In recent weeks, the struggling Chinese portal companies Fang.com and FangDD have sacked their Western auditing firms.
Fang.com was struck off the NYSE in May this year for failure to file reports with the SEC. The company then announced in July via a release on its investor relations website that it had replaced the auditing services of MaloneBailey with those of local firm Shandong Haoxin.
As for competitor FangDD, the portal's shares are still active on the NASDAQ despite a warning from the market at the beginning of the year and dire financial losses in 2021.
In order to maintain its listing, FangDD changed the ratio of its ADS (American Depository Shares representing Class A shares of a non-U.S. company) in June - essentially watering down its ADS to keep its share price above water and remain compliant.
Following the example of Fang.com, FangDD also announced recently that it had dispensed with the services of a Western auditing firm. On the 1st of August FangDD issued a statement confirming that the services of KPMG would be replaced by those of Singapore-based Audit Alliance.
The company then issued a second, mysterious statement three days later which featured comments from KPMG which seem to call into question FangDD's ongoing viability as a business:
"The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern... the Company has suffered recurring losses from operations and a significant decline in revenue during the year ended December 31, 2021, that raise substantial doubt about its ability to continue as a going concern.”
Both Fang.com and FangDD have suffered over the last few years as have all Chinese real estate portal companies as last autumn's Evergrande crisis along with strict government Covid-zero policies and a struggling economy have left the real estate sector struggling.
Perhaps the most hotly anticipated set of results this summer are those of KE Holdings, the operator of the largest real estate company in China. The results are expected on the 23rd of August and will provide insights into the company's strategic move into furnishings and the broader Chinese market in general.