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  "docSlug": "c47ae4d76596",
  "documentTitle": "China Huishan Dairy Holdings (6863 HK)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2016-12-16 00:00:00",
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  "notes": "The slide uses a series of bullet points to highlight specific financial red flags, supported by numerous footnotes referencing annual and interim reports.",
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      "kind": "callout",
      "text": "Huishan has a high chance of defaulting in the next year due to its massive short-term debt.",
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      "kind": "list",
      "text": "Bank deposits to secure bills payable increased +300% year-on-year (RMB 946 million in 2016, up from RMB 314 million in 2015). As of September 30, 2016, these deposits stood at RMB 962.6 million.",
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      "text": "Net interest finance cost increased by almost 3x from RMB 205.7 million in 2014 to RMB 322.8 million in 2015 and RMB 681million in 2016. As of September 2016, finance costs were up to RMB 451.3 million for the first half of the 2017 fiscal year.",
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      "kind": "list",
      "text": "Another potential finance lease agreement for the sale of unspecified property, plants and equipment for a consideration up to RMB 300 million and a lease back rate of 5%.",
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      "text": "In 2016, bank charges and other finance costs increased 3x from RMB 10.4 million in 2015 to RMB 37.5 million in 2016. For the six months ending September 30, 2016, these costs were a staggering RMB 53.8 million.",
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      "text": "short-term debt: RMB 11.1 billion",
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      "kind": "paragraph",
      "text": "Even taking Huishan's financials at face value, its credit metrics are well into the \"red zone\". Other eye-popping Huishan credit metrics (taking its financials at face value) include:",
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      "text": "With 70% of the company's debt coming due in less than a year and a limited free cash flow profile, Huishan's debt profile presents a very high risk of a near term default. (This assessment is without considering our conclusion the company is a fraud.) Huishan will need to somehow address RMB 11.1 billion coming due within a year.",
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      "text": "Footnotes 58-69 detailing financial report sources.",
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