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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 financial data and investigative findings to argue that Huishan's reported margins are fraudulent.",
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      "kind": "callout",
      "text": "Because Huishan has not been self-sufficient in producing alfalfa, the reported outsize margins are fictitious.",
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      "kind": "list",
      "text": "Our investigators found Huishan using Anderson Hay & Grain Company alfalfa imported from the U.S. Employees at nine farms confirmed that Huishan purchases alfalfa from third parties overseas and in Heilongjiang.",
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      "text": "EBITDA margin: 44.2%",
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      "kind": "paragraph",
      "text": "Huishan appears to be trying to take some of the air out of the fraudulent margins by reporting escalating alfalfa production costs. Alfalfa production costs rose 31% from $70/mt to $92/mt in 2014 and another 16% to $107/mt in 2015.",
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      "kind": "paragraph",
      "text": "Most of Huishan's comps do not claim to grow substantial amounts of alfalfa. As a result, Huishan reports gross margin and EBITDA substantially higher than those of its peers. Because Huishan has not been self-sufficient in producing alfalfa, the reported outsize margins are fictitious.",
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      "text": "Footnotes 8-13 detailing sources for financial data and investigative claims.",
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      "text": "Peer comparison table of Gross Margin and EBITDA Margin for Huishan vs. competitors.",
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      "kind": "table",
      "text": "Table showing Alfalfa Fair Value Gain, Other Feed Crops Fair Value Gain, Total Gain, Pre-Tax Income, and profit percentages.",
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      "kind": "title",
      "text": "Huishan lied about being self-sufficient in alfalfa",
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