NEW YORK, June 16 China-based Feihe
International Inc ADY.N has lower earnings quality than more
than 80 percent of its global peers, an analysis of StarMine
The provider of infant formula and milk powder scores 17
out of a possible 100 based on StarMine's earnings quality
ranking, according to Reuters equities analyst Mike Tarsala and
Tim Gaumer, analyst with Thomson Reuters Investment and
That ranking takes into account the level of accruals
relative to revenue and other metrics, cash flows backing
earnings, as well as operating efficiency.
Emerging markets stocks with earnings scores of 10 or below
underperformed those with scores above 90 by 15.5 percent on an
annualized basis, based on a 10-year back test.
Feihe would not comment on the analysis.
The stock, one of many to be hit recently with questions
over accounting, stood out for having a consistent gap between
operating income and pre-tax income. Government subsidies had
been making up a larger portion of pre-tax income in recent
quarters. However, that subsidy fell in the March period.
The resignation of CFO Jonathan Chou in November for
personal reasons has not helped confidence either, according to
To watch the video analysis in full, click on:
(Reporting by Ed Tobin; Editing by Gary Hill)