KUALA LUMPUR (Apr 30): China Ouhua Winery Holdings Ltd's external auditor has issued a qualified audit opinion on the China-based winery's audited financial statements for the financial year ended Dec 31, 2014 (FY14).

In a report addressed to China Ouhua (fundamental: 1.2; valuation: 0.9) that was filed with Bursa Malaysia today, Messrs Helmi Talib & Co said the basis for its qualified opinion was due to the absence of an independent valuation of the assets comprising land, buildings and ancillary facilities in Yantai, China acquired by China Ouhua for RMB132 million.

"In the absence of an independent valuation, we were unable to ascertain whether the net recoverable amount of the assets acquired will exceed the total purchase consideration," said Helmi Talib & Co.

"In addition, we have been not able to obtain sufficient appropriate audit evidence to satisfy ourselves of the extent of recoverability of the deposits of RMB118.8 million in the event the transaction is not completed.

"Consequently, we were unable to determine whether the carrying amount of deposits is fairly stated as at Dec 31, 2013," it added.

"Our opinion on the current year's financial statements is also modified because of the possible effects of this matter on current year's figures as at Dec 31, 2014," Helmi Talib & Co noted.

China Ouhua shares closed unchanged at 8.5 sen today, bringing a market capitalisation of RM56.78 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)