinaBiologic.com seem to be the actual websites for the operating subsidiaries.  Based on archive.org, both websites have linked to mail.ctbb.com.cn which seems to be the company’s internal email system.  At the same time, both have provided stock quote information for CBPO.  The stock quotes are only relevant to the holding company and irrelevant to the partially-owned operating subsidiary.  I find the co-mingling to be really strange.  I would be a lot less confused if the SEC filings said that “山东泰邦生物制品有限公司” owned all of the operating subsidiaries 100%.

(Hui-tian.com is an exception and seems to be the website for Xi’an Huitian Blood Products Co., Ltd., of which CBPO owns a 35% stake.  It does not have obvious co-mingling of the holding company and partially-owned subsidiaries.)

QianFengBiological.com

In the past, there was a website up at QianFengBiological.com.  You can view old snapshots of the site via archive.org.

  • The bottom of the May 31, 2010 snapshot of the site stated: “Copyright © 2009 China Biologic Products, Inc. All rights reserved.”
  • The bottom of the Oct 29, 2010 snapshot of the site stated: “Copyright © 2009 黔峰生物制品有限责任公司. All rights reserved.”  [Qianfeng Biological Products Co., Ltd.]

I could not find any instances where any SEC filing mentions the phrase “QianFengBiological.com”.  The SEC filings make no mention of registering the domain name QianFengBiological.com.  The 10-K dated March 23, 2010 states:

In addition, we have registered the following domain name: http://www.chinabiologic.com and http://www.ctbb.com.cn.

The 10-K dated March 31, 2011 states:

In addition, we have registered the following domain name: http://www.chinabiologic.com and http://www.ctbb.com.cn.

This is strange to me because this website seems to have an identity crisis.

Currently, this domain redirects to taibanggz.com which may correspond to Guizhou Taibang.  QianFengBiological.com may or may not correspond to the following entity mentioned in the CBPO 10-Ks (e.g. the YE2014 10-K):

“Guizhou Taibang” are to our majority owned subsidiary Guizhou Taibang Biological Products Co., Ltd., a PRC company, formerly known as Guiyang Qianfeng Biological Products Co., Ltd.;

According to SEC filings, CBPO’s ownership of Guizhou Taibang has ranged from 0% to 54% to 76.23%.

The taibanggz.com website gives conflicting information regarding the party that owns the copyright.  The identity crisis continues.  The Chinese version of the site states:

Copyright © 2013 贵州泰邦生物制品有限公司. All rights reserved.

That translates to “Guizhou Taibang Biological Products Co., Ltd.” (which should correspond to a partially-owned subsidiary of CBPO).  The English version states:

Copyright © 2012 China Biologic Products,Inc. All rights reserved.

The two versions of the site also have a different Photoshopped image of a building with a logo on it.  The Chinese version states “Taibang Health” and has news from 2015.  The English version states “Chance Front” (a R&D entity) and has news from 2010.

taibanggz-chinese-photoshopped

taibanggz-english-photoshopped

Possible explanations

In many cases, foreigners aren’t actually allowed to own Chinese companies.  (In practice, many investors have been burned by Chinese reverse merger frauds when insiders ran away with all the cash and the operating businesses.)  The legal structures that try to circumvent laws against foreign ownership can cause weird ownership structures to occur.

Another explanation is that many of these websites have outdated and/or inaccurate information.  For example, one webpage on ctbb.com.cn talks about CBPO.OB even though CBPO uplisted to NASDAQ in 2009.

Perhaps their investor relations firm can help them with their websites

CBPO’s investors relations page lists the following contact:

Bill Zima
ICR Inc.
+86-10-6583-7511
+1-646-405-5191
bill.zima@icrinc.com

Going to ICR’s website, the company claims “With ICR as your Investor Relations partner, you’ll establish the relationships and the investor confidence you need to build long-term value and lower the cost of capital.”  To his credit, I think he has done a good job of helping CBPO lower its cost of capital given the prices at which CBPO was able to sell shares in secondary offerings.

Whoever did CBPO’s annual report and March 2015 investor presentation did excellent work.  The quality of the graphic design is excellent.  Some of that care and attention would go a long way to make the company’s other websites (ctbb.com.cn, taibanggz.com) better.  I’m surprised at the incredible performance of CBPO’s operating subsidiaries considering the quality of the websites aimed at customers is so much lower than the graphic design work in the annual report and investor presentation.

*Disclosure:  Short CBPO.  I apologize because I haven’t really explained the whole story about why I’m shorting this stock.

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