Caixin
Caixin Global – Latest China News & Headlines

Home >

ABOUT US

CX Tech is Caixin Global's real-time tech news portal, featuring 24-hour news, short-form analysis, and roundups from business and tech media in China.

TRENDING
In Depth: What’s in the China-U.S. Tariff Truce, and What’s Left Unsettled
LATEST
ByteDance, Tencent Rush to Launch Personal AI Agents After Meta’s Muse Success
Luxshare, Foxconn Among Firms Targeted in U.S. Power System Probe
CXMT Shares Suffer Biggest Drop Since July IPO
Xiaohongshu Pushes Further Into Gaming, Anime With Bigger Festival
In Depth: What’s in the China-U.S. Tariff Truce, and What’s Left Unsettled
AI to Drive Expansion in Cyberattacks, Industry Execs Warn
AI Boom Faces Growing Threat From Climate Change, Researcher Says
AI Boom Redraws Global Tech Map, Industry Executives Say
Chinese Phone-Makers Raise Prices of Flagship Models as Memory Costs Surge
Qualcomm China Chief Sees Country Well Placed for AI Device Race
Tencent to Shut Down QClaw Assistant in Enterprise AI Push
DJI and Insta360’s Battle for Gimbal Camera Market Comes at a Cost
From Chips to Laptops: Alibaba Accelerates Full-Stack AI Ambitions
China’s Open-Source AI Could Narrow Global Income Gap, Economist Says
Embodied AI Startup Paxini Kicks Off Mainland IPO Bid Amid Sector Volatility
Alibaba Unveils New AI Chip as Cloud Infrastructure Push Deepens
Xiaomi Steps Up AI Investment With New Models
AI Firm SiliconFlow Raises New Funds
China Seeks to Protect Minors With Proposed AI Rules
Chinese Smartphone Makers Bet on AI Agents to Revive Demand
Market Rattled by Kangmei’s $4.4 Billion Accounting Error

By Wang Juanjuan and Han Wei / May 01, 2019 12:37 AM / Finance

Photo: VCG

Photo: VCG

Shares and bonds of one of China’s largest listed drugmakers tumbled Tuesday after the company restated 29.9 billion yuan ($4.4 billion) of 2017 results, fueling suspicions of fraud.

Shanghai-listed Kangmei Pharmaceutical Co. Ltd., a producer of traditional Chinese medicines, said in a filing that there were multiple “accounting errors” in its 2017 results, leading to 29.9 billion yuan overstatement of the company’s cash holding. Late last year, Kangmei said it was investigated by securities regulators for suspected violations of information disclosure rules.

Kangmei’s stock, a component of MSCI Inc.’s global indexes, slumped by the 10% daily limit. The company’s bonds fell by 20%.

Several audit professionals said they were concerned that there may be problems in Kangmei’s financials beyond accounting errors, given the vague language and lack of logic in its correction statement. They said they suspected the company may have intentionally inflated its cash holding and inventories to boost profit.

Guangfa Securities and GP Certified Public Accountants Co. Ltd. have served in Kangmei’s financial and accounting operations.

Kangmei was involved in several bribery cases involving government officials. According to court documents released last June, the company bribed Cai Ming, former director of the drug safety supervision department at the Guangdong Province Food and Drug Administration, to the tune of 300,000 yuan from 2014 to 2015.

In February, the company was rattled by default risks on $300 million of bonds. The crisis was eased later after the Guangdong provincial government stepped in.

This story has been updated to correct the year of Kangmei’s financial report that contained errors. The report was for the year 2017, and it contained multiple errors.

Related: Pharmaceutical Firm Avoids Default as Guangdong Pressures Customers

Share this article
Open WeChat and scan the QR code