Things continue to worsen in regards to China Automobile Parts, PKF issued the following rather strong worded statement.
PKF retracted their 2015 audited accounts since the financial statements for FYE2015 do not give a true and accurate picture of the financial position of the company.
Unfortunately, appendix 1 and 2 (mentioned in the text) are not enclosed. That is a pity, they might provide details when things started to turn sour, and how bad things might be.
Audited accounts being retracted from a listed company might be a first in Malaysia, but definitely not for unlisted companies, 1MDB being a rather "famous" example of that.
Showing posts with label China Automotive Parts. Show all posts
Showing posts with label China Automotive Parts. Show all posts
Saturday, 27 May 2017
Friday, 12 May 2017
China Automobile Parts: "bad reputation"? (2)
In addition to my previous blog post about this subject, things have possibly made a clear turn for the worse, according to its latest announcement.
The Company’s auditor, PKF has requested to carry out certain procedures that include the verification of the Company’s value added tax devices with the relevant tax authorities’ system directly and complete the verification of the consignment notes/appropriate delivery documentation against the sales invoices. The Company wishes to inform that the tax system in Fujian Province, China underwent three major upgrades and reforms within a year and this may have resulted in certain tax information being inaccurate. In order to meet PKF’s request, the person in charge of the Company is in the midst of liaising with the tax department, so that the auditor can clarify directly with the tax department where necessary.
This seems like a good action by PKF, comparing the official tax numbers with the alleged comparable numbers as provided by CAP. Many short sellers use indeed tax numbers of the company, its subsidiaries or trading partners.
On the auditor’s request to seek confirmation with the banks on the Company’s recorded bank balances, the Company will co-ordinate and make the necessary arrangement with the bank for PKF to seek confirmation verification where applicable.
And this also deserves attention, in several cases of Chinese companies listed on Bursa I have strong doubt about the bank balances. I even recommended Bursa to let all these China based companies to do a voluntarily, independent confirmation of the bank balances by an expert party. If the cash is not there, immediate action can be taken, and there would be no need to throw more good money after bad money (for instance through a rights issue). However, if the cash is really there, then that might add to the credibility of the company.
This confirmation has to be done in a proper way though, there have been cases where a company falsified the statements and the online banking system, and even the regional branch manager of the bank was in the fraud.
The auditor highlighted that it has come to their attention that there appears to be certain ongoing litigation involving the Company and certain of its directors whereby certain records appear to indicate amongst others that the Company had undertaken significant borrowings and had defaulted in repayment, resulting in a claim and litigation during financial year ended 31 December 2016 (“FYE 2016”) against the Company and certain of its directors by the lending bank. The Company wishes to inform that it has appointed a lawyer, Fujian Shi Long Law Firm, to verify and confirm the litigation cases involving the Company and certain of its directors. The Company will make announcement on the development of the above matter in due course if necessary.
If the underlined is indeed true (and the auditor must have had pretty reliable information regarding this, otherwise the above would not have been published), then that would be an extremely serious matter.
Shareholders should brace themselves for the worst.
The Company’s auditor, PKF has requested to carry out certain procedures that include the verification of the Company’s value added tax devices with the relevant tax authorities’ system directly and complete the verification of the consignment notes/appropriate delivery documentation against the sales invoices. The Company wishes to inform that the tax system in Fujian Province, China underwent three major upgrades and reforms within a year and this may have resulted in certain tax information being inaccurate. In order to meet PKF’s request, the person in charge of the Company is in the midst of liaising with the tax department, so that the auditor can clarify directly with the tax department where necessary.
This seems like a good action by PKF, comparing the official tax numbers with the alleged comparable numbers as provided by CAP. Many short sellers use indeed tax numbers of the company, its subsidiaries or trading partners.
On the auditor’s request to seek confirmation with the banks on the Company’s recorded bank balances, the Company will co-ordinate and make the necessary arrangement with the bank for PKF to seek confirmation verification where applicable.
And this also deserves attention, in several cases of Chinese companies listed on Bursa I have strong doubt about the bank balances. I even recommended Bursa to let all these China based companies to do a voluntarily, independent confirmation of the bank balances by an expert party. If the cash is not there, immediate action can be taken, and there would be no need to throw more good money after bad money (for instance through a rights issue). However, if the cash is really there, then that might add to the credibility of the company.
This confirmation has to be done in a proper way though, there have been cases where a company falsified the statements and the online banking system, and even the regional branch manager of the bank was in the fraud.
The auditor highlighted that it has come to their attention that there appears to be certain ongoing litigation involving the Company and certain of its directors whereby certain records appear to indicate amongst others that the Company had undertaken significant borrowings and had defaulted in repayment, resulting in a claim and litigation during financial year ended 31 December 2016 (“FYE 2016”) against the Company and certain of its directors by the lending bank. The Company wishes to inform that it has appointed a lawyer, Fujian Shi Long Law Firm, to verify and confirm the litigation cases involving the Company and certain of its directors. The Company will make announcement on the development of the above matter in due course if necessary.
If the underlined is indeed true (and the auditor must have had pretty reliable information regarding this, otherwise the above would not have been published), then that would be an extremely serious matter.
Shareholders should brace themselves for the worst.
Sunday, 30 April 2017
China Automobile Parts: "bad reputation"?
It is not often that Bursa listed companies talk themselves down, but that is exactly what China Automobile Parts seems to have done.
In a reply to a query they wrote:
Mr Goh Yoke Tong was appointed as INED on March 31, 2017, became chairman of the audit committee on April 4, 2017 and resigned on April 28, 201 "Due to his other personal commitments".
That leaves only one member in the audit committee, we wish him good luck.
In a reply to a query they wrote:
Mr Goh Yoke Tong was appointed as INED on March 31, 2017, became chairman of the audit committee on April 4, 2017 and resigned on April 28, 201 "Due to his other personal commitments".
That leaves only one member in the audit committee, we wish him good luck.
Thursday, 21 May 2015
Synergy between car parts and mining? (2)
Bursa queried China Automotive Parts (CAP) about Siburan acquiring a stake in CAP, the company answered here and corrected one answer here.
The company had to admit that CAP had actually nothing to do with the deal and that thus no synergies should be expected:
Good from Bursa to get some clarity in this matter. It might have poured some (much needed) cold water on the share price of CAP which was 10% down today.
The results of Siburan were also mentioned, not impressive to say the least, but quite normal for those junior Australian mining companies. They are definitely not intended for orphans or widows.
CAP also announced its quarterly result, profit was down 44% on 37% lower revenue.
The company had to admit that CAP had actually nothing to do with the deal and that thus no synergies should be expected:
Good from Bursa to get some clarity in this matter. It might have poured some (much needed) cold water on the share price of CAP which was 10% down today.
The results of Siburan were also mentioned, not impressive to say the least, but quite normal for those junior Australian mining companies. They are definitely not intended for orphans or widows.
CAP also announced its quarterly result, profit was down 44% on 37% lower revenue.
Monday, 18 May 2015
Synergy between car parts and mining?
China Automobile Parts made an announcement:
The Company wishes to announce that it has been informed by its major shareholder, namely Guotai International Holdings Limited (“Guotai”) (“Vendor”), via its letter dated today that it had entered into a conditional binding heads of agreement (“HOA”) with Siburan Resources Limited (“SBU”) (“Purchaser”), an Australian public-listed company which is a West-Australian based exploration company with tungsten and gold projects in Australia, New Zealand and Papua New Guinea.
The HOA entails the acquisition by SBU of 100,000,000 existing ordinary shares of USD0.10 each (“Sale Shares”) representing 16.67% of the issued capital of CAP from Guotai International Holding Limited, for a total purchase consideration of RM60,000,000 representing a purchase price of RM0.60 per CAP share.
To satisfy the purchase consideration of RM60,000,000, SBU shall issue to Guotai and/or its nominees 417,360,000 fully paid ordinary shares in the capital of SBU or equivalent to 62.5% stake in SBU (after the acquisition) at an issue price of $0.05 per share, which is equal to the Australian dollar equivalent of RM60,000,000.
Siburan is one of those typical Australian listed mining company, tiny and loss making, often based in Perth. Someone "in the know" told me there are hundreds of those.
A few things are rather odd about this proposed deal.
First of all CAP's shares are priced at a huge premium (RM 0.60), while Siburan's shares are priced at market value (AUD 0.05), why?
Secondly, what is the synergy between a Chinese car parts maker and an Australian listed mining company? I don't quite get it.
Thirdly, Siburan has a marketcap of only AUD 14.6M or RM 42M. To buy over shares worth RM 60M, it has to issue an enormous amount of shares, 417M to be exact, while currently there are only 239M issued.
Fourthly, Siburan (while not even holding enough shares to equity account CAP's earnings, for that it needs to own at least 20% of CAP's shares), will be some sort of holding company for these shares.
In other words, there will be a large group of investors (mostly Australians), who own shares in Australia listed company Siburan, which act as a holding company for 16.7% of the shares of Bursa Malaysia listed CAP, which owns a Bermuda listed company, with all of its operations based in China. By the way, the 16.7% might get diluted in a later stage due to a massive 300M warrants that are outstanding for CAP.
Fifthly, shares of CAP went up, from about RM 0.34 to RM 0.42, interesting because for CAP hardly anything will change, except that one major shareholder will sell some of his shares to a new large shareholder, who will appoint one director of CAP.
To me, it all doesn't make any sense at all. But then again, getting Chinese companies listed on Bursa never made any sense to me, so that should not come as a surprise to the readers.
The Company wishes to announce that it has been informed by its major shareholder, namely Guotai International Holdings Limited (“Guotai”) (“Vendor”), via its letter dated today that it had entered into a conditional binding heads of agreement (“HOA”) with Siburan Resources Limited (“SBU”) (“Purchaser”), an Australian public-listed company which is a West-Australian based exploration company with tungsten and gold projects in Australia, New Zealand and Papua New Guinea.
The HOA entails the acquisition by SBU of 100,000,000 existing ordinary shares of USD0.10 each (“Sale Shares”) representing 16.67% of the issued capital of CAP from Guotai International Holding Limited, for a total purchase consideration of RM60,000,000 representing a purchase price of RM0.60 per CAP share.
To satisfy the purchase consideration of RM60,000,000, SBU shall issue to Guotai and/or its nominees 417,360,000 fully paid ordinary shares in the capital of SBU or equivalent to 62.5% stake in SBU (after the acquisition) at an issue price of $0.05 per share, which is equal to the Australian dollar equivalent of RM60,000,000.
Siburan is one of those typical Australian listed mining company, tiny and loss making, often based in Perth. Someone "in the know" told me there are hundreds of those.
A few things are rather odd about this proposed deal.
First of all CAP's shares are priced at a huge premium (RM 0.60), while Siburan's shares are priced at market value (AUD 0.05), why?
Secondly, what is the synergy between a Chinese car parts maker and an Australian listed mining company? I don't quite get it.
Thirdly, Siburan has a marketcap of only AUD 14.6M or RM 42M. To buy over shares worth RM 60M, it has to issue an enormous amount of shares, 417M to be exact, while currently there are only 239M issued.
Fourthly, Siburan (while not even holding enough shares to equity account CAP's earnings, for that it needs to own at least 20% of CAP's shares), will be some sort of holding company for these shares.
In other words, there will be a large group of investors (mostly Australians), who own shares in Australia listed company Siburan, which act as a holding company for 16.7% of the shares of Bursa Malaysia listed CAP, which owns a Bermuda listed company, with all of its operations based in China. By the way, the 16.7% might get diluted in a later stage due to a massive 300M warrants that are outstanding for CAP.
Fifthly, shares of CAP went up, from about RM 0.34 to RM 0.42, interesting because for CAP hardly anything will change, except that one major shareholder will sell some of his shares to a new large shareholder, who will appoint one director of CAP.
To me, it all doesn't make any sense at all. But then again, getting Chinese companies listed on Bursa never made any sense to me, so that should not come as a surprise to the readers.
Subscribe to:
Posts (Atom)