Companies

Do investors overvalue firms with bloated balance sheets? Noble overstated commodity values by at least $3.8 bln – Iceberg Research

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A helpful critical thinking framework relevant for Noble Group, as well as many of the S-chips that include China Environment, the company that Terence, Roy, Shan Rui, Ronald, John have wrote and discussed about.

http://www.sciencedirect.com/science/article/pii/S0165410104000795

Journal of Accounting and Economics Volume 38, December 2004, Pages 297–331

Do investors overvalue firms with bloated balance sheets? 

David Hirshleifer, Kewei Hou, Siew Hong Teoh, , Yinglei Zhang

Abstract

When cumulative net operating income (accounting value-added) outstrips cumulative free cash flow (cash value-added), subsequent earnings growth is weak. If investors with limited attention focus on accounting profitability, and neglect information about cash profitability, then net operating assets, the cumulative difference between operating income and free cash flow, measures the extent to which reporting outcomes provoke over-optimism. During the 1964–2002 sample period, net operating assets scaled by total assets is a strong negative predictor of long-run stock returns. Predictability is robust with respect to an extensive set of controls and testing methods. Continue reading →

Noble Group: Fair Values and Operating Cash Flows (Iceberg Report Part 2)

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Part 1: https://asianextractor.com/2015/02/16/noble-group-a-repeat-of-enron-iceberg-research/

Related post: https://asianextractor.com/2015/02/26/do-investors-overvalue-firms-with-bloated-balance-sheets-noble-overstated-commodity-values-by-at-least-3-8-bln-iceberg-research/

HK SFC action against China Metal Recycling for accounting fraud serves as test case for HK laws involving mainland China firms

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http://www.scmp.com/print/business/china-business/article/1721878/sfc-action-against-cmr-serves-test-case-hk-laws-involving

SFC action against CMR serves as test case for HK laws involving mainland China firms

Monday, 23 February, 2015, 8:37pm

Reuters

A victory for the regulator will set the scene for a tough battle by HK-appointed liquidators to secure China Metal Recycling’s mainland assets

The Securities and Futures Commission is set to take landmark legal action today against China Metal Recycling (Holdings) in a court case that will test laws to sanction mainland Chinese firms listed in the city. The securities regulator forced China Metal Recycling, which describes itself as the country’s biggest recycler of scrap metal, into provisional liquidation in July 2013, alleging it had found evidence of accounting fraud. The action was the first time the regulator used a special provision of the securities law, designed to protect investors, in the case of a listed firm. Today, the SFC will go before the High Court to wind up the company with the aim of recovering as much value as possible for shareholders and creditors.

“This is a critical test for the SFC,” said Michael Cheng, the Asian Corporate Governance Association’s research director for mainland China and Hong Kong. “What the SFC has to demonstrate is that regardless of where a company is incorporated, or where its assets are located, the regulator will go after it.” Continue reading →

Potential Accounting Tunneling Fraud at China Environment? (Part 3)

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Part 1: https://asianextractor.com/2015/02/10/potential-accounting-tunneling-fraud-at-china-environment/ Part 2: https://asianextractor.com/2015/02/17/potential-accounting-tunneling-fraud-at-china-environment-part-2/

Sebi bans company in Rs 1,700cr rigging case

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http://timesofindia.indiatimes.com/business/india-business/Sebi-bans-company-in-Rs-1700cr-rigging-case/articleshow/46317826.cms

Posted by LAM Xin Hui, Year 4 undergrad at the School of Accountancy, Singapore Management University

The Times of India

Feb 21, 2015, 12.35AM IST

NEW DELHI: The Securities & Exchange Board of India (Sebi) on Friday banned trading in little-known Kamalakshi Finance, while imposing restrictions on 33 entities, for what it believes was price manipulation of the order of Rs 1,700 crore, making it the 27th company where trading has been suspended. The move is part of Sebi’s efforts to check possible misuse of stock market trades to ramp up prices of shares allotted through preferential allotment. Continue reading →

Stock Manipulation: Noble Explochem

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http://www.moneylife.in/article/stock-manipulation-noble-explochem/40521.html

Stock Manipulation: Noble Explochem

19 February 2015

Moneylife

Despite no business activity since 2006, in just over a year, the price of Nobel Explochem shot up by 1235%

Established in 1982, Noble Explochem (Noble) was a leading manufacturer of nitro-glycerine-based explosives. In April 2004, the government prohibited the possession, sale and use of nitro-glycerine-based explosives, leading Noble to discontinue its manufacturing activities. Continue reading →

Directors of London-quoted Chinese sports shoe maker Naibu have been forced to admit that they have lost all contact with the company’s chairman and senior executive, in the latest controversy to hit Aim

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http://www.ft.com/intl/cms/s/0/a5b43b32-b790-11e4-8807-00144feab7de.html#axzz3SA7rKDH3

February 18, 2015 6:30 pm

Sports shoe maker loses track of bosses

Miles Johnson and Harriet Agnew

Directors of London-quoted Chinese sports shoe maker Naibu have been forced to admit that they have lost all contact with the company’s chairman and senior executive, in the latest controversy to hit Aim. Naibu, which once said it was China’s 10th largest sportswear brand, listed four years ago on Aim — the London Stock Exchange’s market for fast-growing but often high-risk companies, which was once labelled “a casino” by US regulators. Continue reading →

Iceberg cool to MAS review of its report; “we use public financial information, which should simplify the review process.”

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http://www.businesstimes.com.sg/companies-markets/iceberg-cool-to-mas-review-of-its-report

Iceberg cool to MAS review of its report

Andrea Soh

19 February 2015

Business Times Singapore

Noble Group welcomes the investigation, vows to fully cooperate

ICEBERG Research, whose report on commodity trading firm Noble Group is now under investigation by the Monetary Authority of Singapore (MAS), took to the development coolly, even while Noble welcomed the review. “It is perfectly normal that the regulators review our report,” it said in an e-mailed response to BT’s queries. “As many people have remarked, we use public financial information, which should simplify the review process.” Continue reading →

Jack Ma Says Alibaba At ‘Most Critical Moment’ As China Starts New Investigation

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http://www.forbes.com/sites/gordonchang/2015/02/15/jack-ma-says-alibaba-at-most-critical-moment-as-china-starts-new-investigation/print/

Gordon G. ChangContributor

WORLD AFFAIRS 2/15/2015 @ 12:20PM 20,219 views

Jack Ma Says Alibaba At ‘Most Critical Moment’ As China Starts New Investigation

After authorities accused Alibaba of allowing illegal actions on its shopping platform, Jack Ma said he does not want the site to be seen as a hub for fake products. (AFP PHOTO)

On Friday, China’s powerful National Development and Reform Commissionannounced it was probing e-commerce businesses to ensure a “fair” market. The NDRC said it would “organize and develop special inspections into the online retail sector’s pricing behavior,” especially the practice of inflating prices before reducing them in special offers. The agency also stated it will investigate holiday pricing. Although the state regulator did not name targets, news organizations fingered Alibaba Group Holding, the giant founded by Jack Ma, and JD.com. Of the two, Alibaba, due to its business model, appears to be the focus of the probe. The references to fake special offers and pricing around holidays put Singles’ Day, Alibaba’s November 11 extravaganza, into the crosshairs. Merchants selling on Alibaba’s platforms are widely known to engage in deceptive pricing practices, particularly around that day. Continue reading →

Troubled Chinese developer Kaisa in hidden off-balance sheet debt accounting scandal; told foreign bond investors that it faces a $10.4bn debt load-more than double the amount it previously disclosed

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http://www.wsj.com/articles/kaisa-appeals-to-offshore-creditors-to-contact-firms-financial-adviser-1424067331

http://www.scmp.com/print/business/companies/article/1714531/china-developer-kaisa-halts-share-trading-pending-announcement

Kaisa Discloses Much Higher Debt Burden

Troubled Chinese Developer Pushes Foreign Bond Investors to Cut a Deal

ESTHER FUNG

Updated Feb. 16, 2015 7:44 a.m. ET

SHANGHAI—Troubled Chinese property developer Kaisa Group Holdings Ltd. told foreign bond investors Monday that it faces a US$10.4 billion debt load—more than double the amount it previously disclosed—and pressed them to cut a deal to avert a blow to its operations.

The disclosure is likely to increase investor fears over Chinese property developers and their potential exposure to nontraditional debt that may be held off their balance sheets. It also renews questions about Kaisa’s fate just a week after it struck a 4.55 billion Hong Kong-dollar (US$587 million) deal with another property developer that appeared to address many of its problems. Continue reading →