DALLAS, TX--(Marketwire - November 24, 2009) - China Crescent Enterprises, Inc. (
OTCBB:
CCTR)
today announced that Founder and Board Member Philip Verges has released a
letter to shareholders addressing recent shareholder questions and
discussing the potential for a short-term and long-term return on
investment. The letter to shareholders is included in its entirety below:
Dear Shareholders --
China Crescent posted positive revenue and net income results through the
first nine months of 2009, but its share price dipped down after filing its
3rd quarter financial report. The Company has received shareholder emails
and calls regarding the issued and outstanding reported in the 3rd quarter
report compared to the 2nd quarter. One recurring suggestion in the recent
shareholder communications is that the share price dip following the 3rd
quarter report is related to the increased issued and outstanding.
Increased Trading Volume
In addition to the share price dip since the 3rd quarter report, the volume
of trading has been higher than usual. In reaction to the increased volume
and share price performance, one question raised in the emails asks, "Who
is doing all the selling?" We can only speculate as to the source of sales
or purchases of stock. However, few seem to be speculating in regard to
the source of purchases. While we have received questions and comments
regarding the sale of stock in reaction to the share price dip, we have not
received any questions regarding purchases. There cannot be any sales
without corresponding purchases. If shareholders are selling in reaction
to a perceived reduction in value resulting from the increased issued and
outstanding, why would some other party be buying?
Shareholder Profits from Periodic Increases in Share Price
Included regularly within the Company's communications is the message that
we believe an ongoing disconnect exists between the underlying fundamental
financial performance of over-the-counter quoted companies and the
corresponding price per share. To offset the disconnect, we regularly
discuss the idea of supplementing a long-term investment strategy with
small, short horizon stock purchases to enable profit taking when the share
price periodically increases in reaction to a milestone success. Trading
volume might not be sufficient to enable the liquidation of a large
investment when the share price experiences a periodic peak.
Long-Term Returns from Long-Term Sustainable Operational Success
In our communications we characterize long-term return on investment
potential as a function of operational success, not share price
performance. We discuss our belief that long-term share price appreciation
of over-the-counter quoted securities is unlikely. We believe long-term
return on investment is absolutely possible, but will more likely be
realized directly from the operation rather than from trading of stock.
For instance, cash received from the future potential sale of an operation
might be issued in a dividend to shareholders.
Long-Term Potential Enhanced Through Bolstered Financial Position
China Crescent's third quarter report is a demonstration of management's
focus on developing the opportunity for shareholders to realize a potential
long-term return on investment from the success of the operation.
Management has issued stock since the second quarter to bolster the
financial position of the Company's operating business and improve the
potential for the operation to deliver long-term value. Revenue is up, net
income is at record levels, debt has been reduced and earnings per share
are stable. The Company's Chief Financial Officer discusses the issue of
stock to bolster the Company's financial position in more detail in an
on-demand Webcast. A link to the on-demand Webcast is available on the
corporate website homepage
www.chinacrescent.com titled 'China Crescent 3rd
Quarter Review.'
Over-the-counter Share Price Volatility and Potential for Dramatic Returns
The over-the-counter markets are well-known for share price volatility.
The price of over-the-counter securities can go up and down dramatically in
terms of percentage change. A share price under $0.10 can easily double,
creating an opportunity for a 100% return on investment. The share price
can similarly go the other way. It is not unusual for such share prices
to go up and down repeatedly. As mentioned above, there cannot be a sale
of stock without a corresponding purchase. Even when the share price is
declining, some party is purchasing the stock at a declining share price.
Accordingly, it is reasonable to conclude that money is being made on one
side of the transaction or the other whenever the share price is
increasing or decreasing.
China Crescent Return Potential on the Horizon
Within 2009, the share price of China Crescent has seen periodic increases
in share price as well as periodic decreases. Each decrease refreshes the
opportunity to potentially benefit from a future periodic increase. Each
increase is likely to be met with a periodic decrease. Again, we can only
speculate as to the cause for the most recent decrease. Regardless of the
reason for the decrease, the Company has posted a positive financial report
in addition to communicating potential upcoming milestone events that have
a likelihood of occurring before the end of the year. With the volume of
stock that has been purchased at a lower than average share price, in
combination with the positive financial results and potential upcoming
milestones, China Crescent has the potential to experience yet another
increase in share price before year-end.
Small Equity Initiative
I and others here are dedicated to improving the opportunity for
self-directed retail investors to profit from over-the-counter investments
and for entrepreneurs to gain better access to capital for their business
plans. Our first initiative is to improve the collective understanding by
investors and entrepreneurs as to how the over-the-counter market really
works. It is our position that conventional efficient market wisdom is
flawed when it comes to the over-the-counter markets. We nevertheless
firmly believe the over-the-counter markets can deliver compelling returns
for investors and be a consistent source of investment capital for
entrepreneurs if approached from the right perspective. We will continue
to provide shareholder communications similar to this one in our ongoing
effort to improve the collective understanding as to how the
over-the-counter market really works. We have also taken part in launching
a
not-for-profit organization called the Small Equity Initiative to further
the long-term improvement of the
over-the-counter markets for self-directed retail investors and
entrepreneurs. Look for more news on the Small Equity Initiative in the
near future.
Best Regards,
Philip Verges
China Crescent Board Member and Founder
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About China Crescent Enterprises, Inc. (
www.chinacrescent.com)
China Crescent Enterprises, Inc. reported over $40 million in profitable
revenue in 2008. The Company is a technology leader in the rapidly
developing Chinese market specializing today in software engineering, high
quality software development and digital multimedia outsourcing services
delivered to customers globally. At the same time, the firm is a systems
integrator and value added reseller of major global hardware brands in the
Chinese domestic market.
Headquartered in Dallas with operations in Shanghai and Beijing, China
Crescent bridges the gap between Western and Eastern business cultures to
assist Western clients in realizing the advantages of the high quality, low
cost technology products and services available from China. China Crescent
also assists Western clients in localizing products and services to realize
the tremendous growth potential available by expanding into the Chinese
Market.
"SAFE HARBOR STATEMENT" UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
This press release contains forward-looking statements that involve risks
and uncertainties. The statements in this release are forward-looking
statements that are made pursuant to safe harbor provision of the Private
Securities Litigation Reform Act of 1995. Actual results, events and
performance could vary materially from those contemplated by these
forward-looking statements. These statements involve known and unknown
risks and uncertainties, which may cause China Crescent's actual results in
future periods to differ materially from results expressed or implied by
forward-looking statements. These risks and uncertainties include, among
other things, product demand and market competition. You should
independently investigate and fully understand all risks before making
investment decisions.
Contact Information: Contact:
China Crescent Enterprises, Inc.
ir@chinacrescent.com
214-722-3060