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  "documentTitle": "Man Wah Holdings (1999.HK)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "presentationDate": "2017-06-16 00:00:00",
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  "notes": "The slide uses a 'red flag' argument to suggest potential transfer pricing manipulation.",
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      "text": "We therefore struggle to understand how a company making such a low technology product could manage to be so profitable.",
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      "text": "Disassembled sofa components showing wood and foam construction.",
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      "text": "We estimate that MWH’s Macau entity is responsible for over 50% of its reported net income. MWH claims a Macau preference that gives it a 0% tax rate; however, it is difficult to see how MWH could carry out unnoticed a transfer pricing scheme that has booked estimated profits in Macau greater than 10x those booked in the Huizhou factory, which is located in an export processing zone and appears to a) effectively only produce for exports, and b) serve as the production center for substantially all of Man Wah’s exports. In contrast, the Macau entity appears to lack substance.",
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      "text": "We used the above pictures to illustrate that “There’s no pixie dust in MWH sofas”. The interiors of the sofas are almost entirely wood (plywood, pine, and fiberboard) and foam. There is only a small amount of metal outside of the electric reclining mechanism, which in the case of our sofa, had been largely (likely wholly) produced by a third-party vendor. We therefore struggle to understand how a company making such a low technology product could manage to be so profitable.",
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      "text": "“There’s no pixie dust in MWH sofas” — Muddy Waters",
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      "text": "2 The Macau entity is Man Wah (Macao Commercial Offshore) Ltd.",
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      "text": "Macau Profits – a Red Flag",
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