Forensic Analyst

Jason Yap, CFA

Forensic Accounting

<ul>
<li>As a forensic accountant doing equity research, I strive to publish differentiated insights that augment rather than replace the traditional research feed of institutional investors</li>
<li>Fraud risks, aggressive revenue recognition, balance sheet health, quality of earnings and accounting policy changes underpinned a significant majority of my research</li>
<li>In this Insight, I will do a breakdown of my performance in the past half a year including a recap, key statistics and top insight highlights</li>
</ul>


As a forensic accountant doing equity research, I strive to publish differentiated insights that augment rather than replace the traditional research feed of institutional investors
Fraud risks, aggressive revenue recognition, balance sheet health, quality of earnings and accounting policy changes underpinned a significant majority of my research
In this Insight, I will do a breakdown of my performance in the past half a year including a recap, key statistics and top insight highlights


2021 Year in Review - Forensic Accounting in Equity Research

Venustech Group Inc A / Forensic Accounting

China's cybersecurity market growth is set to reaccelerate given increased digitisation of the economy, emphasis on data security, and increase in cybersecurity spending.  While pandemic disruptions had led to an inevitable slowdown in 2020, recent cybersecurity spending trends by corporates and government bodies suggest a cyclical rebound. 
In the First of this Three part SK Originals series, we discuss how China's Company Accounting Standard No. 14 - Revenue ("CAS No. 14")'s application and consequent changes in accounting policy could result in material changes to the revenue recognition policy of <a href="https://www.smartkarma.com/entities/venustech-group-inc-a" target="_blank" data-smartkarma-citation="entities:2773:1" rel="noopener">Venustech Group Inc A (002439 CH)</a>, such as changing the timing of revenue recognition and the amount being recognised across the company's various revenue segments.  
Most Chinese software companies started adopting CAS No. 14 in 2020.  Broadly, the net impact of CAS No. 14 is that recognition of software product revenue shifts from from multiple milestones based on a percentage of delivery completion to the transfer of actual control of the software products to customers, subject to specific terms of contract and management judgement. 
We also discuss the materiality threshold used to identify the listed software companies that have made changes in lieu of CAS No. 14, the key implications, and what this all means for Venustech with reference to industry dynamics, relative valuation, and company fundamentals.
We are constructive on Venustech's prospects given its market leading position in software products, security operation centers and related services.  At forward P/E of 21.9x and market leading ROE and operating margin relative to peer average, we believe that Venustech is attractively valued.

China's cybersecurity market growth is set to reaccelerate given increased digitisation of the economy, emphasis on data security, and increase in cybersecurity spending.  While pandemic disruptions had led to an inevitable slowdown in 2020, recent cybersecurity spending trends by corporates and government bodies suggest a cyclical rebound. 
In the First of this Three part SK Originals series, we discuss how China's Company Accounting Standard No. 14 - Revenue ("CAS No. 14")'s application and consequent changes in accounting policy could result in material changes to the revenue recognition policy of Venustech Group Inc A (002439 CH), such as changing the timing of revenue recognition and the amount being recognised across the company's various revenue segments.  
Most Chinese software companies started adopting CAS No. 14 in 2020.  Broadly, the net impact of CAS No. 14 is that recognition of software product revenue shifts from from multiple milestones based on a percentage of delivery completion to the transfer of actual control of the software products to customers, subject to specific terms of contract and management judgement. 
We also discuss the materiality threshold used to identify the listed software companies that have made changes in lieu of CAS No. 14, the key implications, and what this all means for Venustech with reference to industry dynamics, relative valuation, and company fundamentals.
We are constructive on Venustech's prospects given its market leading position in software products, security operation centers and related services.  At forward P/E of 21.9x and market leading ROE and operating margin relative to peer average, we believe that Venustech is attractively valued. 

Accounting Standards Series - CAS No. 14 Impact on China Software Companies - Venustech (2439 CH)

China

Beijing Venustech Inc. provides a variety of information security products, information security services and information security solutions.  The Company's products and services are intrusion detection systems, intrusion prevention systems, firewalls, real-time monitoring and security management certification training services.

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Venustech Group Inc A (002439 CH)

2021 Year in Review - Forensic Accounting in Equity Research

As a forensic accountant doing equity research, I strive to publish differentiated insights that augment investment research. I look back at 2021's...

Jason Yap, CFA

Accounting Standards Series - CAS No. 14 Impact on China Software Companies - Venustech (2439 CH)

In this SK Originals series, we discuss how CAS No. 14 Standards could affect the revenue recognition policy of Venustech, such as changing the...

Jason Yap, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)