{ "docId": "019dd923-622c-750b-8b96-aa4b5c012f2a", "docSlug": "aa7e6c3950ac", "documentTitle": "TAL Education Group (TAL)", "authorId": "51_Muddy_Waters", "authorName": "Carson C. Block", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2018-06-13 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 15, "pageCount": 71, "prevPage": 14, "nextPage": 16, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "The slide uses a forensic accounting style to highlight discrepancies between SAIC filings and 20-F disclosures.", "elementsJson": [ "paragraph", "callout_box", "data_table", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-aa4b5c012f2a/15", "deckHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a#slide-15", "components": [ { "bbox": { "h": 0.05, "w": 0.76, "x": 0.12, "y": 0.21 }, "kind": "callout", "text": "Ironic Fact: TAL was likely the first Shunshun investor to actually record a cash contribution into the Shunshun entity.", "attrs": null, "subkind": "primary", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c8e0f020-1cba-4f33-8507-618c3730eeef", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.07, "w": 0.76, "x": 0.12, "y": 0.29 }, "kind": "paragraph", "text": "TAL seems to have deliberately obfuscated DFRL was transferred to Shunshun. In the same 20-F in which TAL disclosed it owned 30% of Shunshun, it separately disclosed the disposal of DFRL.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5f891691-21ff-4cd8-b3c2-ecfb0849e1a7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.76, "x": 0.12, "y": 0.09 }, "kind": "paragraph", "text": "If all of this were on the up and up, why would TAL lie about the timeline, and claim it invested in Shunshun four months after it reversed merged its overseas education consulting business into Shunshun?", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "761815d8-479a-4b73-9bc7-bb18ee385e21", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.09, "w": 0.76, "x": 0.12, "y": 0.42 }, "kind": "paragraph", "text": "TAL Beijing, Beijing Dongfangrenli and its original shareholders entered into a series of contractual arrangements on December 27, 2011. In August 2015, all of the equity interests of Beijing Dongfangrenli were transferred as part of our consideration in a purchase agreement for a long- term investment. Thus TAL Beijing, Beijing Dongfangrenli and its original shareholders entered into a VIE Termination Agreement in July 2015.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "cfefee29-7458-4bd5-8c47-adcc2905d05c", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "TAL seems to have deliberately obfuscated DFRL was transferred to Shunshun. In our opinion, this failure to identify DFRL / Shunshun as a related party transaction is to avoid scrutiny of the propriety of the transactions and the subsequent valuation gains.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-25b2-736e-8e65-9b07adde2765", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.12, "y": 0.89 }, "kind": "source-note", "text": "36 TAL FY2016 20-F, p. 75", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ece53961-4188-4657-9489-49766676db5e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.76, "x": 0.12, "y": 0.65 }, "kind": "table", "text": "FY2016 Subsidiary list: Beijing Dongfangrenli Science & Commerce Co., Ltd. FY2017 Subsidiary list: Beijing Dongfangrenli Trade Development Co., Ltd.", "attrs": null, "subkind": "data", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "41a19d70-d982-4acc-b67f-cd8b55f9f07b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.76, "x": 0.12, "y": 0.55 }, "kind": "title", "text": "DFRL’s Name Change – Was it Sent into TAL’s Witness Protection Program?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0a4655c5-9088-4160-a969-31d2e5535e12", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "cf000a99-5106-403c-ad3c-6bf43e2cbf7b", "evidence": "The slide systematically identifies discrepancies in financial reporting to suggest intentional obfuscation.", "confidence": 0.9 } ], "arcBeats": [ { "to": 71, "from": 3, "beatId": "9de0976e-28e1-420f-a107-b337349d49c9", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Expose Contradiction", "beatSlug": null, "evidence": "The document is primarily composed of slides that expose contradictions in TAL Education's financial reports", "position": 0, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null }, { "to": 28, "from": 5, "beatId": "11c13b7b-b36c-475f-9c6c-e855711d459e", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Preempt Rebuttal", "beatSlug": null, "evidence": "The document anticipates potential rebuttals to its claims", "position": 1, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 20, "from": 8, "name": "Iceberg", "slug": "10-iceberg", "bestFor": "Consulting, complex problem solving, organizational change", "matchId": "99149f44-5959-4c86-aa77-8f6fb44bba5b", "evidence": "The document reveals the iceberg principle, where TAL Education's transactions appear legitimate but have hidden implications", "position": 1, "objective": "What are the implications of TAL Education's transactions?", "structure": "The Symptom (Visible) -> The System (Hidden) -> The Root Cause", "confidence": 0.7, "description": "Reveal that the visible problem is merely a symptom of a deeper root cause" }, { "to": 71, "from": 2, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "173d833e-f506-46f1-a81b-f0c40e490cd2", "evidence": "The document implies that investors who fail to address these discrepancies may suffer significant financial losses", "position": 2, "objective": "What is the cost of not addressing TAL Education's financial discrepancies?", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.6, "description": "Quantify what happens if the audience does nothing" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }