China Paper Holdings

[Musicwhiz]

People are still interested in S-Chips because they believe they have the skills t separate the wheat from the chaff.

But for me, I think it is too much of a hassle. There are many other good companies out there waiting to be analyzed without having to bother about China companies.

[specuvestor]

China Paper's papers caught fire... is that a pun??

The SGX needs to grow a spine and stand up to these jokers. Lobby MAS to change the regulations if need be. Sure, the Chinese bosses are overseas, but the investment bankers are local, right? So if the investment bankers pay heavy fines or go to jail, the supply of garbage will quickly stop.

Totally agree. Or make the chairman hold significant part of his shares as collateral for banker's guarantee. And preferably the bank is one of the lead manager or underwriter for the IPO.

I can't wait for RMB to be internationalised to see how they can still claim they can't repatriate their money.

[Musicwhiz]

China Sun was much more interesting....truck stolen with all the financial records.

The Straits Times
www.straitstimes.com
Published on Dec 18, 2012
Companies
China Paper financial records destroyed in fire

By jonathan kwok

A FIRE at the Shandong Province office of China Paper Holdings has destroyed many of the firm's financial records, the company announced yesterday.

The fire last Thursday afternoon did not damage any production facilities or injure staff and was put out in about an hour, China Paper said.

But the firm said its 2011 financial records were destroyed and those for the first eight months of this year suffered partial damage. Records for September to November were severely damaged.

Official investigations found that an electrical short circuit in an office started the blaze, said the announcement. There was also some damage to the office.

Singapore-listed China Paper said it has started communications with customers and suppliers to obtain copies of invoices and other transactional records that were damaged, so it can reconstruct its financial records.

As this process could take four to six months, the firm will discuss with its auditors a possible delay to this year's annual audit.

Trading in China Paper stock was halted on Friday afternoon for yesterday's announcement.

Trading resumes today.

The firm sells paper products to publishing houses, printing companies and other paper distributors throughout the mainland.

Its stock changed hands at 4.4 cents on Friday before the trading halt was called. That is near an all-time low for the firm, after a rights issue earlier this year dragged down its stock price.

Shares in the company, which listed here in 2004, hit almost 50 cents in 2006.

Other China companies have also reported mishaps to their financial records in recent years.

Last year, Sino Techfibre said its financial records were destroyed in a fire at its Shandong province premises. In 2009, China Sun Bio-chem Technology Group said its records were lost when a truck transporting them was stolen while the driver was having dinner.

jonkwok@sph.com.sg

[Greenrookie]

well, 1 thing I dun quite understand is that the ex CEO of sgx who roll out the red carpet to all these s chips are doing quite well at temasek.

[pianist]

well, 1 thing I dun quite understand is that the ex CEO of sgx who roll out the red carpet to all these s chips are doing quite well at temasek.

fyi he is now on the board at one of the bluest chip companies listed on sgx as well

how come all the mishaps all happening in shandong province? i hope elite KSB done their due diligence on their shandong's associates.

[wsreader]

An expensive lesson on paper cannot wrap fire

[violinist]

Greed never cease to exist, no matter how much the danger or financial losses.

[money]

This is too funny.

Meanwhile, in related news:

http://www.channelnewsasia.com/stories/s...39/1/.html

Choice quote:

"After a meteoric rise between 2005 and 2007, S-chips crashed in the couple of years that followed, undone by a number of accounting fraud cases.

Mr Gerald said this does not mean all S-chips are bad, adding that out of all the listed S-chips, only 13 have had problems."

Hello? Earth to David Gerald: "What planet are you living on?"

My own limited shortlist of "problem Chinese companies" already way exceeds 13:

Beauty China
Cacola
Celestial Nutrifoods
China Essence
China Fibretech
China Gaoxian
China Hongxing
China Milk
China Printing & Dyeing
China Sky Chemical Fibre
China Sports
China Sun Bio-Chem
Dapai
Eratat
Ferrochina
Fibrechem
Foreland Fabrictech
Hongwei
Oceanus
Oriental Century
Qingmei
Sino-Environment
Sino Techfibre
Synear
United Food

That's 25 right there. If we count China Paper that makes 26, which is double the august Mr Gerald's claim.

The CNA article claims a peak of "almost 160" Chinese companies 2 years ago. OK, let's say 159. 26 out of 159 is over 15%.

I do not know of any other developed-market stock exchange where over 15% of a group of companies can have obvious accounting issues and the stock exchange says "no problem".

The SGX needs to grow a spine and stand up to these jokers. Lobby MAS to change the regulations if need be. Sure, the Chinese bosses are overseas, but the investment bankers are local, right? So if the investment bankers pay heavy fines or go to jail, the supply of garbage will quickly stop.

Let me do some sharing.

i actually owned cacola, celestial, chinasky, ferrochina, eratat for a short moment in my life.

The other S chips i once owned were chinaPrtP, Changtian, ChinaTaisan, ChinaMinzhong, yangzijiang

Out of 10 S-chips i once owned, 5 fall into d.o.g's lsit of 26, the other 5 have yet to enter. haha my hit-rate for frauds is actually 50%.

To make the story complete,
for cacola, -$50,
for celestial, +$1290
for changtian, +$1690
for chinasky, +$1780
chinaMZ, +1770
chinaPrtP, -$455
chinataisan, +141
eratat, +2340
ferrochina (cant find the records but i remember making money)
yangzijiang, -2020

haha i still made a net gain, i am still wondering how i found the courage to buy these stocks in the first place. I think i was quite lucky to escape with a gain. To be rewarded for doing something stupid is not something to be proud of.

[setan]

Long term investor in S-chip will lose a big time, while short term one may or may not lose as much.

Anyway, it is painful lesson learned.

As long as you are still investing, there will still this type of lesson to be learn so just need to take extra precaution in evaluating an opportunity.

[Ben]

I learnt a painful lesson from this counter, and paid a heavy price for it. I should have been more decisive when I detected something is not right with this company, but I either chose to ignore it or refuse to face it. What can go wrong with a counter that is trading way below NTA, PE of < 5, profitable every year and have load of cash? If something is amiss with this company, it would have been uncovered by the auditors long ago since this company was listed for so long already. I was dead wrong!

This is one of the counters that I hold for a long time, since 2005 to be exact. I attended every AGM and follow every announcement. I was bought over by all the promises the company gave and truly believes that the BODs are honest and hardworking people. In my mind I am painting a beautiful picture that one day this company will grow to be a big and profitable organization and people will realized how undervalued this company is and I will be grinning by the handsome rewards. What a joke! Now I fully understand the famous saying, “love your stock but don’t fall in love with your stock.”

I should have realized that something is wrong when a cash rich company is not paying any dividends for years. I was really annoyed by fellow SH at each AGM who keep on grilling the BODs for not paying out dividends. In my heart, these people are so shortsighted.

While not paying dividends to SH is still “acceptable”, continuously raising money in the market via right issues should have raised a big red flag. The reasons given by BOD for these actions is to preserve or raise cash for plant expansion, for new products development, for adding new production lines etc… it sound so damn convincing to me.

And then one fine day in Mar this year, a long term ID tender his resignation abruptly. I was alarm, but it is still not enough an impact to upset my love for this company. However, the next day after this ID announced his resignation; my beloved company once again announced another big right issue and priced it at a big discount to the last traded price! The stock price crash the following day. It breaks my heart and I started to realize that I am taken for a ride. My sweet dream is turning into a nightmare. After some soul searching, I decided that enough is enough. Few days after this rights announcement, I wield my sword and in one swift decisive move I chop off this rubbish at 4.1c, completely. Strangely, I feel more relief rather than pain. A burden is now off my back, I do not have to hope for a hopeless hope anymore.

I thought I got it cheap each time I average it down at lower price. It is a steal, I thought, only that it is the company that is stealing my money. Wise WB said: “It is better to buy a good company at a fair price than to buy a fair company at a good price”. This is so wise, so wise…..

Now that this is behind me, I really feel very relief and lighthearted. I tell myself that I would rather miss a boat than to hit a rock.

Even despite this, I still know of friends who are die- hard fan of CP and are still holding on to their dear shares. I wish them well.

Just sharing this with fellow investors and I hope you can learn a thing or two from my mistakes.