Hall of Shame

Information Technology

Linklogis Inc (9959 HK)

Year: 2021


Linklogis Inc is a China-based investment holding company principally engaged in providing supply chain finance technology solutions and innovative data-driven emerging solutions. Its supply chain finance technology solutions include Anchor Cloud and financial institution (FI) Cloud. Its supply chain finance technology solutions help digitalize the process of supply chain payment and financing. Its innovative data-driven emerging solutions include Cross-border Cloud and small and medium-size enterprise (SME) Credit Tech Solution. The company conducts its businesses in domestic market and overseas markets.

The company listed on the Hong Kong Stock Exchange (HKEx) on 9 April 2021 and raised HK$9.16bn in its IPO.

On 22 July  2021, short sellers, Valiant Varriors, released a short report on Linklogis; "Linklogis (9959.HK): A supply chain of lies". It was short on the company as it believed that the company:

  • Lied about overexposure to real estate: Linklogis is the backdoor that developers use to skirt the regulations and they have blatantly and publicly downplayed that.
  • Blatantly disregarded and violation of Notice 205: At 80x debt-to-equity, the company has far exceeded the regulatory limit for commercial factoring enterprises.
  • Was a massive financial risk from hiding tens of billions in bridge loans and related-party transactions.
  • Had overstated revenues: Questionable accounting practices in the company led to the frequent change of auditors running up to its IPO.
  • Exaggerated technology capabilities and actual use of manual labour: a closer look at the company’s R&D spend and leadership team raised many questions about its credibility and valuation as a tech company.
  • Is a tax fraud: The consequences of underreporting tax was another ticking time bomb that would deal a severe blow to future earnings

Valiant Varriors concluded the report saying that Linklogis' purported supply chain financing system was nothing more than a well-designed and elaborate pack of lies built
using sophisticated deception tactics.  That it was nothing more than a glorified mortgage broker and over-valued in the market. It added that with zero cutting-edge technological capabilities, an over-reliance on the real estate segment for its revenues, management team with questionable integrity, and an increasingly marginalized business model, it should be valued at no more than 10-12 times forward P/E; a 90%+ downside.

On 22 July 2021, Linklogis responded to the report with a clarification notice. The company said that the allegations in the report were groundless. It added that the report contained various misrepresentations, false allegations and obvious factual errors, and the logic employed in the report was flawed. In an eight page response, it addressed the allegations. 

On 23 July 2021 In a rebuttal to the Linklogis response, Valiant Varriors issued a short article; "Fundamentally, is this a financing company or a technology company?". It stated that the management had chosen to beat about the bush and avoid providing any further clarification on the issues at hand. In its rebuttal, Valiant Varriors listed the following points:

  • High concentration on real estate was not addressed.
  • Management was obviously confused and contradicting themselves on financial risk.
  • Asks why as a tech company it was getting into a debate with gearing ratios?
  • Overstatement of revenues: a convenient deflection to the accountants.
  • Questions whether Linklogis was still trying to prove it had good tech?
  • Linklogis’ tax evasion issue might just open the biggest can of worms.

Valiant Varriors ends its article saying that Linklogis was in deep trouble and this was further proven by the quality of responses to the first report. It believed Linklogis was merely a heavy asset lending business trying to fit into a nimble Fintech outfit.


Valiant Varriors: Linklogis Inc. - A supply chain of lies, 20 Jul 2021
Linklogis Inc: Clarification, 22 Jul 2021
Valiant Varriors: Fundamentally, is this a financing company or a technology company?, 23 Jul 2021
Linklogis Inc: Prospectus, 26 Mar 2021
HKEX: Linklogis Inc Filings


 

Auditors

Company From To
KPMG 26-Mar-21 -

Advisors

(IPO - Initial Public Offering, ASO - Additional Share offerings)

Type Date Role Party
IPO 9-Apr-21 Auditor(s) KPMG
IPO 9-Apr-21 Co-Manager(s) Valuable Capital Ltd
IPO 9-Apr-21 Global Coordinator(s) Citigroup
IPO 9-Apr-21 Global Coordinator(s) China International Capital Corp
IPO 9-Apr-21 Global Coordinator(s) Goldman Sachs
IPO 9-Apr-21 IPO Sponsor China International Capital Corp
IPO 9-Apr-21 IPO Sponsor Goldman Sachs
IPO 9-Apr-21 Joint Lead Managers-Books Citigroup
IPO 9-Apr-21 Joint Lead Managers-Books China International Capital Corp
IPO 9-Apr-21 Joint Lead Managers-Books Goldman Sachs
IPO 9-Apr-21 Joint Lead Managers-Books CLSA
IPO 9-Apr-21 Joint Lead Managers-Books China Renaissance Securities HK Ltd
IPO 9-Apr-21 Joint Lead Managers-No Books Huajin Securities International Ltd
IPO 9-Apr-21 Joint Lead Managers-No Books China Merchants Securities Co Ltd
IPO 9-Apr-21 Joint Lead Managers-No Books CCB International
IPO 9-Apr-21 Joint Lead Managers-No Books Futu Securities International Hong Kong Ltd
IPO 9-Apr-21 Legal Adviser to the Issuer(s) Commerce & Finance Law Offices
IPO 9-Apr-21 Legal Adviser to the Issuer(s) Davis Polk & Wardwell
IPO 9-Apr-21 Legal Adviser to the Issuer(s) Harney Westwood & Riegels
IPO 9-Apr-21 Legal Adviser(s) to the Manager(s) Haiwen & Partners
IPO 9-Apr-21 Legal Adviser(s) to the Manager(s) Skadden Arps Slate Meagher & Flom
IPO 9-Apr-21 Registrar(s) Tricor
IPO 9-Apr-21 Registrar(s) Maples Group
IPO 9-Apr-21 Transfer Agent(s) Maples Group

Directors

(CAC/MAC Chairman / Member Audit Committee - NC Nomination /Governance Comm. - CC Compensation/Remuneration Committee)

Type Name Role From To
Executive Song Qun Chairman, CEO, MCC, MNC 13-Mar-18 -
Executive Ji Kun President 13-Mar-18 -
Executive Chau Ka King Vice Chairman, Chief Risk Officer 13-Mar-18 -
Independent Tan Huay Lim CAC 26-Mar-21 -
Independent Gao Feng MAC, CCC, CNC 26-Mar-21 -
Independent Chen Wei MAC, MCC, MNC 26-Mar-21 -
Non-Executive Zhang Yuhan 9-Oct-18 -
Non-Executive Lin Haifeng 15-Oct-19 -
Non-Executive Zhao Yongsheng 27-Oct-20 -
Senior Management Zhao Yu CFO 5-May-19 -
Senior Management Zhong Songran CTO 18-Jul-16 -
Senior Management Wong Keith Shing Cheung Joint Company Secretary 7-Jan-21 -
Senior Management Wang Yihan Joint Company Secretary, Senior Legal Expert Jun.2019 -
Senior Management Li Xiaogang VP 7-May-19 -

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