A China XD Plastics follow-up

In my previous post, I explained how CXDC’s website was worse than Bill Ackman’s due diligence on Valeant.  It turns out that CXDC really does use that website for their operating business; I thought that they simply setup chinaxd.net for Western investors and had another website somewhere else for the operating business.

According to CXDC’s latest 10-K, they had $237M USD in revenue for 2016.  They have almost two thousand employees:

As of December 31, 2016, there were 1,960 employees, including 710 in manufacturing, 485 in R&D, 584 in management, 59 in finance, 101 in sales, purchasing and marketing and 21 in other departments.

But apparently they cannot make a fully functional website.  Perhaps it is due to a stifling bureaucratic environment of middle management: more than a quarter of their employees (584) are in management.

They actually use the chinaxd.net website

  1. Go to http://www.chinaxd.net/.  (Archive.org)  This is their website according to their 10-K.
  2. Click on “Chinese” in the top right to end up at xdholding.com.  (Archive.org)
  3. Click “News”, which is the third link after the logo (I used Chrome’s built-in Google Translate function).  You will be at http://www.xdholding.com/news.php.  (Archive.org)
  4. Click on the entry for 2016-10-17.  You will be at http://www.xdholding.com/news-1-view.php?id=302.  (Archive.org)
  5. The news entry talks about the “K Show” trade convention in Germany – http://www.k-online.com/.  (Archive.org)
  6. If you click around the site, you can find the exhibitor index at http://www.k-online.com/vis/v1/en/directory/c?oid=87922&lang=2.  (Archive.org)
  7. Scroll down to find China X D Plastics Co., Ltd.

    Note that there is no logo beside their name.  It’s unclear to me if they have to pay extra for that.  As I will explain later, you can figure out the size of their trade show booth and think about whether it is consistent with a company of China XD’s size.
  8. Click on China XD’s listing to land at http://www.k-online.com/vis/v1/en/exhibitors/k2016.2450930?oid=87922&lang=2.  (Archive.org)
    You will see a link to chinaxd.net.

So yes.  They actually use chinaxd.net for their operating business.

Size of trade show booth

In the right hand side of the image above, you can see a map of the trade show complex with its multiple buildings.  CXDC’s trade show booth was on the second floor of Hall 7.  The red arrow (which I added) points to D22 in the Hall map on the left-hand side.

You can form your own opinion as to whether the size of their trade show presence is proportional to the size of their business.

To be fair, perhaps China X D Plastics will never be very good at attracting English-speaking clientele given the company’s poor English skills.  They couldn’t even be bothered to proof-read their own website.  So perhaps an extravagant trade show booth would be a waste of money.

Closing thoughts

I will probably lose money by failing to cover my CXDC short early.  Almost all of the Chinese reverse mergers that have announced going-private transactions did actually go private (see “Throwing pennies in front of a streamroller“).

As well, I am pretty disappointed that the borrow has shot up to 15.6%.  You guys need to stop reading this blog.

*Disclosure:  I am short CXDC. 

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