{ "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": 29, "pageCount": 71, "prevPage": 28, "nextPage": 30, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 8, "notes": "The slide uses a quote from an earnings call to highlight a discrepancy in growth projections versus historical reported data.", "elementsJson": [ "headline_text", "paragraph", "quote_block", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-aa4b5c012f2a/29", "deckHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a#slide-29", "components": [ { "bbox": null, "kind": "callout", "text": "Five percent growth onto just FY2017 Q2's revenue of $271.1 million is $13.56 million (Rmb 90.3 million), which is already 27% higher than Shunshun's full year revenue reported to SAIC of Rmb 76.47 million.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b2-736e-8e67-6735777efb2e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.75, "x": 0.13, "y": 0.16 }, "kind": "paragraph", "text": "From our analysis of the FY2018 earnings calls, we think that CFO Rong Luo’s guidance for Shunshun’s revenue predicts that they may once again amend results and/or simply claim greatly inflated revenues.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "5543913a-106e-4759-88e6-d242ef8f3fe6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.75, "x": 0.13, "y": 0.35 }, "kind": "paragraph", "text": "In these comments, Rong Luo projects Shunshun’s revenues in the first half to be based on a 5% growth rate year-on-year. However, just looking at FY2017 Q2 revenue alone we can see that this is an exaggeration.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8fb5cd84-a50a-4dfb-93fb-653fa23b22a5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.75, "x": 0.13, "y": 0.64 }, "kind": "paragraph", "text": "Our analysis of the Shunshun transaction being in substance an investment TAL made into itself is based upon the glaring evidence of deception regarding TAL’s initial investment date into Shunshun and injection of the critical asset of DFRL into Shunshun.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "ea60e26f-8ecc-4cea-829f-eef1f0783e0f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.06, "w": 0.7, "x": 0.16, "y": 0.23 }, "kind": "quote", "text": "…we have acquired Shunshun from last year Q3. So when we consider a Q1 and Q2 top line growth, actually they can give us something, additional numbers over there which is around 5% growth rate perspective.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b6662491-6987-4941-8660-3d31a74c3297", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“...we have acquired Shunshun from last year Q3. So when we consider a Q1 and Q2 top line growth, actually they can give us something, additional numbers over there which is around 5% growth rate perspective.” — 2018 Q2 earning's call, CFO Rong Luo", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-25b2-736e-8e67-6a0c023930d7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.28, "x": 0.6, "y": 0.31 }, "kind": "source-note", "text": "- 2018 Q2 earning’s call, CFO Rong Luo", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c8631b9c-ff92-406c-b05b-21955aed8b3f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.75, "x": 0.13, "y": 0.78 }, "kind": "source-note", "text": "70 This conclusion is based on several of Rong Luo’s statements about Shunshun in the Q2 and Q3 2018 earnings calls...", "attrs": { "numbered": true }, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d6d101ac-1c74-411e-a58f-e67f2b574d15", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.75, "x": 0.13, "y": 0.6 }, "kind": "title", "text": "The Impact of Restating TAL’s Financials to Consolidate Shunshun from July 2015", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "1ef0d452-8571-4764-bf10-7e27f93276ce", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.3, "x": 0.13, "y": 0.12 }, "kind": "title", "text": "Sneak Preview of More Fraud?", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "498f823a-d5f8-470e-b623-112c0de57214", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "fraud-exposure", "slug": null, "matchId": "030aff0c-488a-41fc-863b-14d8fb14abdc", "evidence": "The slide explicitly frames the analysis as a 'Sneak Preview of More Fraud' and details discrepancies in financial reporting.", "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": 71, "from": 24, "beatId": "f1a1059e-e779-4948-a18b-bd7e979146da", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Appendix Data", "beatSlug": null, "evidence": "The document includes extensive data and financial reports to support its claims", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "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 }