How to GRO in Reverse

Instead of nurturing seed, sapling, and sheep specialist Agria (NYSE: GRO  ) , investors are stomping all over the young Chinese company. Last time we checked in, shares were zooming in response to a less clouded corporate governance picture. Now Agria's market cap is growing in reverse. So what happened today?

Well, for one, the company finally got around to releasing its 2007 results. The (unaudited) numbers were quite bold, with the seed segment -- corn seed sales rose 40% -- leading the way. If you recall that these numbers were pushed back on account of an audit delay, it's kind of startling that Agria still hasn't released audited 2007 financials. But then again, neither have solar players like Solarfun Power Holdings (Nasdaq: SOLF  ) or Trina Solar (NYSE: TSL  ) . Any day now, people.

The complete lack of a cash flow statement probably didn't bother too many investors bitten by the China bug. Instead, the first-quarter results and gloomy second-quarter guidance appear to have sent Agria's shares south. Total revenue lightened slightly compared to the prior year's quarter, with sheep breeding really petering out. It's not that the sheep weren't in the mood -- Agria implemented an overhaul to its facilities that only saw embryo and semen sales resume in June.

By keeping the bleepin' sheep asleep, Agria can now only project 10% to 15% top-line growth this year. That's far from the since-retracted February guidance of 25%-plus.

Agria certainly has a niche in the realm of Chinese publicly traded companies, and its potential market-share gains make for an interesting story. Still, I'm not tempted to buy on the (sheep) dip here, given the company's ongoing lack of transparency. Agria and Origin Agritech (Nasdaq: SEED  ) still have some work to do in order to silence the skeptics.