{ "docId": "019dd923-622c-750b-8b96-37b5b32da084", "docSlug": "a1081380296f", "documentTitle": "NQ Mobile (NQ)", "authorId": "51_Muddy_Waters", "authorName": "Carson C. Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2013-11-06 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 14, "pageCount": 16, "prevPage": 13, "nextPage": 15, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 5, "notes": "This is a text-heavy research note page detailing potential corporate malfeasance and lack of transparency.", "elementsJson": [ "paragraph", "footnote" ], "metadataConfidence": 0.9, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-37b5b32da084/14", "deckHref": "/decks/019dd923-622c-750b-8b96-37b5b32da084", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-37b5b32da084.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-37b5b32da084#slide-14", "components": [ { "bbox": null, "kind": "callout", "text": "However, from day one, Mr. Zhou Xu seems to have had no involvement in NQ’s management.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-203f-7169-9f99-b0e224689490", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.78, "x": 0.11, "y": 0.29 }, "kind": "paragraph", "text": "After NQ’s listing, Mr. Zhou Xu’s personal wealth realized explosive growth, and in 2011 according to “Money Weekly’s” publishing of the wealthiest overseas Chinese, Mr. Zhou Xu’s fortune reached 640 million RMB.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "084b5ea0-4d06-4301-9f6d-e8d52ad0b474", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.78, "x": 0.11, "y": 0.76 }, "kind": "paragraph", "text": "iFeng Finance learned that Mr. Zhou Xu’s present official duties are that of one of partners in a private enterprise called Guan Yu Ventures. iFeng Finance attempted to reach him, but each time we called Beijing Poly Communications, the phone rang but there was no answer.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2947e580-530b-4cc5-b62a-2ec5556dee83", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.11 }, "kind": "paragraph", "text": "Therefore it is after Mr. Zhou Xu became a “founder” at NQ that the volume of SP business between NQ and Yidatong enjoyed explosive growth. According to the data revealed to ifeng financial by Ms. Xu Rong, NQ has always been their largest customer in terms by volume of business, representing 70% of their revenue.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "29ea0795-57d6-451b-81d6-0e41f8cab83c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.78, "x": 0.11, "y": 0.44 }, "kind": "paragraph", "text": "It is worth considering, as iFeng Finance observed, that Mr. Zhou Xu is a man who has maintained a very low profile, seemingly wishing to avoid contact with the outside world, such that it is even difficult to obtain information about his public activities. iFeng Finance searched through media photos, and even on the day of the IPO, Mr. Zhou does not appear, so much so that NQ’s Vice President Zou Shihong was taken to be one of the thee founders.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "621c2070-56b1-4072-b134-5ec2ae67ff61", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.2 }, "kind": "paragraph", "text": "As at May 5, 2011, when NQ went public in New York, the prospectus reported that Mr. Zhou Xu held a 31.1% stake prior to the listing, and that after it went public that his shares declined to 22.9%. His 51,832,941 shares increased in value to over 600 million RMB, and Mr. Zhou’s stake became worth even more than that of an earlier founder, Shi Wenyong.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7651f7f3-c23b-424d-ab9e-2a465cd29c64", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.11, "w": 0.78, "x": 0.11, "y": 0.54 }, "kind": "paragraph", "text": "From Zhou Xu’s unknown background we can see an interesting phenomenon, he seems to like to give to the companies that he founds the name “Poly”, besides “Polywin Technology Co.,” he founded another software developer and wholesaler company called “Beijing Poly Intelligence Technology Company”, and in the recruitment information for 9H the company originally introduced itself as “a member of the Poly Communications Holding Co,” but iFeng Finance was unable to locate information connecting this company to the [well known] Poly Group. The Poly Group’s representatives also deny any knowledge of these companies.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d1cd52e4-39a7-40b2-94d7-eaae4d2df90c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.78, "x": 0.11, "y": 0.66 }, "kind": "paragraph", "text": "Additionally, during the period of time when the SP’s were running amok, MIIT initiated several rectification efforts, but Mr. Zhou Xu’s Polywin Technology Co., Communications group committed multiple violations yet survived, and on the eve of NQ’s IPO, when the scandal regarding NQ and Beijing Feiliu Jiutian Technology Co.’s conspiracy to compel additional cell phone billing charged was exposed, Yidatong as an SP was not subject to any punishments.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d52f0ba8-69b5-4e49-a67c-1a8e73b63cd1", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.78, "x": 0.11, "y": 0.34 }, "kind": "paragraph", "text": "However, from day one, Mr. Zhou Xu seems to have had no involvement in NQ’s management. The management roles at NQ are: Dr. Lin Yu is NQ’s CEO, Mr. Shi Wenyong is the COO, but Mr. Zhou Xu is listed only as a “founder.” After NQ went public, Mr. Zhou Xu never required matching voting rights, with his voting rights being only 16.7%. Even one year after having gone public, he resigned his position on the audit committee, retaining only the role of a director.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e2f7e570-bc43-4c30-820d-15e3e64073b1", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“a member of the Poly Communications Holding Co,” — iFeng Finance", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-203f-7169-9f99-b48058e9afe8", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.35, "x": 0.11, "y": 0.89 }, "kind": "source-note", "text": "9 Since acquired by NQ and renamed FL Mobile.", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a47c547a-f6ae-489d-938c-10b424af49bd", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 16, "from": 2, "beatId": "06039f66-a515-4a56-93bc-d3feccb8e00a", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The document presents a series of contradictions and discrepancies in NQ's narrative and financials.", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }