Facing Sluggish Sale, Sino Clean Energy Inc. Halted by NASDAQ

By Pucong Han (People’s Daily Online USA)

Sino Clean Energy, Inc. (NYSE: SCEI), a China-based commercial producer and distributor of coal-water slurry fuel, launched NASDAQ in early June 2010.

On May 21, 2012, trading in Sino Clean Energy on the NASDAQ Capital Market was halted and had not resumed. According to NASDAQ, trading will remain halted until Sino Clean Energy, Inc. has fully satisfied NASDAQ’s request for additional information. The last price of Sino Clean Energy in the market was $1.02.

According to the First Quarter of 2012 Financial Results, revenues of Sino Clean Energy decreased 17.6% from $33.8 million in 2011 to $27.8 million in 2012. Net income of Sino Clean Energy in the first quarter of 2012 was $2.8 million, a decrease of 77.0% from $12.1 million in the same quarter of 2011.

Disclosed by the newsroom of Sino Clean Energy, the negative result in the first quarter of 2012 was primarily due to a year-on-year decrease in sales to the Company’s major customer, Haizhong Heating, in Shenyang. Sales to Haizhong Heating decreased by $4.4 million. In addition, the Company’s subsidiary Shaanxi Suo’ang New Energy lost nine customers in 2011. According to the newsroom, the reduction in sales due to this loss of customers was approximately $5.0 million.

“The past quarter was a challenging period for Sino Clean Energy,” said Baowen Ren, chairman and chief executive officer of Sino Clean Energy. “Although we had expected a slowdown in order volume from our largest customer, which is based in Shenyang, our Shenyang facility sales were more sluggish than anticipated.”

“We are encouraged, however, that order volume at Dongguan continued to expand and partly offset the revenue reductions from our other two facilities,” said Ren. As disclosed in the 8-K filing with the SEC on May 18, its Dongguan facility was forced to suspend operations pending the outcome of a lawsuit filed against Yongchang Paper Industry Co Ltd.

Sino Clean Energy is in the process of appealing the court order and intends to defend its contractual rights. In the meantime, Sino Clean Energy is actively seeking alternative production options and may lease additional facilities to serve its customers in the region.

The management team of Sino Clean Energy is actively looking for solutions to stop the sluggish sales. “Our management team and I are carefully reviewing both the successes and shortcomings of the year’s first quarter to find ways to recapture the growth that our experience has shown this company is fully capable of achieving,” said Ren.

(Pucong Han is an intern reporter at People’s Daily Online. He is from Columbia Journalism School. Pucong can be reached at: puconghan@gmail.com)

Social Networks Shares Fall After the Heavy Volume of Facebook IPO

By Pucong Han (People’s Daily Online)

The world’s largest social network site Facebook (NYSE: FB) went public on May 18, 2012. The share price opened above $42 per share, 10% higher than its IPO price of $38 per share. Although the performance of Facebook on Friday was below investors’ expectations, it became one of the most heavily traded U.S. IPOs in history. However, the heavy volume of trading on Friday did not prevent the fall of its share price. Facebook closed at $38.23 per share, only 0.6% higher than its IPO price.

On the second day of trading, the share price of Facebook opened below its IPO price and closed at $34.03 per share, 10.44% lower than its IPO price.

Compared with other publicly traded social network sites, Facebook’s was not a unique occurrence on Nasdaq. Renren (NYSE: RENN), the dominant social network site in China, lost 7% on Friday. It began the day trading at $6.31 per share and moved between $5.61 and $6.38. Renren closed at $4.74 per share on Monday, 24.88% lower than its Friday’s opening price.

Both Renren and Facebook have moved beyond the traditional Internet business model of only displaying ads.

Facebook generates revenues from online ad sales, third-party partnerships, data sharing / analytics, daily deal & coupon E-commerce and virtual currency (Facebook credits). The total revenue of Facebook has increased from $770 million in 2009 to $3.285 billion in 2011.

According to the private company financial report of Facebook published on July 20, 2011, Facebook considered the possibility of loss of investor confidence due to its partnership with Zynga. Since the health of Zynga’s business is so strongly related to that of Facebook, investors may view Zynga’s performance as an indicator of how well Facebook is performing.

The report also discloses that Facebook has expanded its ad space to include three advertisement slots per page, up from two, a move that PrivCo predicts will counteract the trending increase in price per advertisement on Facebook.com.

According to the report, Facebook plans to re-enter China after its ban in 2009. In order to properly comply with Chinese law, Facebook plans to partner with a Chinese search engine, most likely Baidu (NYSE: BIDU), which will enforce proper censorship and compliance with Chinese laws.

This plan might shrink the market share of Renren, but it will not easily challenge the role of Renren as the leading social network site in China. The consequence of this plan is creating opportunities for search engine companies like Baidu to play a role in social networks.

Renren generates revenues from both online advertising and Internet value-added services (IVAS). The IVAS provides creative online environments for users to have fun, to communicate and interact with their friends and families.

According to its Form 6K – a report for non-U.S. companies to disclose financial or important changes in the company’s operations – about two-thirds of Renren’s revenue is from IVAS. The rest of revenue comes from online advertising.

Renren’s IVAS revenues are comprised of online game revenues, VIP membership fees, social commerce revenues from merchants on nuomi.com, and fees from 56.com. According to its Form 6K, its revenue from IVAS has increased from $12.422 million in March 2011 to $22.749 million in March 2012.

Renren’s online advertising revenue increased from $8.13 million in March 2011 to $9.33 million in March 2012. Despite these improvements in revenue, the operating expenses of Renren were US$40.2 million, an 89.8% increase from the corresponding period of 2011.

The 45% increase in IVAS revenue plus the 12.8% increase in online advertising revenue failed to stop Renren’s losses before Facebook launched on Nasdaq. The net loss of Renren increased from $2.6 million in March 2011 to $13.616 million in March 2012. Excluding results of operations attributable to Nuomi in both quarters, net loss in the first quarter of 2012 could be US$5.5 million, compared to a net income of US$1.0 million in the corresponding period of 2011.

These negative results may hurt the market confidence in Renren for its long-term performance. Its share price has shrunk by 66.14% since it first launched on Nasdaq in 2011. There is no clear evidence whether Facebook will repeat Renren’s market value loss, but, its 10.5% lossin share price suggests that the performance of social network sites on Nasdaq are unpredictable.

(Pucong Han is an intern reporter at People’s Daily Online. He is from Columbia Journalism School. Pucong can be reached at: puconghan@gmail.com)