In assessing the accounting risk at the top 100 companies in Asia ex-Japan, our analysts highlight 36 companies with high risk, and short-list six where it is acute. We have previously written on four of these (CCC, CKH, Ctrip, and Sinopharm) and are in the process of following up with management at Gree and Mengniu Dairy. Furthermore, our quantitative scoring system highlights a further five companies with risky accounting, including Mahindra & Mahindra, New Oriental Education, Alibaba, Hikvision and Amcor. The report includes write-ups of all 100 companies with links to our screen and published financials. GET PDF VIEW SLIDES…
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Research
Insights
IN-BRIEF: CHINESE SPORTSWEAR
Another one bites the dust
Gillem Tulloch · 13 September 2018
Yet another sportswear company has blown up. In June, Hosa’s share price mysteriously collapsed 90% in a day. It has since been targeted by a short-seller, delayed its dividend, failed to submit interim financials and is now suspended. Hosa’s financials have similar traits to the nine previous frauds highlighted in our recent report on the Chinese sportswear sector, lending credibility to our argument that companies faking their sales have a unique set of financial characteristics. Furthermore, background research shows that many of Hosa’s management had links to companies embroiled in past scandals. We have devised a slightly more generic scan…
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IN-BRIEF: COMPLICIT AUDITORS
PWC gives Sunac and R&F a free pass
Nigel Stevenson · 29 August 2018
Imagine if fund managers could immediately revalue new investments to what they considered fair value. It would make a mockery of the industry and be considered unethical. In RARE circumstances, such as a forced sale, accounting rules allow buyers to book an immediate gain on the revaluation of acquired assets. Unfortunately, highly indebted Hong Kong audited companies are using this loophole to inflate their profits and equity. PWC has set the benchmark by allowing Sunac and R&F Properties to push through questionable revaluations of acquired assets. Incidentally, embattled commodities trader, Noble Group used similar gains on acquisitions to pad its…
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A&G MASTER SCREEN
New Product Launch
Gillem Tulloch · 23 August 2018
We’re pleased to launch our Accounting & Governance (A&G) Master Screen, a major new addition to our product line-up. This enables users to evaluate portfolio accounting risk, and to search for companies with specific accounting traits. A significant development is the introduction of positive accounting flags, as opposed to negative ones. This will, hopefully, help users find companies with desirable accounting traits, not just problematic ones. The screen has been pre-loaded with over 10,000 companies globallly, based on the latest year-end scores from six of our accounting modules, including Profit Manipulation (Beneish and Montier), Fake Cash Flow, Excess Capital, Acquisition Accounting and Debt…
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