Thursday, December 29, 2011

First China Pharmaceutical Group (FCPG) Won't Reorganize

Trinity Investment Research did it again.  They pumped another penny stock in a mailer last year and it went nowhere but down.  First China Pharmaceutical Group (FCPG) is a drug distributor in China that used to be called E-Dispatch.  Why the name change?  Beats me.  Maybe they just wanted to differentiate themselves from all of the links I found when I did a web search for "E-Dispatch."

They sure don't differentiate themselves with financial results.  They turned a profit in the last two quarters of 2010 but are now losing money.  Their negative retained earnings are getting farther in the hole.  Free cash flow has been negative for three years.

The company has problems that are forcing it to abandon a proposed corporate reorganization it had planned to execute.  The details don't interest me.  A foreign penny stock that can't get a simple administrative reorganization right isn't going to get serious attention from me.  Investors who bought FCPG when this mailer came out would have lost around 90% of their money if they had held on until now.  I don't like those kinds of returns.

Full disclosure:  No position in FCPG, ever.