{ "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": 38, "pageCount": 71, "prevPage": 37, "nextPage": 39, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "The slide uses interview transcripts and SAIC filing discrepancies to challenge the narrative of an acquisition.", "elementsJson": [ "paragraph", "bullet_list", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b96-aa4b5c012f2a/38", "deckHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a", "deckJsonHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b96-aa4b5c012f2a#slide-38", "components": [ { "bbox": null, "kind": "callout", "text": "We take this as an indication that they had been instructed or even threatened not to speak of the matter.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-25b2-736e-8e68-f19c29419ce6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.7 }, "kind": "list", "text": "A former GZ 1-1 Head of School (2012-2016) when asked about the Changing Edu acquisition replied that: “It was not purchased, there was just cooperation.”", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "41a75125-ff9d-43c2-a0f8-894a24086ca2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.7, "x": 0.15, "y": 0.61 }, "kind": "list", "text": "A former Guangzhou Changing Edu teacher (2015-2016) and now head of a GZ 1-1 school since 2016, when asked about the Changing Edu acquisition replied that: “You can't call it ‘bought’, you can't call it ‘bought’. It was just kind of cooperation.”", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "be1f006b-798f-438e-be17-ef8b682b2493", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.7, "x": 0.15, "y": 0.16 }, "kind": "list", "text": "A learning center staff member during a site visit to the Huayi learning center: Q: I thought I saw online that there was some cooperation with Qingqing [Changing] Education? A: There was before, for a brief time in the middle, but later it came back to the Group. Q: Some kind of good relationship, it seems like they bought it back? A: Seems like it could be, but I'm not clear about this, it's all decided at the senior level. Q: Right, doing that kind of back and forth. A: As far as these kinds of company things go I don't know too much.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f098bc38-6560-40ae-ae49-b05c6f6e6cdb", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.78, "x": 0.11, "y": 0.42 }, "kind": "paragraph", "text": "The directors of the learning centers our investigators interviewed appeared to know a bit more about the relationship with Changing Edu, but they were very reluctant to talk. None affirmed there had been a purchase by Changing Edu, or a repurchase by TAL. They quickly, almost reflexively, described the relationship between Changing Edu and GZ 1-1 as “cooperation.” When our investigators asked specific questions about contracts or the particulars of the Changing Edu cooperation or transaction, the conversations would quickly go from congenial to cold. We take this as an indication that they had been instructed or even threatened not to speak of the matter. Two excerpts from interviews with heads of learning centers are below.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3f3d10ac-c736-4123-8784-5c1d3b24175f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.78, "x": 0.11, "y": 0.78 }, "kind": "paragraph", "text": "2. During the period of purported non-ownership, TAL appears to have remained the lessee for substantially all the learning centers. TAL’s CFO claims to have transferred 10 learning centers to Changing Edu, but SAIC files show only one lease was assumed by Shujia. This does not appear to be a clerical issue. The former Changing Edu senior manager confirmed that few learning center leases were transferred. A filing in a PRC lawsuit shows that over a half year after the purported disposal, TAL renewed", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "47a37176-8832-4cd2-8f38-578602b1dbdc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.7, "x": 0.15, "y": 0.11 }, "kind": "paragraph", "text": "A: I'm not familiar with this, we and Xueersi are the same group, we are all part of the Haoweilai group.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "66231e81-a347-4d20-810f-391c2deb4a0e", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“You can’t call it ‘bought’, you can’t call it ‘bought’. It was just kind of cooperation.” — A former Guangzhou Changing Edu teacher (2015-2016) and now head of a GZ 1-1 school since 2016. “It was not purchased, there was just cooperation.” — A former GZ 1-1 Head of School (2012-2016).", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-25b2-736e-8e68-f6ef22ad3e23", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "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 }