Taming the dragon: Understanding Chinese stocks from a forensic analyst’s perspective

More pronounced issues relating to Chinese stocks include the following:

  • Recognition of tangible and intangible assets such as goodwill at highly inflated values amid increasing cross-border M&A activity, especially in the Chinese ICT sector, often at extremely high valuation multiples. However, these transactions often fail to yield the intended growth results, leading to significant write-offs.
  • Companies reporting high volumes of other gains and investment income in
    their profit and loss accounts to boost profits.
  • Other issues: mitigating impairment of assets using evasive impairment approaches and assumptions, and making favourable adjustments to operating profits in arriving at non-GAAP results.

Key Takeaways

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/