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  "documentTitle": "Joyy Inc. (YY)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2020-11-18 00:00:00",
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  "notes": "The slide presents a forensic accounting argument by comparing third-party data against official company filings to highlight anomalies.",
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      "text": "Our conclusion that approximately 90% of the YY Live revenues are fraudulent focuses on the ~70% of YY livestreaming revenue reported by XHL and uses the paid gifts in XHL's database to determine how much of it is fake.",
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      "text": "When reviewing XHL’s data at a monthly or quarterly basis, a significant delta in both revenue and PU numbers between it and YY is immediately apparent. For example, in Q4 2019, YY reported RMB 3.162 billion in livestreaming revenue and 4.50 million PUs, but XHL reported only RMB 2.131 billion (-32.6%) in livestreaming revenue and just 1.32 million (-70.7%) PUs.",
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      "text": "When we asked XHL’s staff about this, they told us that they could not give us an explanation, but assured us that their results were consistent with others in the industry within a margin of about +/- 5%.",
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      "text": "We dismiss the possibility that the difference is created by the mis-recording of the lucky draw stars, moons YY sells and the luck draw gifts performers receive. XHL’s revenue approximates the accounting revenue YY reports in the period because the lucky star and lucky moon is recorded at just 0.02 rmb/ea instead 0.1 rmb (its sale price) but it also includes the lucky draw gift revenue given to the performer at its face value. However, the lucky gifts are not accounting revenue for YY. YY’s revenue recognition policy will not recognize them. Due to this adjustment, we can see that this is not the cause of the discrepancy.",
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      "text": "Again, we use XHL’s data despite these anomalies because we believe this is the data set which the company want diligent investors to review and evaluate.",
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      "text": "Our conclusion that approximately 90% of the YY Live revenues are fraudulent focuses on the ~70% of YY livestreaming revenue reported by XHL and uses the paid gifts in XHL’s database to determine how much of it is fake.",
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      "text": "The BigOne is another Chinese data analytics company which collects top line revenue data from YY and Huya. This too has a large delta for YY, but not Huya. The reasons for the difference attributed for the difference with YY’s live steaming revenue by the BigOne were due to YY’s “online dating” channels. Discrepancies with Huya were accounted for as being due to “non-revenue generating gifts”.",
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      "text": "This contradiction might be explained by a desire for XHL to appear to be a real, unrelated 3rd party. A real 3rd party app analytics company could not have perfect data; therefore, we believe that they intentionally created a discrepancy which is roughly equivalent in scale with its peers.",
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      "kind": "paragraph",
      "text": "we saw perfectly matched. This is not possible unless there is a direct access to YY’s own data sources. Therefore, we think XHL’s discussion for its data collection by using crawlers is bogus, and that instead, it is directly linked to YY’s backend.",
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      "text": "4Q19 BigOne YY: 2.297 bln, -22.1% < than YY: 2.950 bln\n1Q19 BigOne YY: 1.862 bln, -27.4% > than YY: 2.567 bln\n2Q19 BigOne YY: 2.033 bln, -29.0% < than YY: 2.863 bln\n3Q19 BigOne YY: 2.043 bln, -29.5% < than YY: 2.899 bln",
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      "text": "4Q19 BigOne Huya: 1.531 bln, 6.2% > than Huya: 1.442 bln\n1Q19 BigOne Huya: 1.539 bln, -0.9% < than Huya: 1.553 bln\n2Q19 BigOne Huya: 1.918 bln, -0.2% < than Huya: 1.922 bln\n3Q19 BigOne Huya: 2.043 bln, -5.2% < than Huya: 2.156 bln",
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      "text": "Example of a 3rd Party App Monitoring Service",
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