The directors have appointed KPMG to look into Naibu’s financial position. The
non-executive directors have asked Mr Lin to co-operate with KPMG in the
preparation of this report, although as yet, he has not indicated he will do
so.
The most recent turn of events is the latest in a sorry tale for investors in
Aim-listed Naibu Global International.
Naibu was set up by its founder, Huoyan Lin, in 2002, and is headquartered in
Fuzhou, the capital city of Fujian Province, China. The company was admitted
to Aim in April 2012, raising £6m and valuing the company at £68m.
It reported impressive annual results with revenue up 15pc to 1.93bn renminbi
(£19.3m) and pre-tax profits up 15.7pc to Rmb417m for the year ended
December 2013. The company even paid out a 4p dividend. The shares looked
like an absolute bargain trading on a low single digit price earnings (P/E)
ratio and paying a handy dividend.
However, the investment story came to an abrupt end last year when the company
unexpectedly stopped paying dividends despite Naibu reporting record
first-half sales of Rmb332.7m for the six months ended June, and had cash on
the balance sheet and no debt.
On the company’s “Honors page” it was voted “International
Famous brand” and one of “China’s 500 most valuable Brands”
The company used nearly all the free cash to invest in buying land rights and
investing in a factory, according to its latest
set of annual results, which showed it generated cash of Rmb205m
after tax in 2013, but then spent another Rmb195m buying land and property.
What appears to be a computer generated image of Naibu’s offices from the
website
The share price has collapsed since the start of 2014, from 69.5p to just 11p
before they were suspended early last month.
British investors have been lured into UK-listed Chinese companies in recent
years by the promise of riches linked to the country’s fast-growing economy
and booming middle-class spending. But, in many cases, all it has delivered
is misery and losses, with inexperienced investors losing millions.