If HKEX proceeds with an ill-conceived Listing Rule change, companies with disclaimed audit reports for 2019 will be suspended and likely delisted, victimising minority shareholders. We now list those with disclaimed audits up to 30-Jun-2018 which would be affected if the rule applied today. Make your submission to stop this nonsense!

41 endangered stocks
17 November 2018

In our article HKEX: shoot patients to prevent illness (30-Sep-2018) we opposed HKEX's proposed changes to the Listing Rules which would allow it to suspend and subsequently delist companies which receive a disclaimed audit opinion. Our reasons are in the first article, so we won't repeat them here. The deadline for submissions to HKEX on the proposals is soon, 30-Nov-2018. Together, these 2 articles consitute our submission. You can make your submsission using the questionnaire here or simply by dropping an email to response@hkex.com.hk.

We noted in the first article that HKEX failed to include a list of companies that would have been affected if the policy was already in effect. We invited readers to find them. A number of readers sent us contributions to the following list, which we have enhanced and verified - a special shoutout to the team over at Gekko Lab, which got most of it right.

We exclude stocks which are already in long-term suspension. If the proposed rule is adopted and the companies don't obtain (perhaps by opinion-shopping) a non-disclaimed audit report for their financial year commencing on or after 1-Jan-2019, then they will be suspended. That means we could see the first casualties by 31-Mar-2020 when the 2019 results are due.

It's worth noting that in HKEX's own survey, there were 43 companies (not in long-term suspension) with disclaimed audit opinions in 2017, of which 24 had received disclaimers for 2 or more consecutive years. So the average prospects for a company getting off the endangered list in 2019 are not great. Without further ado, the current 41 endangered stocks that we can identify with a disclaimed audit opinion in the latest financial year are:

Name Auditor Year
0030 Ban Loong Hldgs Ltd HLB 18-03
0061 Green Leader Hldgs Grp Ltd Crowe 17-12
0065 Grand Ocean Advanced Resources Co Ltd BDO 17-12
0110 China Fortune Hldgs Ltd BDO 17-12
0186 Nimble Hldgs Co Ltd Moore Stephens 18-03
0228 China Energy Development Hldgs Ltd BDO 17-12
0351 Asia Energy Logistics Grp Ltd BDO 17-12
0353 Energy International Investments Hldgs Ltd BDO 17-12
0399 Innovative Pharmaceutical Biotech Ltd BDO 18-03
0632 Pearl Oriental Oil Ltd Cheng & Cheng 17-12
0651 China Ocean Industry Grp Ltd Asian Alliance 17-12
0673 China Health Grp Ltd Elite 18-03
0702 Sino Oil and Gas Hldgs Ltd BDO 17-12
0809 Global Bio-Chem Technology Grp Co Ltd Mazars 17-12
0845 Glorious Property Hldgs Ltd PwC 17-12
0858 Extrawell Pharmaceutical Hldgs Ltd BDO 18-03
0875 China Finance Investment Hldgs Ltd Elite 17-12
0918 State Energy Grp International Assets Hldgs Ltd Cheng & Cheng 18-03
0948 Alpha Professional Hldgs Ltd Crowe 18-03
0959 Amax International Hldgs Ltd Elite 18-03
1007 Longhui International Hldgs Ltd** HLB 17-12
1068 China Yurun Food Grp Ltd Moore Stephens 17-12
1101 China Huarong Energy Co Ltd PwC 17-12
1103 Shanghai Dasheng Agriculture Finance Technology Co Ltd BDO 17-12
1106 Sino Haijing Hldgs Ltd Mazars 17-12
1192 Titan Petrochemicals Grp Ltd Elite 17-12
1227 National Investments Fund Ltd HLB 17-12
1393 Hidili Industry International Development Ltd Zhonghui 17-12
1400 Moody Technology Hldgs Ltd Zhonghui 17-12
2700 Green International Hldgs Ltd HLB 17-12
3889 Global Sweeteners Hldgs Ltd Mazars 17-12
3963 China Rongzhong Financial Hldgs Co Ltd BDO 18-03
8026 China Brilliant Global Ltd HLB 18-03
8029 Sun International Grp Ltd* Andes Glacier 18-03
8090 China Assurance Finance Grp Ltd BDO 17-12
8132 China Oil Gangran Energy Grp Hldgs Ltd HLM 18-03
8153 Code Agriculture (Hldgs) Ltd Elite 18-03
8202 Inno-Tech Hldgs Ltd Elite 18-06
8271 Global Digital Creations Hldgs Ltd Deloitte 17-12
8272 Chinese Food and Beverage Grp Ltd Asian Alliance 17-12
8331 HangKan Grp Ltd Elite 17-12

* Sun International Group Ltd (8029) was the only one to achieve the accolade of "adverse opinion" - that is, the auditors didn't just disclaim their opinion, but opined that the financial statements do not give a true and fair view.

** Longhui (formerly Daqing Dairy) has recently completed a Reverse Takeover and new listing application, so it may leave the list when its 2018 results are published.

Click the names to find their past financial statements back to 2002. If we have missed any companies on the endangered list, let us know.

© Webb-site.com, 2018

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