Wednesday 30 October 2013

China Stationery: too many red flags and what does "demised" mean?

I was alerted to Common Sense Investing's posting about China Stationery, one of the China listed companies on Bursa.

The posting referred to an article of Tong Kooi Ong in The Edge. The discrepancy in interest rate received versus the interest rate paid is worrisome. It has been observed in other China companies, in which reported cash was simply hugely overstated. China Stationery claims it owns more than RM 1 Billion cash, an unbelievable amount, that is, if it is for real (I have my doubts).

Common Sense Investing also wrote a previous article about the company, about a puzzling announcement that the CEO was "demised".

One website writes about the uncertainty:

"There is uncertainty surrounding Jiang Danping, the CEO of Chinese manufacturer China Stationery. In an 8 October filing to the Malaysian stock market to announce a boardroom change, China Stationery said that 54-year-old Jiang Danping had 'demised' on 1 October. A number of Malaysian publications have interpreted the wording of the stock market filing as meaning that Jiang Danping has died, although this is still being questioned on some financial forums. We'll provide an update as soon as we have more information."

But the update never came.

Here is one of the definitions of the word "demise" (I only give the first two):

1. death or decease.
2. termination of existence or operation: the demise of the empire. 

If the CEO really passed away (the first definition), one would expect a date of passing, plus on the company website an eulogy, but I can't find any.

If the CEO did not pass away (the second definition), then what was the reason for his termination? Surely shareholders are entitled to know that.

Also, the CEO owned shares in the holding company of CSL, rather important. And in most companies, the CEO is the most important executive, should he not be replaced?

The confusing situation around the CEO is puzzling, to say the least.

The following information I found in the last year report:

Many China companies were listed on the SGX during that time (and many failed), the fact that CSL's IPO was aborted in 2010 must be a large red flag.

The CFO has also resigned, in 2012.

The auditor is oddly enough from Singapore.

Too many red flags, and the trust has gone, the graph of the share price is not pretty:

In an interview with KiniBiz, the Chairman mentioned:

“The stock market moves up and down like the ebb and flow of the tides,” he explained when asked if he was concerned about the sorry performance of his company’s stock.

But I only see the share going down.


  1. M, you know if there is anything a minority shareholder can do like asking for copies of the bank statement to authenticate the bank/cash balance? Thank you.

  2. No, one can not ask for the bank statements.

    One can complain to the authorities (BM, SC and SSM) and/or MSWG. Also, one can ask questions at AGMs and EGMs, bring the matter up, the BoD has the obligation to answer the questions in a proper way. One can also bring the matter up with the director in charge of communicating with investors.

    Problem is, without the documents, it is very hard to come up with the proof.

    SC though has investigating powers, so if you can convince them, they can do something, like a raid, confiscating all documents and digital files.It happens rarely, and often too late (when the fraud is clear and the company has collapsed). No idea how much SC can do in China based companies.

  3. M.A.Wind...thanks very much. Your info is very helpful. I have follow your blog and i find it very professionally written. Tks again.

  4. Hi LHC,

    I think the ability of minority shareholder to question a company directly is very limited.

    However the company's obligation of continuous disclosure under Part E, Chapter 9 of the listing requirement, the company have an obligation to provide clarification to any material rumours or report, a link to the rule is provided below.

    However it is up to the regulator to enforce the listing requirement. The relevant person monitoring this company is Mr.Tang Eng Kean, his email address is .

    I've written to him to draw his attention to this puzzling report, but in his autoreply - he is away on leave till 8/11/2013. I hope there's better disclosure upon his return but I urge all concern minority shareholder write to him, perhaps with 100 email from minority shareholder - they will be compelled to do something.


  5. Thanks Market Watcher, I will write a posting in the future about what minority investors can do, first have to do some more homework where all the appropriate legal stuff is hidden. Probably partly BM & SC (for listed companies), M&A, CCM (for all companies) etc.

  6. Thanks Market Watcher...i will definately write to Mr Tang ( can't see the email address ) and will try to get like minded minority shareholders to write in to pressure our SC to do something.

  7. Good luck, I hope you keep us informed about progress. I think BM/SC should take some stern action.

  8. I think there's some privacy protection in action preventing my posting of email address.

    But here I try again:

    tangengkean (at)

  9. Hi Market Watcher, Fyi, i had written to both bursa ( ) and sc ( ) last week. Ms Nisha Kamilla from Bursa is currently spearheading the investigation.