News

Chen Hsong (0057): majority shareholder votes Chiang Chi Kin, brother of Chairman, off the board at AGM
Company announcement, 22-Aug-2019
The announcement fails to state whether there is any disagreement between Mr Chiang and other directors and/or other matters to be brought to shareholders' attention. At the time of the annual report, he and his sister Chiang Lai Yuen (Chairman) were directors of the majority shareholder, Chen Hsong Investment Ltd, which is 100% held by Chiangs' Industrial Holdings Ltd, of which Ms Chiang was a director. In turn, this is held by the trustee of the Chiang Chen Industrial Charity Foundation. The 2 siblings were among eligible beneficiaries of the trust via BVI companies that they own.
Chen Hsong (0057): co has no plan to consider any privatisation proposal, none has been put forward
Company announcement, 22-Aug-2019
At this afternoon's AGM, David Webb asked whether the company consulted the majority shareholder before making this statement. The answer was "no". So this statement does not rule out the possibility that the majority shareholder is considering putting forward a proposal to the board. The meeting was video-recorded (but not webcast) by the company with 4 cameras, so the media can ask them for a copy. It's a public company after all.
Webb on HK protests and China: a 1-hour podcast
Hidden Forces, 19-Aug-2019
Recorded at 9pm HKT on 16-Aug-2019, a wide-ranging discussion on the unsustainability of HK's model of civil liberties without democracy and the possible outcomes, as well as the unsustainability of the centrally-planned Chinese economic model.
Cathay Pacific (0293) management changes
Company media release, 16-Aug-2019
This is the most appalling kowtow to Peking, dressed up as a "flight safety" issue. Every substantial employer in HK, in both the public and private sectors, has employees who have participated in marches that have frequently gone beyond their approved spatial or time limits. Should all the CEOs resign? What did the PRC Government threaten Swire and Cathay with to make these sacrificial offerings at this "sensitive time", as they put it? CX says recent events have "put our reputation and brand under pressure" - but tonight's shameful appeasement does far worse.
"Long Hair" gets short cut to final appealJustice is blind, except for haircuts
HK Court of Final Appeal, 13-Aug-2019
Mr Leung is granted leave for a final appeal to be heard on 18-Feb-2020. More people in wigs will hear his plea that male and female prisoners should have the same rule on haircuts. The UK removed the different treatment by 1999, as we reported last year in "Justice is blind, except for haircuts", after the Court of Appeal overturned the First Instance judgment which was in his favour.
HKICPA fines HLB Hodgson Impey Cheng Ltd, Yu Chi Fat & Shek Lui HK$60k
HKICPA, 2-Aug-2019
The 2013 accounts of China Creative Digital Entertainment (8078) stuffed an investment loss below the line, in comprehensive income, rather than running the impairment through profit and loss, thereby understating the loss for the year.
Censure of Liang Jianheng, ex-Chairman of Wan Cheng Metal Packaging (8291)
SEHK, 29-Jul-2019
For breaching the Listing Rule which required him to remain as a controlling shareholder until 12 months after listing. In fact he had undertaken in the IPO underwriting agreement to remain as a controller for 54 months.
HKICPA bans Constant Mo Kong Fung for 2 years and fines him HK$80k
HKICPA, 26-Jul-2019
For audit deficiencies and for creating new working papers after the audit report date and making false statements to the Practice Reviewer, all of which he admits.
HKICPA fines Lie Kong Sang and PwC HK$50k
HKICPA, 25-Jul-2019
For their audit of Modern Beauty Salon (0919) in 2006-2009, where pre-paid contract revenue was recognised in breach of accounting standards. The case was referred by the Financial Reporting Council.
Arthur Shek Kang Chuen resigns as ED of HKET (0423)POO section 26
Company announcement, 23-Jul-2019
Webb-site founder David Webb owns over 6% of HKET. Last night he told the newspaper that he would call for Mr Shek's resignation at the AGM on Friday, and hoped that the University of HK, which owns 10%, would agree. At a rally on 20-Jul, Mr Shek advocated beating protesters with canes or 20mm plastic pipes, He has apologised and retracted, but too late for those injured in Yuen Long on Sunday. Incitement at a public gathering of violence causing physical injury breaches Section 26 of the Public Order Ordinance. He should be prosecuted.
4 charged with conspiracy to defraud over bonds placement of Convoy (1019)SFC announcement
ICAC, 22-Jul-2019
Allegedly, over a 3.5 year period, Convoy Investment Services (CIS), in which Mark Mak Kwong Yiu and 2 other EDs of Convoy held substantial shareholdings, acted as a hidden connected placing agent for bond issues, using Gransing Securities as a front. We note that in 2015, CIS applied for a listing on GEM which lapsed. It was then a partial subsidiary of a BVI company which was 35.06% owned by Quincy Wong Lee Man, 29.62% by Mr Mak and 20.71% by Shin Kin Man, Wong and Shin, both EDs of Convoy, are not charged today.
Christie Chan Lai Yee & Byron Tan Ye Kai charged with conspiracy to defraudSFC announcement
ICAC, 22-Jul-2019
Slowly but not surely, the Enigma Network is being decoded. Co-conspirator Roy Cho Kwai Chee was charged in the same matter on 16-May. Ms Chan is an ED (duties suspended since 8-Dec-2017) of Convoy (1019). Mr Tan resigned as an ED on 6-Jan-2018. Ms Chan faces a charge in a separate case announced today.
APAC Resources (1104): extension of loan to unnamed partyCWT announcement
Company announcement, 19-Jul-2019
APAC again fails to name the borrower and worse, it fails to disclose that the original loan was in default. The company joins its controlling shareholders Allied Group (0373) and Allied Props (0056) and Allied Props' subsidiary SHK (0086) in extending the loan to CWT (0521) along with an unnamed new "Lender F".
Allied Group (0373), Allied Props (0056), SHK (0086): extension of loanCWT announcement
Company announcement, 19-Jul-2019
This again fails to name the borrower, which we have previously identified as CWT (0521), part of HNA Group. Even worse, they fail to disclose that the borrower has defaulted on the original loan facility, as CWT announced on 16-Apr-2019. The total loan amount is increased by 17.14% by each lender, covering the accumulated interest, and an additional unnamed "Lender F" is introduced, raising the loan facility to HK$1640m.
Court sets pre-trial review for unlicensed activities prosecution
SFC, 18-Jul-2019
The SFC alleges that on or around 8-Jan-2013, Brilliance Capital Management Ltd held itself out to an unnamed company as a corporate finance advisor without a licence. We don't know why it took them over 6 years to commence prosecution.
SFC fines Glory Sun Securities Ltd HK$1.2m, suspends current and former ROs
SFC, 15-Jul-2019
The firm is a partly-owned subsidiary of Glory Sun Financial (1282). The firm's controls were ineffective to prevent naked short-selling by an account executive, Hui Kwok Piu.

Our stories

Why Carrie Lam must go
The "suspension" of the Extradition Bill, which will likely lapse in July 2020, is not the end of an increasing erosion of HK's autonomy. With a rubber-stamp legislature, the only thing that now prevents draconian legislation is massive public pressure. Mrs Lam has irrevocably lost the public trust. Beijing will hold her accountable for the loss of control last week, after a suitable interval to disconnect the issues, but this will not prevent the increasing erosion of HK's autonomy. (16-Jun-2019)
The Trump Dump: war-gaming the next move against China
The US Administration has so far focused entirely on the trade account, but when the potential for tariffs is exhausted, if not sooner, Trump may start to wonder why US funds have hundreds of billions of dollars invested in stocks and bonds of Chinese state-backed companies, and use OFAC powers to order them to divest. (2-Jun-2019)
Andrew Fan, Universal INED
A quick look at tomorrow's new listing sees an INED taking his 10th board seat. In our view, he should have found time to check his prospectus biography more carefully. (15-May-2019)
Stop the Scripless U-turn
Investors were in the dark for 4 years about plans to tear up a model that was first recommended by the Hay Davison Report in 1988, has worked in Australia since 1999, and was legislated in HK in 2015 but never actioned. Our extensive discussions with SFC and HKEX reveal no legitimate issues. We urge legislators to reject this U-turn and the SFC to proceed with the legislated model. The stench of vested interests is overpowering. (30-Apr-2019)
Putting the dot back in HK
A deep dive into HK's "not-for-profit" internet domain registry reveals appalling governance, over-charging, continuing conflicts of interests and a severe case of corporate obesity. In late 2015, having hoarded enough cash to run the registry for 9 years, the Government-controlled board reversed a fee cut, losing a quarter of registered domains over the next 3 years, while seeking ways to squander the surpluses on mission-creep rather than return the cash to users. There is a better way. (25-Apr-2019)
SFC action is too little, too late for minority shareholders of Luxey (8041)
The SFC seeks disqualification of 2 ex-directors, but fails to seek any recovery of Luxey's HK$350m, 7-fold overpayment in an acquisition from an alleged nominee of then Chairman Joseph Lau. We first documented this case and numerous other suspicious transactions involving Luxey and other listed companies in a series of articles in 2012. This is the only one to see any action, and it falls far short of what is needed to provide a deterrent. (14-Apr-2019)
Hopewell and the lemon discount
What does the ability to take a company private for 57 cents on the dollar say about the future of HK's public market? Failure to reform HK's laws and regulations to improve the corporate governance framwork will see the market shrink over time as good companies stay away and controllers take existing companies private. (22-Mar-2019)
Inside the Kingdee bubble
It appears to be a Shenzhen success story, conquering the World with the "Chinese management model", but we burn through the techno-fog of the disclosures and dig deep inside the accounts. You won't like what you see. (18-Mar-2019)
Revealed: SFC probes Chairman, CEO of Hua Han Health (0587), freezes their accounts
The SFC has frozen accounts at 3 brokerages up to HK$3.81bn, the amount raised by HHH in 2015 in an open offer ($3.19bn) and a CB ($0.62bn) issued to Huarong (2799) and CCB (0939). The SFC suspects false or misleading statements and misappropriation of part of the proceeds. (16-Feb-2019)
A simpler, fairer tax system
There are calls for a rental deduction for HK salaries tax, to compensate for the mortgage interest deduction. Both miss the point. Governments should not use tax breaks to distort consumer choice. Give people unconditional higher personal allowances instead, and introduce a flat rate of tax above that. Also, abolish the tiered rate of profits tax and the R&D deduction, 2 gimmicks introduced by Carrie Lam. (30-Jan-2019)
Why stock-plunges happen so often in HK
We explain the 20-year history to a statutory loophole which keeps investors in the dark on share pledges. (24-Jan-2019)

Other news

Chen Hsong (0057): majority shareholder votes Chiang Chi Kin, brother of Chairman, off the board at AGM
Company announcement, 22-Aug-2019
The announcement fails to state whether there is any disagreement between Mr Chiang and other directors and/or other matters to be brought to shareholders' attention. At the time of the annual report, he and his sister Chiang Lai Yuen (Chairman) were directors of the majority shareholder, Chen Hsong Investment Ltd, which is 100% held by Chiangs' Industrial Holdings Ltd, of which Ms Chiang was a director. In turn, this is held by the trustee of the Chiang Chen Industrial Charity Foundation. The 2 siblings were among eligible beneficiaries of the trust via BVI companies that they own.
Chen Hsong (0057): co has no plan to consider any privatisation proposal, none has been put forward
Company announcement, 22-Aug-2019
At this afternoon's AGM, David Webb asked whether the company consulted the majority shareholder before making this statement. The answer was "no". So this statement does not rule out the possibility that the majority shareholder is considering putting forward a proposal to the board. The meeting was video-recorded (but not webcast) by the company with 4 cameras, so the media can ask them for a copy. It's a public company after all.
Webb on HK protests and China: a 1-hour podcast
Hidden Forces, 19-Aug-2019
Recorded at 9pm HKT on 16-Aug-2019, a wide-ranging discussion on the unsustainability of HK's model of civil liberties without democracy and the possible outcomes, as well as the unsustainability of the centrally-planned Chinese economic model.
Cathay Pacific (0293) management changes
Company media release, 16-Aug-2019
This is the most appalling kowtow to Peking, dressed up as a "flight safety" issue. Every substantial employer in HK, in both the public and private sectors, has employees who have participated in marches that have frequently gone beyond their approved spatial or time limits. Should all the CEOs resign? What did the PRC Government threaten Swire and Cathay with to make these sacrificial offerings at this "sensitive time", as they put it? CX says recent events have "put our reputation and brand under pressure" - but tonight's shameful appeasement does far worse.
"Long Hair" gets short cut to final appealJustice is blind, except for haircuts
HK Court of Final Appeal, 13-Aug-2019
Mr Leung is granted leave for a final appeal to be heard on 18-Feb-2020. More people in wigs will hear his plea that male and female prisoners should have the same rule on haircuts. The UK removed the different treatment by 1999, as we reported last year in "Justice is blind, except for haircuts", after the Court of Appeal overturned the First Instance judgment which was in his favour.
HKICPA fines HLB Hodgson Impey Cheng Ltd, Yu Chi Fat & Shek Lui HK$60k
HKICPA, 2-Aug-2019
The 2013 accounts of China Creative Digital Entertainment (8078) stuffed an investment loss below the line, in comprehensive income, rather than running the impairment through profit and loss, thereby understating the loss for the year.
Censure of Liang Jianheng, ex-Chairman of Wan Cheng Metal Packaging (8291)
SEHK, 29-Jul-2019
For breaching the Listing Rule which required him to remain as a controlling shareholder until 12 months after listing. In fact he had undertaken in the IPO underwriting agreement to remain as a controller for 54 months.
HKICPA bans Constant Mo Kong Fung for 2 years and fines him HK$80k
HKICPA, 26-Jul-2019
For audit deficiencies and for creating new working papers after the audit report date and making false statements to the Practice Reviewer, all of which he admits.
HKICPA fines Lie Kong Sang and PwC HK$50k
HKICPA, 25-Jul-2019
For their audit of Modern Beauty Salon (0919) in 2006-2009, where pre-paid contract revenue was recognised in breach of accounting standards. The case was referred by the Financial Reporting Council.
Arthur Shek Kang Chuen resigns as ED of HKET (0423)POO section 26
Company announcement, 23-Jul-2019
Webb-site founder David Webb owns over 6% of HKET. Last night he told the newspaper that he would call for Mr Shek's resignation at the AGM on Friday, and hoped that the University of HK, which owns 10%, would agree. At a rally on 20-Jul, Mr Shek advocated beating protesters with canes or 20mm plastic pipes, He has apologised and retracted, but too late for those injured in Yuen Long on Sunday. Incitement at a public gathering of violence causing physical injury breaches Section 26 of the Public Order Ordinance. He should be prosecuted.
4 charged with conspiracy to defraud over bonds placement of Convoy (1019)SFC announcement
ICAC, 22-Jul-2019
Allegedly, over a 3.5 year period, Convoy Investment Services (CIS), in which Mark Mak Kwong Yiu and 2 other EDs of Convoy held substantial shareholdings, acted as a hidden connected placing agent for bond issues, using Gransing Securities as a front. We note that in 2015, CIS applied for a listing on GEM which lapsed. It was then a partial subsidiary of a BVI company which was 35.06% owned by Quincy Wong Lee Man, 29.62% by Mr Mak and 20.71% by Shin Kin Man, Wong and Shin, both EDs of Convoy, are not charged today.
Previously on Webb-site.com
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