The company’s earnings announcement on April 16 raised its estimated net loss for 2020 to 24.5 billion yuan (RMB) to 29.9 billion yuan, and once the market opened on April 19, Kangmei Pharmaceuticals sealed the deal on the down board, ending at 1.96 yuan per share.
According to a report by the mainland market sector on April 20, the performance explosion of Kangmei Pharmaceuticals on the 16th was foreseen, and it was more like a continuation of the previous performance falsification.
On April 30, 2019, Kangmei Pharmaceuticals blew itself up with accounting errors and missing 29.9 billion yuan of monetary funds. Four months later, an announcement by the Securities Regulatory Commission uncovered the fact that Kangmei Pharmaceutical had committed financial fraud for three consecutive years and involving multiple subjects, of which the combined monetary funds were falsified by up to 88.7 billion yuan, making it the largest capital fraud case in A-shares.
And the 2019 disclosure of the fraud of Kangmei Pharmaceuticals involves revenue, profit, money funds, fixed assets, construction in progress and other subjects, including, for Kangmei Pharmaceuticals due to inventory omission bookkeeping will be reduced by 19.5 billion yuan of money funds to inventory, the city believes that that is a false increase, sooner or later, Kangmei Pharmaceuticals will find a way to clean it up.
According to the 2020 annual report, Kangmei Pharmaceuticals started the whitewashing operation at that time. According to the performance revision forecast, the impairment involved at least five major asset accounts, the absolute bulk of which was inventory, with an impairment amount of 20.3 billion yuan, accounting for more than 66% of the company’s inventory balance at the end of September 2020. In addition, construction in progress and fixed assets were impaired by 1.5 billion yuan, accounts receivable were impaired by 1 billion yuan and goodwill was impaired by 0.44 billion yuan, for a total impairment of 22.844 billion yuan.
After this whitewash, the market research found that there is still a lot of water in Kangmei Pharmaceutical. As of the end of September 2020, Kangmei Pharmaceuticals had total assets of 61.5 billion yuan. Assuming that in the fourth quarter, the company’s assets did not change significantly, the size of Kangmei Pharmaceutical’s total assets after the impairment would shrink to 38.7 billion yuan, which is mainly inventory, other receivables and fixed assets, together accounting for 77% of total assets.
However, its annual report shows that after the impairment, inventory is still the company’s first major asset, but once its herbal markets around the world again “management chaos” and other phenomena, do not rule out the discovery of more “devalued” inventory.
In addition, fixed assets and construction in progress, which are impaired to the tune of $9.3 billion, are also at risk of another large impairment. 2018 and 2019, both accounting firms issued qualified audit reports on Kangmei Pharmaceuticals for reasons related to construction in progress – some of the construction in progress had irregular management and incomplete information, making it impossible to guarantee its accuracy. resulting in audits whose accuracy could not be guaranteed. As of the end of June 2020, the book balance of seven projects, including the medical campus of Kangmei Mehekou Medical and Health Center, was 3 billion yuan, accounting for 87% of the balance of construction in progress.
The report said that after this performance whitewash, Kangmei Pharmaceutical has become insolvent. at the end of September 2020, Kangmei Pharmaceutical’s net assets were 18.3 billion yuan, which is -6.2 billion yuan based on a minimum net loss estimated at 24.5 billion yuan.
And if inventories, fixed assets, construction in progress continue to large impairments, other receivables can not be recovered in cash, the size of Kangmei’s assets will be further reduced, the degree of insolvency may further increase.
Kangmei Pharmaceuticals continues to build the price of the biggest victims are shareholders, but with its performance continues to explode, the number of funds holding its shares fell from 263 to 2 at the end of September 2020, but the company’s shareholder households are still as high as 159,100.
Currently, Comerica has issued a delisting warning, and once it is delisted, shareholders may lose their money. Some shareholders have now launched lawsuits. on April 8, 2021, the CSI Small and Medium Investors Service Center (SMISC) accepted special authorization from more than 50 rights holders to file lawsuits against Kangmei Pharmaceutical and 21 of its natural persons as well as intermediaries for claims.
The total number of plaintiffs and the total amount of claims will unquestionably break the highest historical record of domestic securities civil compensation, said Li Jian, a lawyer at Zhejiang Yufeng Law Firm and director of the Securities Law Research Society of the China Law Society.
The report said that in a premeditated, organized, long-term systematic implementation of financial fraud, Kangmei Pharmaceuticals from a hundred billion white horse stocks, down to now full of sores, standing on the edge of delisting.
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