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  "documentTitle": "China Huishan Dairy Holdings (6863 HK)",
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  "authorName": "Carson C. Block",
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  "presentationDate": "2016-12-16 00:00:00",
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      "text": "We are short China Huishan Dairy Holdings (6863 HK / “Huishan”) because we believe it is worth close to Zero.",
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      "text": "Market Cap: HKD 38.4 billion",
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      "kind": "paragraph",
      "text": "We are short China Huishan Dairy Holdings (6863 HK / “Huishan”) because we believe it is worth close to Zero. We conclude Huishan is a fraud. In this first report on Huishan, we detail the following conclusions and supporting facts.",
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      "text": "Chairman Yang appears to have stolen at least RMB 150 million of assets from Huishan – the actual number is quite possibly higher. The theft relates to the unannounced transfer of a subsidiary that owned at least four cow farms to an undisclosed related party. It is clear to us that Chairman Yang controls the subsidiary and farms.",
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      "text": "Since at least 2014, the company has reported fraudulent profits largely based on the lie that it is substantially self-sufficient in producing alfalfa. We found overwhelming evidence that Huishan has long purchased substantial quantities of alfalfa from third parties, which gives us no doubt that Huishan’s financials are fraudulent.",
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      "text": "Even if Huishan’s financials were not fraudulent, the company appears to be on the verge of default due to its excessive leverage. Taking Huishan’s financials at face value, its credit metrics are horrible. The leverage is so substantial that in FY16, Huishan’s auditor appears to have stopped just short of issuing a “going concern” qualification. Given that we conclude Huishan’s reported profits are fraudulent, we have no confidence that Huishan can make it through the next year without defaulting. There are clear signs of enormous financial stress, including the types of financing Huishan is trying to employ and halted projects. The asset side of Huishan’s balance sheet, in our opinion, is massively overstated due to fraudulent profits and cash, overvalued biological assets, and certain highly suspicious asset accounts.",
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      "text": "We believe Huishan has engaged in CapEx fraud related to its cow farms. We estimate that Huishan has overstated the spending on these farms by RMB 893 million to RMB 1.6 billion. The primary purpose of the CapEx fraud is likely to support the company’s income statement fraud.",
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      "text": "Company: China Huishan Dairy Holdings Co Ltd. Ticker: 6863 HK Industry: Dairy Report Date: December 16, 2016 Stock Price: HKD 2.85 Market Cap: HKD 38.4 billion Float: 3.5 billion shares Average Volume (30-day): 11.9 million shares",
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      "text": "China Huishan Dairy (6863 HK): A Near Zero",
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