CMFO: 2009 SAIC financials

Today, CMFO announced that its 2009 SAIC financial statements match its 2009 SEC financial statements. I also posted a comment to that effect on Tuesday on my Seeking Alpha post on the historical SAIC financials. I’m going to re-paste that comment below:

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I’ve received the 2009 SAIC financial statements and have had them translated.

The Chinese version is attached here.
The English version is attached here.

The 2009 SAIC statements match the company’s 2009 SEC financial statements.

This by no means leads me to believe that CMFO has been accurately representing itself in its SEC filings. Rather, the chief financial officer of CMFO has indicated that he was alerted several months ago to the fact that the historical SEC and SAIC financial statements did not match. An investor on sumzero.com (login required) has also identified himself as having asked the CFO about this discrepancy several months ago. I believe that as a precaution to future allegations of fraud, such as mine, China Marine Food made sure that the 2009 SAIC filings matched their 2009 SEC filings.

I believe that I have overestimated the veracity of SAIC filings in my previous article. Now I think that they can be falsified just as SEC filings can.

The chief financial officer of CMFO naturally has a different story, and I will let him argue his case on his own. Investors can then decide whether my story or his story is the more compelling one.

The mismatch between the 2006, 2007 and 2008 SEC and SAIC financial statements was one element of my case that China Marine Food is much smaller than its SEC filings indicate. The Company’s dubious acquisition of Xianghe plays a more central role in my argument.

I will end with a final point. In this link, I have included comparisons of SEC and SAIC financial statements for four companies: FUQI, YUII, SOLF and CMFO.

I provide backup for FUQI’s and YUII’s SAIC financial statements on my blog at here and here, and SOLF’s SAIC financial statements are available at www.waldomushman.com.

For FUQI, YUII and SOLF, the SAIC and SEC financial statements are in the same ballpark. But you’ll notice that the numbers are not identical; rather, Chinese GAAP and other reporting norms will always result in differences between SEC and SAIC filings. For SOLF, for instance, 2008 SAIC revenue was $809mm while 2008 SEC revenue was $712mm. Similar differences exist in other line items as well. But in CMFO’s 2009 filings, the revenue, gross profit, net income, total assets and total equity are nearly identical, different only by a couple million dollars at most. YUII’s are fairly close as well, but there are still more discrepancies than CMFO’s filings.

While it’s ironic, my evidence for fraud when looking at the 2009 SAIC financial statements is that they match the SEC filings too closely.

Disclosure: I hold a short position in CMFO.