Recently, the Li Jiacheng family owned by the Yangtze River Heji (hereinafter referred to as "Changhe", stock code: 00001.HK) was targeted by short-selling organizations.
On May 14, the short-selling institution GMT Research (hereinafter referred to as “GMT”) released a report saying that the net profit of the Yangtze River 2018 Annual Report did not match the cash flow, and questioned that Changhe Company concealed HK$57.7 billion in the name of “sales assets”. debt.
Short-selling institutions GMT said long and concealed $57.7 billion in debt
According to the GMT report, according to the long and 2018 annual report, the accounting adjustments of Changhe and the acquisition of Italian telecommunications company Wind Tre and its 2015 restructuring have increased the profits of Changhe in 2018 by 13.2 billion.
The report also noted that Changhe may have hidden HK $57.7 billion in debt related to assets to be sold by classifying some of his assets as assets for sale.
According to the Daily Economic News, a number of subjects in Changhe's cash flow statement showed negative growth, which has also become the focus of GMT doubts, such as a 59.079 billion Hong Kong dollar drop in cash flow from investment activities. You know, in long and 2018 earnings, revenue was HK $45.887 billion, up 29.64 percent from a year earlier, and net profit was HK $39 billion, up 11 percent from a year earlier.
According to Wall Street reports, Changhe's cash flow on operating activities was just HK $55.734 billion, up less than 4 percent from a year earlier. This is inconsistent with double-digit increases in revenue and net profit in 2018.
So the GMT speculated in its report that long and used this aggressive accounting method to hide HK $57.7 billion in debt in order to get a higher market rating and get cheap credit loans. At the same time, GMT recommends that investors sell long and.
However, in response to the GMT short report, on the evening of May 14, Changhe issued a clarification notice saying "strongly denied."
The company said that the audited financial statements are in strict compliance with the applicable Hong Kong financial reporting standards. Matters relating to the reported profits of the Group referred to in the introduction have been fully and transparent disclosed in the Group's audited financial statements in accordance with applicable accounting standards.
As regards the reference in the short report to liabilities related to assets to be sold that are not consolidated, this is also in full compliance with the requirements of the applicable accounting standards and has been discussed with credit rating agencies.
However, it is worth noting that according to the daily economic news report, before the GMT short report, the number of long and short-selling stocks has increased:
On May 7, the number of short-selling stocks increased to 490000 shares; on May 8, the number of short-selling stocks increased to 574000 shares; on May 9, it soared to 133.65 shares. On May 14, the number of short-selling stocks fell sharply, leaving only 714500 shares.
Photo source daily economic news
Affected by the short-selling report, on May 14, Changhe’s share price fell to a minimum of HK$78/share. Today (May 15th), Changhe's share price stabilized and closed at the close. Changhe's share price was HK$78.45.
What kind of institution is GMT?
On March 16, 2018, at the results meeting for the long and 2017 fiscal years, Li Jiacheng announced that he would retire as chairman, executive director and member of the compensation committee after the conclusion of the 2018 annual general meeting to be held on May 10, 2018.
The Changhe Empire built by Li Jiacheng will be replaced by his eldest son, Li Zeju. At the request of the board of directors, Li Jiacheng will act as a senior adviser to the company to advise on major matters.
This year is also the first performance report after Li Zezhen took over, and he was targeted by the short-selling institution. So what kind of institution is GMT?
From the official website, GMT is an accounting research institution. The company is mainly based in Hong Kong, mainly to discover the financial loopholes of listed companies, and to short.
The founder of the company is Gillem Tulloch.. He has been a financial analyst since 1994, focusing on the audited accounting and financial reports of Asian listed companies, focusing on debt and cash flow issues.
Main member of GMT company, screenshot source official website
In fact, Changhe is not the first company to be targeted by GMT this year. Previous companies, including JD.com and 58.com, have been shorted by GMT.
On March 6 this year, GMT released a short report saying that JD.com sold JD.com Finance, providing a "beneficial" one-off boost to the company's cash flow, while avoiding the company's financial statements from taking into account JD.com 's financial losses and cash outflows.
GMT believes that after deducting the impact, JD.com 's actual cash flow position is much lower than the figures reported by the company, JD.com 's current EBITDA may only be slightly above break-even level. After rebounding 30 per cent in the past three months, investors were advised to avoid JD.com.
However, the short target of GMT is mainly concentrated in medicine and sports. Chinese traditional Chinese medicine, traditional Chinese medicine holding, Anta, special step, 361 degrees have been short by it.
And this time GMT will short the spear to point to Changhe, is it "porcelain" or full grasp?