{ "docId": "019dd923-622c-750b-8b96-8fb17e36fe49", "docSlug": "02b460a1c4f6", "documentTitle": "Man Wah Holdings (1999.HK)", "authorId": "51_Muddy_Waters", "authorName": "Carson Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2017-06-16 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 16, "pageCount": 17, "prevPage": 15, "nextPage": 17, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 4, "notes": "The slide uses a forensic accounting approach to question the validity of off-balance-sheet debt offsets.", "elementsJson": [ "paragraph", "bullet_list", "quote_block", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-8fb17e36fe49/16", "deckHref": "/decks/019dd923-622c-750b-8b96-8fb17e36fe49", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-8fb17e36fe49.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-8fb17e36fe49#slide-16", "components": [ { "bbox": null, "kind": "callout", "text": "Perhaps Mr. Wang is just not versed in the transaction, or perhaps the inconsistency is a sign of a deeper problem with the accounting for the loan.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6e9-749a-ba88-04be5dbbda95", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.65, "x": 0.14, "y": 0.18 }, "kind": "list", "text": "Does this pertain to the same debt in the PBOC credit reports? If 'yes', are the cash deposits real? If again 'yes', does the lender have the right to offset them?", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "431ecfe4-97b0-479d-bf9f-1115c574cfce", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "The company's response focused on the Huizhou debt by stating the debt was disclosed in Note 38 to the FY 2017 financials. Note 38 states that MWH has US$200 million of borrowings that are not on the balance sheet.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "55f5ade7-1b7a-40aa-9738-e8f5b66c39bd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.78, "x": 0.11, "y": 0.28 }, "kind": "paragraph", "text": "Ordinarily a company with audited financial statements would be given the benefit of all doubt... our overall belief that MWH is committing fraud, we believe it is premature to take the company's word on this issue.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ef1248f7-d161-4751-9a1a-932af4a855ce", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.75, "x": 0.14, "y": 0.68 }, "kind": "quote", "text": "Actually, [the offset loan] is part of the treasury management of the company... The bank provide a loan 200 million USD... we enter into a forward contract to convert RMB into USD... we are guaranteed a fixed return.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "051c7d9d-7d42-4def-9a34-31d86a91ee1d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.75, "x": 0.14, "y": 0.48 }, "kind": "quote", "text": "Financial assets and financial liabilities subject to offsetting... bank deposits amounted to RMB202,000,000 and USD169,588,000, bank borrowings amounted to USD200,000,000 and a forward exchange contract.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "666220a1-c1a1-4c26-97e9-e4dddffddd33", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Actually, [the offset loan] is part of the treasury management of the company. We had some arrangement with a major commercial bank in china. The bank provide a loan 200 million USD. At the same time, the money will be transferred into RMB and deposited totally in the bank. And also, we enter into a forward contract to convert RMB into USD as of the maturity date of the loan so this means there is no risk and we are guaranteed a fixed return from this arrangement. — CFO of Man Wah Holdings", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6e9-749a-ba88-0b437f60ca04", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.78, "x": 0.11, "y": 0.88 }, "kind": "source-note", "text": "See http://www.abchina.com/en/corporate-banking/financing-and-credit-facility/international-trade-finance/ebp/ and http://www.boc.cn/en/cbservice/cb3/cb35/200806/t20080627_1324126.html", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "907ed175-bdb0-45e7-bed6-f080fc00fac8", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "89b77c52-f5c0-4c0b-92bb-f55dd2a0c556", "evidence": "The slide explicitly contrasts financial notes with verbal statements to build a case for accounting fraud.", "confidence": 0.9 } ], "arcBeats": [ { "to": 17, "from": 6, "beatId": "e4447fc4-2572-43a5-8167-c63c5babbc68", "arcName": "Overcoming the Monster", "arcSlug": "overcoming-monster", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The document presents several contradictions and inconsistencies in ManWah's financial statements and tax filings", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }