{ "docId": "019dd923-622c-750b-8b96-4fec9c84ee4f", "docSlug": "1b5057c3a25e", "documentTitle": "Superb Summit International Group Limited (1228.HK)", "authorId": "51_Muddy_Waters", "authorName": "Carson C. Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2014-11-20 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 7, "pageCount": 18, "prevPage": 6, "nextPage": 8, "slideType": "villain_critique", "function": "name_villain", "density": "overcrowded", "nDataPoints": 20, "notes": "The slide serves as a critical assessment of JFT, characterizing it as a 'one-man band' rather than a scalable enterprise.", "elementsJson": [ "paragraph", "data_table", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-4fec9c84ee4f/7", "deckHref": "/decks/019dd923-622c-750b-8b96-4fec9c84ee4f", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-4fec9c84ee4f.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-4fec9c84ee4f#slide-7", "components": [ { "bbox": null, "kind": "callout", "text": "The reason JFT has not grown into a substantial company is the same reason why your neighborhood tailor has not developed into a world famous fashion brand – there is no scalable business there.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-ee37-76cb-8480-4e7925fac9ae", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "Revenue: 3", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-ee37-76cb-8480-51a2392ae45f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.145, "w": 0.77, "x": 0.117, "y": 0.685 }, "kind": "paragraph", "text": "JFT is essentially a niche consulting firm, and its role in the construction of coal liquefactions plants is limited. JFT oversees the design and installation of the processing lines that produce oil from coal, or extra heavy crude oil, using iron-based catalysts. JFT’s clients are oil companies. The oil companies provide the location and facilities, and JFT is responsible for working with a design firm to prepare the full set of designs, including the designs for the specific equipment/devices/parts. JFT is also responsible for paying the temporary labor for installing the processing lines. Once completed, JFT will transfer the production line to the client. After completion, JFT might also do maintenance work.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6d7068ac-fffd-4715-b18c-0568ef8e5af9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.77, "x": 0.117, "y": 0.84 }, "kind": "paragraph", "text": "Mr. Jin’s largest added value is that he helps formulate the chemistry requirements for the project. He also operates as somewhat of a managing contractor, building and operating the projects, and then transferring them to the clients. JFT’s projects have all been medium size demonstration units. To date, JFT has built three projects. None of the projects have been", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "738aa67d-de06-479e-9194-d2b5a26d1b58", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.165, "w": 0.77, "x": 0.117, "y": 0.51 }, "kind": "paragraph", "text": "JFT is essentially a one-man band. Substantially all of its IP is in the head of its founder, Mr. Jin Jun. Mr. Jin was a chemical engineer with PetroChina until 2006 when he left to start his consulting business. Mr. Jin’s son, Jin Fei, handles administrative matters for JFT. JFT has a total of five to six people in its office: one general manager, one accountant, one supervisor, and one to two office staff. JFT has no direct engineering employees other than Mr. Jin, and it outsources the design work to third party design institutes or technical personnel at some of its project sites. It also sub-contracts the construction of plant equipment. JFT process payments to about 100 temporary site construction and maintenance workers its client selects.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9e578a86-95d2-41f2-9c9e-fedf16f2cdc9", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.115, "w": 0.77, "x": 0.117, "y": 0.093 }, "kind": "paragraph", "text": "department. JFT has been in existence since 2008. The reason that it has never generated much revenue is not because it was still developing its technology, or waiting for the right partner to help commercialize its technology, or waiting for the coal liquefaction industry in China to develop. The reason JFT has not grown into a substantial company is the same reason why your neighborhood tailor has not developed into a world famous fashion brand – there is no scalable business there.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cd3f5b3f-82c4-4255-bffb-3759a4c647d2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.105, "w": 0.77, "x": 0.117, "y": 0.39 }, "kind": "paragraph", "text": "Note that JFT has very few tangible assets of its own. The bulk of the assets on its balance sheet is Construction in Progress, which will be transferred to its client upon completion of the project. Each project will typically yield new patents in the form of new chemical catalysts. Intangible assets, such as catalysts, formulation, or process improvements will usually be transferred to the client, calling into question Superb Summit’s HK$1.5 billion of patent value resulting from the transaction.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ffe31af0-ea13-4ea6-9b0d-3e174e603771", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.035, "w": 0.48, "x": 0.26, "y": 0.33 }, "kind": "source-note", "text": "(1) JFT SAIC financial statements (2) March 3, 2014 Disclosable Transaction Announcement. Note that the financials match the 2012 SAIC financials (the most recent year in the SAIC financials)", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "18df5228-2109-421c-bebb-b0bee862bc51", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.13, "w": 0.48, "x": 0.26, "y": 0.213 }, "kind": "table", "text": "RMB (000s) CY 2010(1) CY 2011(1) CY 2012(2) CY 2013(2) Revenue - 3,104 4,435 3 Pre-tax Income (Loss) (175) 279 410 (321) Net Income (Loss) (175) 268 308 (321) Total Assets 9,929 12,835 15,494 13,677 Net Assets (Liabilities) 735 1,003 1,311 975", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3590e072-4187-42d8-b6b8-fea8b6f1ff3b", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [ { "name": "Table data", "slug": "table-data", "agent": null, "layer": "slide", "matchId": "8ffff3f4-2c41-4eea-bd30-b5bed793234a", "evidence": "The slide presents a table with financial data for JFT.", "confidence": 0.7 } ], "frameworks": [], "arcBeats": [ { "to": 9, "from": 3, "beatId": "2c71ae55-844b-4fd3-8ee8-b70985715b4a", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "The Monster", "beatSlug": "overcoming-monster-the-monster", "evidence": "The document presents several examples of Superb Summit's questionable business practices, including false claims of acquisitions and inflated financials", "position": 1, "confidence": 0.8, "parentBeatName": "Hook", "parentBeatSlug": "hook" } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }