Global Hunter Suspends Coverage on China Agritech (CAGC), Cites "Numerous Questions"

Global Hunter Securities is suspending coverage on of China Agritech Inc. (Nasdaq: CAGC) following recent events.

The firm said the recent pre-announcement raised numerous questions and recent intensified insider selling raises a red flag.

The firm said, "In our attempts to address our questions with the company since the January 21 release, we have been disappointed by management's response to date (and lack thereof). In hindsight, we recognize that we should have placed our coverage status under review when questions regarding the rollout of the distribution centers first arose. We had hoped to have further clarification on how and why the strategy had changed since our previous meeting in October in which plans, designs and locations had been discussed."

They continue, "Further diligence and auditor sponsorship required. We are suspending coverage of CAGC to allow time to investigate the various allegations made in a short report published by a third party today; assuming those findings are positive, we will get a better sense of the growth strategy in place and we would consider reinstating coverage. In addition to our findings, we would like to remind investors that in November 2010, the company announced that it had appointed Ernst & Young as its independent public auditor. Were the company to successfully pass E&Y’s audit of its FY2010 financial results without the need for any major restatements to historically reported numbers, we believe this would be a necessary first step in restoring investor confidence."

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