HENGAN INTL

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Short-seller, Bonitas Research has targeted Hengan (1044 HK) as a fraud. Operating margins in its sanitary napkins business of over 50% are far higher than those earned by any other comparable business. We struggle to think of any plausible explanation….
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TONGCHENG-ELONG

AG-Master-Screen

Tongcheng-Elong is yet another hastily constructed company with limited historical financials that has sought a listing in Hong Kong. Taken at face value, China’s third largest online travel agency is more profitable than market leader Ctrip, in what is a…
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PINDUODUO

AG-Master-Screen

Pinduoduo (PDD) has been accused of inflating GMV, overstating revenues, understating staff costs and, therefore, under-reporting its losses. In our view, the majority of allegations made by short-seller Blue Orca (BOC) are not supported by the evidence. We agree that…
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A2 MILK

AG-Master-Screen

A2 Milk (A2M) has achieved super-normal profitability by selling a “special” kind of infant formula to Chinese consumers through unofficial distribution channels. The problem is that A2M has limited IP to protect its product, and competitors like Nestle are closing…
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CORPORATE TRAVEL

AG-Master-Screen

We’re no fan of acquisition-driven business models, such as Corporate Travel (CTD), but they’re not a crime. The allegations presented thus far by hedge fund VGI Partners against CTD appear, in our opinion, to lack substance and in some instances…
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SMOKE & MIRRORS

AG-Master-Screen

Accounting standards are designed to make life easy for investors. As such, companies moving away from GAAP measures should be regarded with suspicion. Our review of the 30 largest Chinese domiciled ADRs shows an increasing use of adjusted, vaguely defined…
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HAILIANG EDUCATION

Excess-New-Capital-Screen

In the best-case scenario, Hailiang Education (HLG US) is a financing vehicle for its parent company, with cash being siphoned into related parties. In the worst-case, it’s a fraud; and there’s a substantial body of evidence, although circumstantial, to support…
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A&G SCREEN UPDATE

AG-Master-Screen

The newly released forensic report on Greek jewellery retailer Folli Follie concludes that it was making up 90% of its sales in China. Our Accounting & Governance Screen suggests that the company had been faking sales since FY09, hiding the…
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HAIDILAO

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Half of Haidilao’s raw materials are bought from related parties, accounting for 25% of total operating expenses. This recently listed hot pot restaurant chain has a seemingly compelling investment story but there is huge scope to shift profits around the…
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AVOIDING TROUBLE

AG-Master-Screen

You might have skimmed over last week’s email in the belief that we were droning on about yet another sportswear company that you would never buy in a month of Sundays. Well, you’d be partly right; however, buried deep in…
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