{ "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": 9, "pageCount": 17, "prevPage": 8, "nextPage": 10, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 20, "notes": "The slide uses a table to highlight a 'Diff %' between reported sales and import data, framing the company's explanation as a 'nonsensical excuse'.", "elementsJson": [ "data_table", "paragraph", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-8fb17e36fe49/9", "deckHref": "/decks/019dd923-622c-750b-8b96-8fb17e36fe49", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-8fb17e36fe49.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-8fb17e36fe49#slide-9", "components": [ { "bbox": null, "kind": "callout", "text": "It should be an additional red flag that the company is dodging a discussion of the discrepancies in its export revenue – particularly on the back of a nonsensical excuse related U.S. import data.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-e6e9-749a-ba86-b8ab629fc978", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "export revenue discrepancy: 48%", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-e6e9-749a-ba86-c36f3fbf4e1a", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.78, "x": 0.11, "y": 0.51 }, "kind": "paragraph", "text": "We strongly suspect that some portion of MWH’s reported export sales is overstated, and it seems highly likely to relate to Macau. The bottom line is that investors should demand a full explanation of Macau operations, financials, and the export discrepancies.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1099f986-20cc-4a7c-ac00-3ead515cb5e4", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.78, "x": 0.11, "y": 0.43 }, "kind": "paragraph", "text": "It should be an additional red flag that the company is dodging a discussion of the discrepancies in its export revenue – particularly on the back of a nonsensical excuse related U.S. import data. The slide on which the above table was shown reads “The table below compares Panjiva data for China export to reported overseas sales”.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "59901c83-89f2-4ee8-bb84-2d8582bbd41d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.78, "x": 0.11, "y": 0.09 }, "kind": "paragraph", "text": "Panjiva data. It therefore seems almost certain that revenue booked in Macau constitutes the difference, and as we have written, we believe the Macau contributions are highly suspect.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "735ff950-a9dd-488b-9923-c105f9c605c0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.78, "x": 0.11, "y": 0.73 }, "kind": "paragraph", "text": "One interesting point is that SAIC filings shows MWH’s store closures have been concentrated in Tier 1 cities:", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cacee56f-c215-4be3-916d-0a4e35d006f0", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.78, "x": 0.11, "y": 0.63 }, "kind": "paragraph", "text": "In FY 2017, MWH reported China sales grew 37%. While anecdotal, our fieldwork calls the blowout reported growth into question. We categorize China sales in two ways: sales through company-owned stores, and sales to distributors. Distributor stores greatly outnumber company-owned stores, but company-owned stores reportedly generate far more revenue per average store than distributor stores.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e3a8f821-a64e-4652-9705-df85a52b409d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.78, "x": 0.11, "y": 0.29 }, "kind": "paragraph", "text": "Even though MWH could have responded with the export sales it has booked by entity, it failed to do so. Instead, the Clarification Announcement reads “The Company will not comment on the veracity of the information relating to Panjiva. However, the Company believes that it is inappropriate to compare Panjiva’s data in respect of imports into the United States to the Group’s sales worldwide (other than the PRC) which approximate the figures under the column headed ‘HK filings’ in the above table.” On the call, the CFO stated, “They use the sales to U.S. from the Panjiva data to compare our total sales to the whole world.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "fd6c7ed1-768e-4325-842c-092567055823", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "The Company will not comment on the veracity of the information relating to Panjiva. However, the Company believes that it is inappropriate to compare Panjiva’s data in respect of imports into the United States to the Group’s sales worldwide (other than the PRC) which approximate the figures under the column headed ‘HK filings’ in the above table. — Man Wah Holdings Clarification Announcement", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-e6e9-749a-ba86-bf277dc70289", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.14 }, "kind": "table", "text": "Table comparing Huizhou SAIC, Panjiva, and HK filings data from FY2014-FY2017.", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c67a2324-6c2c-41c5-9f98-6f987358c505", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.45, "x": 0.11, "y": 0.59 }, "kind": "title", "text": "Fieldwork Casts Doubt on the China Growth Story", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "bd1b58ed-d64e-4318-a3c2-a90fc4b05a36", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "43c3c3b4-9100-4730-9303-fc9f50406230", "evidence": "The slide explicitly identifies 'red flags' and 'discrepancies' in financial reporting to argue for potential overstatement of revenue.", "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 }