{
  "docId": "019dd923-622c-750b-8b96-835a69513742",
  "docSlug": "c47ae4d76596",
  "documentTitle": "China Huishan Dairy Holdings (6863 HK)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2016-12-16 00:00:00",
  "orientation": "portrait",
  "aspectRatio": 0.77272725,
  "pageNumber": 30,
  "pageCount": 47,
  "prevPage": 29,
  "nextPage": 31,
  "slideType": "villain_critique",
  "function": "expose_contradiction",
  "density": "dense",
  "nDataPoints": 2,
  "notes": "The slide uses a 'fraud-exposure' framework to highlight the discrepancy between the company's reported financial health and the reality of its operations.",
  "elementsJson": [
    "paragraph",
    "footnote"
  ],
  "metadataConfidence": 0.95,
  "imagePath": null,
  "slideHref": "/slides/019dd923-622c-750b-8b96-835a69513742/30",
  "deckHref": "/decks/019dd923-622c-750b-8b96-835a69513742",
  "deckJsonHref": "/decks/019dd923-622c-750b-8b96-835a69513742.json",
  "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-835a69513742#slide-30",
  "components": [
    {
      "bbox": {
        "h": 0.03,
        "w": 0.8,
        "x": 0.1,
        "y": 0.38
      },
      "kind": "callout",
      "text": "We believe Huishan is in very real danger of defaulting in the next year.",
      "attrs": null,
      "subkind": "primary",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "1bafe443-15bf-4f28-a5c7-83a4ea0cd994",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.8,
        "x": 0.1,
        "y": 0.43
      },
      "kind": "paragraph",
      "text": "Huishan’s incomplete projects show it is financially stressed – construction on its RMB 6.8 billion Xifeng liquid milk plant had been stopped when our investigators visited in July 2016; and, instead of finding a RMB 8.8 billion liquid milk facility...",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "60cb1034-a883-43ac-8ab8-e4279887704e",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.8,
        "x": 0.1,
        "y": 0.18
      },
      "kind": "paragraph",
      "text": "Even if Huishan’s financials were not fraudulent, the company appears to be on knife’s edge due to its excessive leverage. The leverage is so substantial that in FY16, Huishan’s auditor appears to have stopped just short of issuing a “going concern” qualification.",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "a615b27b-00a1-475d-a6cb-a8c3a8674c5b",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.15,
        "w": 0.7,
        "x": 0.15,
        "y": 0.75
      },
      "kind": "paragraph",
      "text": "“These consolidated financial statements have been prepared on a going concern basis notwithstanding the net current liabilities as at March 31, 2016 because the directors of the Company are of the opinion that based on the unconditional banking facilities of RMB 11,231,622,000 not utilised by the Group...",
      "attrs": null,
      "subkind": "paragraph",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "d2fc692a-91b8-452f-8b43-70e9e31f080f",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": null,
      "kind": "quote",
      "text": "“These consolidated financial statements have been prepared on a going concern basis notwithstanding the net current liabilities as at March 31, 2016 because the directors of the Company are of the opinion that based on the unconditional banking facilities of RMB 11,231,622,000 not utilised by the Group as of the date of issue of these consolidated financial statements, the Group would have adequate funds to meet its liabilities as and when they fall due at least twelve months from the end of the reporting” — KPMG (Huishan's auditor) disclosure in notes to the financials.",
      "attrs": null,
      "subkind": null,
      "toolName": "Authority citation",
      "toolSlug": "authority-citation",
      "confidence": null,
      "componentId": "019dd953-2b64-7193-87f7-f0869504ddc8",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.02,
        "w": 0.4,
        "x": 0.1,
        "y": 0.92
      },
      "kind": "source-note",
      "text": "http://www.lnah.gov.cn/zwgk/tztg/201508/t20150805_1812049.html",
      "attrs": null,
      "subkind": null,
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "857835d6-b9f1-48d7-a471-1aef8365fe61",
      "frameworkName": null,
      "frameworkSlug": null
    },
    {
      "bbox": {
        "h": 0.05,
        "w": 0.8,
        "x": 0.1,
        "y": 0.12
      },
      "kind": "title",
      "text": "Huishan’s Liquidity Appears to be on the Knife’s Edge, it has Dubious Assets, and its Reported 1H17 Cash Flow is Almost Certainly Fraudulent",
      "attrs": null,
      "subkind": "headline",
      "toolName": null,
      "toolSlug": null,
      "confidence": null,
      "componentId": "f256bb41-36f4-443d-90be-f52c345c88fa",
      "frameworkName": null,
      "frameworkSlug": null
    }
  ],
  "metrics": [],
  "tools": [],
  "frameworks": [
    {
      "name": "fraud-exposure",
      "slug": null,
      "matchId": "b3e2212e-96a5-4781-8255-b06289e3396e",
      "evidence": "The slide systematically deconstructs the company's financial claims to expose potential fraud.",
      "confidence": 0.9
    }
  ],
  "arcBeats": [
    {
      "to": 40,
      "from": 30,
      "beatId": "df34ebd0-5aea-463a-bfea-d11d064de1c1",
      "arcName": "Overcoming the Monster",
      "arcSlug": "overcoming-monster",
      "beatName": "The Victory",
      "beatSlug": "overcoming-monster-the-victory",
      "evidence": "The report concludes that Huishan's financial reporting is likely fraudulent",
      "position": 2,
      "confidence": 0.8,
      "parentBeatName": "Turn",
      "parentBeatSlug": "turn"
    }
  ],
  "loops": [],
  "imagePathAlt": null,
  "thumbSrc": null,
  "thumbSrcAlt": null,
  "locked": true
}