US to start audits of Chinese e-commerce giants

United States regulators have selected tech giants Alibaba (9988) and Baidu (9888) among other US-listed Chinese companies for audit inspection starting this month in Hong Kong, people with knowledge of the matter said.

The selection follows a landmark audit deal between Beijing and Washington on Friday allowing US regulators to vet accounting firms in mainland China and Hong Kong, potentially ending a long-running dispute that threatened to boot more than 200 Chinese companies from US stock exchanges.

In addition, tech firms like JD.com (9618) and NetEase (9999) along with Yum China (9987) - owner of KFC, Taco Bell and Pizza Hut restaurants in China - have been notified that they are among the first batch of Chinese companies whose audits will be inspected in Hong Kong by US audit watchdog, the Public Company Accounting Oversight Board, the people told Reuters.

The respective accounting firms of Alibaba, JD.com and Yum China - PwC, Deloitte and KPMG - have also been notified of the inspection, the people added.

US regulators have for more than a decade demanded access to audit papers of US-listed Chinese companies, but Chinese authorities have been reluctant to let US regulators inspect accounting firms in China, citing national security concerns.

Alibaba, which went public in New York in 2014 in what was at the time the largest listing in history, is the most valuable Chinese firm listed in the US with a market value of HK$2.02 trillion as of yesterday.

The PCAOB on Friday said it had notified the selected companies, without naming them, and that it expects its officials to land in Hong Kong, where the inspections will take place, by mid-September.

Reuters

Shimao (0813) has sold two residential sites to China Resources Land (1109) for 3.32 billion yuan (HK$3.78 billion) and repaid its debt to the state-owned developer.

The two sites with a total gross floor area of 228,200 square meters were valued at 3.69 billion yuan, 373.94 million yuan of which was used to offset the debt with CR Land.

This came as CR Land said its first-half net earnings drop 19.2 percent to 10.6 billion yuan but declared an interim dividend of 18.2 fen, up by 5.2 percent from one year ago. Core net profit however rose 2.6 percent rise to 10.16 billion yuan after excluding the revaluation gain from investment properties.

CR Land's contracted sales slumped 26.6 percent yearly to 121.04 billion yuan for the first six months of 2022, while its sold gross floor area plunged 39 percent to 5.87 million square meters, joining the sluggish performance of other Chinese developers.

China Resources Mixc Lifestyle Services (1209), CR Land's property management arm, said its interim net profit jumped 27.5 percent to 1.03 billion yuan, citing the widened managed areas. It declared a first-half dividend of 12.7 fen.

Shimao Services (0873), another China's major property manager, said its interim net profit declined 75.9 percent yearly to 139.6 million yuan, declaring no first-half dividend.

Also, China developer Yuzhou (1628) saw its interim net profit slump 93.1 percent to 59.09 million yuan, as its contracted sales slid 60.26 percent yearly to 20.95 billion yuan over the same period amid falling demand.

Meanwhile, Zhu Jiusheng the chief executive of China's large residential builder Vanke (2202), said its sales in the second half will outperform the previous half with the expectation that China's property market will rebound.