China Sky Chemical Fibre

[Nick]

APPOINTMENT OF SPECIAL AUDITORS

http://info.sgx.com/webcoranncatth.nsf/V...B000CE1A3/$file/Announcement_ProposedAppointmentofSpecialAuditors.pdf?openelement [SGX Announcement]

The Company has requested for a suspension of share trading from this morning onwards.

Hope no one here got caught !

(Not Vested)

[dzwm87]

Almost wanted to buy CSCF. Luckily I didn't. Else stuck with the suspension as normally such auditing should take a while and even if nothing bad emerges, the reputation will be worsened!

Bottom line: Given the many other opportunities available, stay out of S-chips for now

[Nick]

Personally, I wouldn't touch most of the S Chip unless there is some SOE/SWF backing + decent dividend payout ratio. Though this is pretty rare in SGX. How to analyze something when the F/S itself is suspect !

[Musicwhiz]

Wasn't this already suspended?

Sorry ah, with so many S-Chips being suspended and their names all sounding the same (with the word "China"), it's unavoidable that I get mistaken sometimes.

So is this a new case of suspension or there were already some issues beforehand?

[Nick]

It is a new case. I think you might have confused it with Sky China Petroleum whose auditors resigned recently but the Company's shares is still trading and the CFO went down to PRC to personally check on the cash.

[dzwm87]

Sorry ah, with so many S-Chips being suspended and their names all sounding the same (with the word "China"), it's unavoidable that I get mistaken sometimes.

A psychological reason behind the poor sentiments of s-chips..

[Musicwhiz]

It is a new case. I think you might have confused it with Sky China Petroleum whose auditors resigned recently but the Company's shares is still trading and the CFO went down to PRC to personally check on the cash.

Gosh, sounds serious! And I thought perhaps the days of bad governance were behind the whole S-Chips sector. Apparently not.

I am afraid that with the continuing Euro crisis, it may start to expose even more dubious S-Chips - as the tide recedes then you really start to see who had been swimming in the buff!

[Musicwhiz]

Business Times - 18 Nov 2011

China Sky halts trading after SGX directive

S-chip is asked to immediately appoint special auditor for probe into firm

By LYNETTE KHOO

CHINA Sky Chemical Fibre suspended trading of its shares yesterday following a directive from the Singapore Exchange (SGX) to immediately appoint a special auditor to probe into the company.

'The Board will be meeting on an urgent basis to consider this directive and to make the necessary announcements as needed,' the S-chip said yesterday.

This directive from SGX was issued to the group on Nov 16.

Areas of concern to the Exchange include the circumstances surrounding a botched land acquisition in Fujian province, purchase of new production facilities, other major acquisitions, and some 72 million yuan (S$14.7 million) of repairs and maintenance costs incurred in the first quarter of 2009.

SGX also wants the special auditor to probe into the interested person transactions the group has with its independent director.

China Sky has to consult the Exchange on the appointment of special auditors and the terms of reference for the special audit. The special auditor will report to the group's audit committee and the Exchange.

The group hit headlines earlier this year when it became known that its independent director, Lai Seng Kwoon, had provided accounting-related services to China Sky through his firm SK Lai & Co from 2008 to 2010.

These services related to reviewing the company's internal, accounting and reporting controls, quarterly financial statements and results announcements, and providing consultancy and advisory services for accounting procedures.

Mr Lai's business relationship with China Sky, though he was chairman of the audit committee, raised questions on possible conflicts of interest and the degree of his independence.

The past couple of years have also seen China Sky making some major acquisitions.

In 2006, China Sky agreed to acquire land in Quanzhou city in Fuijian from land owner Fujian Fuyuan Chemical Fibre Co to enable its expansion into upstream production.

But difficulties to transfer the land use rights to China Sky led to this agreement turning void this year and Fujian Fuyuan refunded in full a sum of 263 million yuan that had been paid.

This year, the group has pre-paid some 190 million yuan for new machinery to raise its production capacity for 'super-resilient' products.

When queried by SGX in May, however, the group declined to disclose the utilisation rates for each of its product capabilities, citing competition issues.

China Sky is also trying to relocate the production facility of its wholly owned unit, Qingdao Zhongda Chemical Fibre Company. This is because the lease on the existing land occupied by the subsidiary expired in March and the land is re-zoned for commercial and residential use.

Qingdao Zhongdao plans to pay 84 million yuan for a piece of land in Qingdao and build a new production facility worth 128 million yuan on the acquired land. All these are still subject to approval from Qingdao authorities while the subsidiary is staying at its current premises for the time being.

[Qiaofeng]

The group hit headlines earlier this year when it became known that its independent director, Lai Seng Kwoon, had provided accounting-related services to China Sky through his firm SK Lai & Co from 2008 to 2010.

These services related to reviewing the company's internal, accounting and reporting controls, quarterly financial statements and results announcements, and providing consultancy and advisory services for accounting procedures.

Mr Lai's business relationship with China Sky, though he was chairman of the audit committee, raised questions on possible conflicts of interest and the degree of his independence.

SGX/MAS should investigate if there is a thread in the chain of S-Chips Corporate Governance issues involving certain IDs.
The name mentioned in this article has cropped up too many times in the list of S-Chips failures.
Just Google and U will see the list of S-Chips he was ID of; and how many of them have had corporate governance issues.

[momoeagle]

I'm thanking my lucky stars to have taken the guts to cut at 23cts after I owned the shares for a year at 24.5cts vested price.