When frozen sheep semen is involved, you know you've got a hot stock on your hands.

OK, maybe not, but Chinese agricultural product purveyor Agria (NYSE:GRO) has still been one of the biggest gainers over the past two days. Let's see what all the fuss is about.

As with many busted Chinese IPOs, it's been mostly downhill since Agria went public at $16.50 back in November. Shares really got mutton-chopped in April, with a real doozy of a press release. Probably most important was the delay of an independent audit of Agria's 2007 financials. Additionally, the company announced that a key executive, one Mr. Xue, had resigned over a money squabble.

It gets worse. With Xue's resignation came the revelation that Agria's chairman was halfway through executing an $18 million retention bonus for Xue and his colleagues. Agria's board was reportedly "concerned about the potential adverse impact of the proposed transaction on the Company's business, financial condition and results of operations, as well as whether a similar situation may occur in the future." With all this drama coming to light, investors were rightly worried that they'd had the wool pulled over their eyes.

Right on cue, class action lawyers piled in, alleging that big compensation charges would slam Agria's reported profits, rendering previous financial statements misleading with regard to future profitability. While this is technically true, it's important to recognize that the payments are coming out of the Chairman's pocket, not company coffers. The more critical matter is the cost and uncertainty of key employee retention.

Agria went a long way toward clarifying this muddied situation with a release on Monday, setting out new employee agreements, share lock-ups, and other corporate governance tweaks. The last remaining issue is the delayed 2007 audit, which is under way.

We've seen what audit woes can do to an NYSE-listed Chinese firm -- just look at LDK Solar (NYSE:LDK), which was cleared of wrongdoing, yet still trades at a bit of a discount to smaller rival ReneSola (NYSE:SOL). If all the numbers check out, Agria will prove to be a bargain in hindsight. Still, there are plenty of lower-risk Ag plays out there, with reasonable valuations and room to run. Archer Daniels Midland (NYSE:ADM), for example, may lack the sizzle of a Monsanto (NYSE:MON) or an Origin Agritech (NASDAQ:SEED), but the firm's got plenty of arrows in its quiver when it comes to generating cash for shareholders.

Agria is rated a middle-of-the-road three stars in Motley Fool CAPS. Think this company's growing up to be a seed sultan, or just going to seed? Go ahead and make an outperform/underperform call right here.

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