As there are several S-Chip accounting problems recently, shouldn't we check out the credibility of their external auditors? You can easily check this via internet . ( eg links below)
ezinearticles.com/?The-Top-Accounting-Fi...The-World&id=6344634
www.accountancyage.com/static/top50-this-year
This is my personal views only, but I sleep better if the annual reports have been signed off by the top accounting firms ( say top 25 globally? ) for AT LEAST 2 to 3 YEARS IN SUCCESSION. Off course companies can still cheat in their subsequent unaudited quarterly reports after their annual reports have been signed off. Nothing is 100% as investing is always risky , best is to avoid S-Chips altogether . Any comments?
Almost all s- chips are audited by the top 5 external auditors, doesn't stop anything. S- chips not for the faint hearted, but rewards high if u pick the right ones. There are Singapore and amercian companies with accounting frauds too. Nonetheless, dun invest if u dun have a risk managent guideline that should be strictly adhered to when trading s- chips unless u can stand your investment going kaput. My colleague from China told me it's in the culture to have 2 accounting books, one on top of the table and one below. Think the Chinese generally has quite a bit way to go in terms of coporate governance. But then, correct me if I am wrong, where on earth in another exchange in this world can u find a highly profitable company which is expanding but trading at 2x PE and 0.4 PB .. I think there are a few more with such attractive valuations. Buy only when sentiments is sour, when u buy when everyone is embracing s- chips, the odds might not be in your favor anymore. For me, I dun stop driving because there are accidents on the roads, even fatal ones. I just remind myself that driving can be dangerous and not be reckless
If auditors can kena conned, how much more the retail investors? Even the fund managers get conned even tho they visit the companies and have access to mgt.
The truth is we don't a lot about what we are investing. We are constantly surprised by (good or bad) news. In short, don't be a hero in investing.
Hi Greenrookie - Agree that many S-Chips have ridiculously low valuation and that there are great opportuinities for investors with discipline and deligence. But those with low risk apetite should stay out.
SGX has done well in its new self-appointed role as a door-stopper, preventing a S-chip from raising funds from the market for an event that may not materialize.
Dapai announcement (with its tail between its legs):
The Directors wish to update Shareholders that the Company has had discussions with the Singapore Exchange Securities Trading Limited regarding the proposed Rights Issue exercise and understood that as the proceeds of the Rights Issue are intended to be used for a proposed acquisition for which no agreement has been signed as yet and which when signed, will require shareholders' approval, it is therefore pre-mature for the Company to carry out the proposed Rights Issue exercise at this stage.
In view of the foregoing, the Company will postpone its plans for the proposed Rights Issue exercise and will update Shareholders accordingly by way of announcement when and should it decide to proceed with the rights issue exercise again.
When the rights issue was ann 9June11, the share crushed from 14 cts to 8 cts or 43% within ONE week despite rights being underwritten by UOB Kay Hian. I think only abt 32 m were traded ( total share 992 m ) in that week and it beats me why ppl sell at 8 cts though the YE2010 audited cash holding was Rmb659m or 12.5 cts/share. At 8cts and basing on 1Q2011 EPS annualised, the PE ratio is only 1.75 , probably lowest in SGX. Guess it was just fear or margin call? The question now is will the share go back to 14 cts ? e
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