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02-05-2019, 07:04 PM
From starving pigs to disappearing chairmen: Chinese companies offer some bizarre excuses for plunging profits, missed deadlines amid worst earnings season on record
* Chinese companies have come up with some bizarre explanations for their worst earnings season on record
Laura He
Published: 6:00pm, 2 May, 2019
Earlier this week Kangmei Pharmaceutical, one of China’s biggest drugmakers, blamed an “accounting error” for overstating its cash holdings by an eyewatering 30 billion yuan (US$4.5 billion), making headlines around the world.
The staggering blunder, amid China’s worst corporate earnings season on record, sent the firm’s stocks and bonds plummeting and sounded alarm bells about the quality of auditing in one of the world’s fastest-growing markets.
But Kangmei is by no means alone in offering up surprising or downright bizarre explanations for plunging profits, irregular disclosures or failure to disclose at all.
Chuying Agro-Pastoral, one of the country’s biggest pig farmers, needed an excuse when it reported annual losses of 3.9 billion yuan, more than double its previous estimate. It said it had run out of money to buy food for the pigs during last year’s liquidity crunch.
This had led to “many unexpected deaths of pigs”, Chuying said in a statement, without giving a specific figure. The company’s annual pig production is around 3 million, according to a previous estimate.
According to an estimate by the industry website zhujiage.com.cn (literally pigprice.com.cn in English), roughly 2.7 million of Chuying’s pigs would have had to succumb to starvation for it to suffer that magnitude of loss.
Shanghai Zhongyida, a Shanghai-listed machinery manufacturer, was one of five companies that failed to deliver their annual reports before the April 30 deadline.
The excuse offered by Shanghai Zhongyida was that it had been unable to produce its report because all the senior executives, including the chairman, were missing and the business licence, financial books, official seals had vanished.
Some firms were brutally honest about their failure to produce the necessary documents.
Xinjiang Yilu Wanyuan Industrial Investment said it had missed the deadline because it takes too much time to enter and proofread the data.
Chengdu Huaze Cobalt and Nickel Material, a repeat offender, said it had hired an accounting firm to handle its annual results, but had not paid the auditing fees. It marked the second straight year Chengdu Huaze has used the same excuse for failing to disclose on time.
An inability to pay for the auditing work was a common theme.
Changsheng Bio-technology, the vaccine maker embroiled in a rabies scandal last year, said the court had frozen all of its bank accounts since last July, leaving it with no money to hire an accounting firm to audit its reports.
Tanac Automation, a Shenzhen-listed machinery equipment maker, took an honest approach when it reported some unusual figures earlier this week.
“I can’t guarantee the report is authentic, real, and complete, because it contains false statements. I suggest investors pay special attention to it,” Gong Lunyong, a board director, said in the company’s annual report for 2018 and again in the first quarter report for 2019. He said the “false statements” were related to the financial figures about a key subsidiary of the company.
More details in https://www.scmp.com/business/china-busi...nies-offer
* Chinese companies have come up with some bizarre explanations for their worst earnings season on record
Laura He
Published: 6:00pm, 2 May, 2019
Earlier this week Kangmei Pharmaceutical, one of China’s biggest drugmakers, blamed an “accounting error” for overstating its cash holdings by an eyewatering 30 billion yuan (US$4.5 billion), making headlines around the world.
The staggering blunder, amid China’s worst corporate earnings season on record, sent the firm’s stocks and bonds plummeting and sounded alarm bells about the quality of auditing in one of the world’s fastest-growing markets.
But Kangmei is by no means alone in offering up surprising or downright bizarre explanations for plunging profits, irregular disclosures or failure to disclose at all.
Chuying Agro-Pastoral, one of the country’s biggest pig farmers, needed an excuse when it reported annual losses of 3.9 billion yuan, more than double its previous estimate. It said it had run out of money to buy food for the pigs during last year’s liquidity crunch.
This had led to “many unexpected deaths of pigs”, Chuying said in a statement, without giving a specific figure. The company’s annual pig production is around 3 million, according to a previous estimate.
According to an estimate by the industry website zhujiage.com.cn (literally pigprice.com.cn in English), roughly 2.7 million of Chuying’s pigs would have had to succumb to starvation for it to suffer that magnitude of loss.
Shanghai Zhongyida, a Shanghai-listed machinery manufacturer, was one of five companies that failed to deliver their annual reports before the April 30 deadline.
The excuse offered by Shanghai Zhongyida was that it had been unable to produce its report because all the senior executives, including the chairman, were missing and the business licence, financial books, official seals had vanished.
Some firms were brutally honest about their failure to produce the necessary documents.
Xinjiang Yilu Wanyuan Industrial Investment said it had missed the deadline because it takes too much time to enter and proofread the data.
Chengdu Huaze Cobalt and Nickel Material, a repeat offender, said it had hired an accounting firm to handle its annual results, but had not paid the auditing fees. It marked the second straight year Chengdu Huaze has used the same excuse for failing to disclose on time.
An inability to pay for the auditing work was a common theme.
Changsheng Bio-technology, the vaccine maker embroiled in a rabies scandal last year, said the court had frozen all of its bank accounts since last July, leaving it with no money to hire an accounting firm to audit its reports.
Tanac Automation, a Shenzhen-listed machinery equipment maker, took an honest approach when it reported some unusual figures earlier this week.
“I can’t guarantee the report is authentic, real, and complete, because it contains false statements. I suggest investors pay special attention to it,” Gong Lunyong, a board director, said in the company’s annual report for 2018 and again in the first quarter report for 2019. He said the “false statements” were related to the financial figures about a key subsidiary of the company.
More details in https://www.scmp.com/business/china-busi...nies-offer
Specuvestor: Asset - Business - Structure.
