The last five articles were written over the course of several days originally posted in the general forum for Xinghe. The only reason you're reading them for the first time – like Coldrisks – is because I was asked by the forummers to render it into a blog so the wider audience could benefit. I hope you don't mind getting a different perspective about Xinghe.

Regarding CSL, I have explained why the Chinese fear factor is a non-issue in my previous article entitled “Why did Xinghe's initial rally on 1 June 2015 fizzle out?” dated 3/6/2015.

But, since some of you may have missed my earlier explanation, allow me to elaborate further.

When one refers to CSL, it’s always with the intent to highlight the pitfalls of investing in a Chinese stock. So, let me begin by assuring you the spectre of a failing investment in a Chinese stock is more of a fiction than a fact at least insofar Malaysian experience is concerned. It's a fact no Chinese companies has ever been delisted in the Malaysian stock market. CSL's case was due to poor risk management as they had failed to adequately insure their factory - a fact that is worth asking not just the Chinese companies but also all Malaysian companies listed on the KLSE.

Indeed, poor risk management was the reason behind why MAS was unable to track their missing plane's whereabouts on a real time basis as they deemed the cost of such a tracking system to be unnecessary. The same poor risk management attitude affects many a company not only KLSE but also NYSE and the rest.

I'm not discounting there're bad apples. There are but they're not confined to companies from China alone. In fact, some of the biggest accounting frauds involve US companies. Some of you may remember Enron (once a bluechip stock on NYSE and voted in Fortune as America's Most Innovative Company between 1999 and 2001, now defunct) which had maintained two books one for their own consumption and another to fool the market. And they had help from some of the biggest names in the marketplace including Citigroup, J.P. Morgan, Credit Suisse, Barclays and other leading banks as well as Arthur Andersen (one of the Big Five accounting firms then).

And it’s a common knowledge double accounting is practiced by Malaysian companies too.

But are we going to tar a company with the same brush just because they're from US, Malaysia or China for that matter?

There's nothing wrong in being a skeptic. But let's be consistent with how we view stocks and not merely succumb to double standards here just because they're convenient.

Each company and stock must be judged on their own merits. Xinghe has to be judged just like any stock listed on KLSE.

Unless we find evidence to the contrary, let's be guided by published facts and figures.

The Star has reported Xinghe as being the sixth biggest edible oil company in China as early as in March 2014 when Key West Global Telecommunications Berhad shareholders had voted to pass the reverse takeover of the company by Testa Holdings Ltd, China which saw the latter injecting into the listed concern its edible oil business, namely, Henan XingHe Oil and Fat Co. Ltd.

The said RTO was to allow Key West to assume all 91.15% stake held in Henan Xinghe through a HK subsidiary. The remaining 8.85% stake in Henan XingHe is owned by the Chinese Government-linked Henan Finance Bureau through its unit, Henan Agric Synthesis Exploitation Co.

Following the RTO exercise, Key West is currently known as Xinghe.

You may read on the rest of the report dated 26 March 2014 here http://www.thestar.com.my/Business/Business-News/2014/03/26/China-Testa-to-inject-edible-oil-business-into-Key-West/?style=biz

As far as its books are concerned, BDO audit on the company completed last April 2015 has revealed no red flags.

In fact, the company was bold enough to admit a reduced profit in FYE 2014 due to the singular listing expense item incurred following the RTO exercise in April 2014.

A company given to disingenuous reporting like Enron would have exaggerated its profits – reporting perhaps 'an exponential growth in profit despite its expense'.

Perhaps we should then applaud Xinghe for telling the truth. I suppose some will say 'well, we have more Malaysian companies telling us greater truths about themselves everyday'.

I can think of a long list of Malaysian companies with 1MDB at the top falling over each other to tell us the truth. On the contrary, all these greater truths were revealed in news through good old-fashioned journalism.

Hence, the importance of published news in informing us more about a company.

Recently, both The Star and The Sun have reported a proposed joint venture between Xinghe (the 6th largest edible oil manufacturer in China) and Asfar (a 30% Jordanian owned company in Malaysia) to produce blended edible oils in the Port Klang Free Trade Zone with 10,000MT monthly capacity for the Middle East market which was set to yield an initial RM100 million in sales by 2016.

At the end of the day, we rely on independent news report and external audit – and not irrational prejudice – to reasonably inform ourselves about whether a company like Apple, IFCA or even Xinghe is worth investing in.

For the benefit of the readers, BDO has a reputation in the market for raising a red flag should they find anything adverse in a given company's books (as was the case with MPI per news at http://www.thesundaily.my/news/1250061).

Do note BDO is also the external auditors for China Automobile Parts Holdings Ltd (CAP) whose financials have drawn confidence from no less an institutional investor than Credit Suisse which recently acquired a 6% stake in the latter.

It’s the same auditing firm that has also audited the financials of Xinghe which by the way has a better commodity, revenue and profit story to tell than CAP or even IFCA for that matter.

Last but not least, the Chairman of Xinghe is Tan Sri Dato’ Dr Sak Cheng Lum, who is also an independent director at A&M Realty Bhd and HIL Industries Bhd. A medical doctor by training, he is a former Penang State Executive Councilor, Senator and Parliamentary Secretary of Ministry of Domestic Trade and Consumer Affair. The last appointment is perhaps relevant to an investor in a commodity stock such as Xinghe which produces peanut oil and peanut protein cake. And who knows an edible oil player in China better than a former official of the Ministry of Domestic Trade and Consumer Affair.

In fact, Xinghe’s reputation as a major edible oil company in China was known to Key West Global Telecommunications Berhad’s previous board of directors – which had included the current chairman – that subsequently led to a shareholders’ vote allowing a reverse takeover by the former.

That was a vote of confidence by a Malaysian board and shareholders in Xinghe in turning around Key West’s financial fortunes which took place last March 2014.

So far, Xinghe has a done a great job in stewarding the company to a greater revenue and profit level judging from the audited FYE 2014 report and Q1 results for 2015.

In a nutshell, there’s nothing – in the RTO exercise last year and subsequent news on the joint venture and auditors’ report and Q1 results this year – to suggest that Xinghe isn’t the real deal.

                                                                                                                                          Ezra, 17 June 2015