Kangmei Pharmaceuticals exploded again!

Finishing | Linan

On April 17, ST Kangmei issued a performance forecast correction announcement.

Prior to this, Kangmei Pharmaceuticals released its 2020 financial report, with an estimated loss of 14.

The announcement shows that there are two main reasons for the correction of the Kangmei performance forecast.

Kangmei Pharmaceutical said that in view of the company’s poor inventory management and major deficiencies in internal control, with the further deepening of asset inventory, evaluation and audit procedures, it has learned that the historical cost of some inventory and other assets is higher than the fair value, and market transactions are not active.

In accordance with the principle of prudence, Kangmei has conducted impairment tests on goodwill, accounts receivable, fixed assets, construction in progress, inventories, etc.

After this performance forecast is revised, Kangmei expects the company's net assets to be negative.

On the same day, Kangmei Pharmaceutical received an inquiry letter from the Shanghai Stock Exchange.

In the correction announcement, Kangmei revealed that the company may face investor civil litigation claims with a large amount of contingent litigation costs.

On April 16, the Small and Medium Investor Service Center accepted more than 50 investors' entrustment to initiate a special representative lawsuit against ST Kangmei (600518.

The Shanghai Stock Exchange requires Kangmei to carefully assess the impact on the company’s operating finances in light of the current progress of civil litigation claims, explain the basis for the provision of contingent litigation costs, whether it meets the requirements of accounting standards, and fully remind the relevant litigation risks.

In view of the fact that Kangmei Pharmaceutical currently has a large amount of funds that have not been resolved, large amounts of due debts have not been paid, and major litigation and other risks are involved.

Kangmei Pharmaceutical was listed on the Shanghai Stock Exchange in 2001, with a listed market value of less than 900 million.

In May 2020, the China Securities Regulatory Commission imposed administrative penalties and a decision on market bans on the illegal and irregular information disclosure of Kangmei Pharmaceutical, and the company and related personnel were transferred to the judicial authorities for suspected criminal acts.

In the financial fraud, Kangmei Pharmaceutical's stock price has repeatedly experienced "flash crashes", and now the latest market value is only about 10 billion.

In 2020, the Guangzhou Pharmaceutical Group with a state-owned background will register a new company to host ST Kangmei.