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Consumer Staples

Zhongguo Jilong (ZJL SP)

Year: 2006

Chinese food and beverage company Zhongguo Jilong listed on the Singapore exchange in 2004. Financial performance began to disappoint almost immediately, with profits falling 46% in FY05 YoY. In December 2006, the company issued a profit warning relating to inventory impairment which appeared to trigger a debt covenant. Thereafter followed a series of director resignations. In February 2007, the company requested a trading suspension and announced that its auditors had found irregularities relating to FY06 financials. The company never resumed trading. Zhongguo Jilong is a confirmed fraud. Its FY04 financials triggered our Fake Cash Flow Fraud model and Beneish's M-Score for profit manipulation. We think it faked profits in order to raise capital and then embezzled the proceeds. Fake profits were likely parked primarily in inventories but loans also appear to have been understated.

Last updated February 2022

The information on this page has been compiled from publicly available sources. GMT Research Limited has not verified the information and does not warrant its accuracy. Any claims made or views expressed are not necessarily those of GMT Research Limited.

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