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  "docId": "019dd923-622c-750b-8b9a-d9e512d5a5f7",
  "docSlug": "f289bd97a3f5",
  "documentTitle": "GSX Techedu (GSX)",
  "authorId": "62_Grizzly_Research",
  "authorName": "Grizzly Reports",
  "documentKindSlug": "research-note",
  "documentKindLabel": "Research note",
  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2020-02-25 00:00:00",
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  "pageNumber": 22,
  "pageCount": 59,
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  "nextPage": 23,
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  "density": "balanced",
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  "notes": "This is a page from a short-seller research report (Grizzly Reports) accusing GSX of financial manipulation.",
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  "metadataConfidence": 1,
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  "components": [
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      "kind": "callout",
      "text": "We believe GSX overstates its capex investment in order to wash off the cash that was exaggerated on its balance sheet in the first place.",
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      "text": "Timing: GSX announced on January 31, 2020 that the deal was closed RECENTLY vs the shareholder change of Zhengzhou Kaitong that happened on January 13, 2020; Buildings: GSX stated that the deal include two completed office buildings and one office building in construction vs Zhengzhou Kaitong’s 2016 application of constructing 2 R&D buildings and 1 product display center; Utilization purpose: GSX stated it plans to use these premises for business operating functions vs Zhengzhou Kaitong’s 2016 evaluation report clearly stated after the project is completed it is mainly for office building lease or sale to private companies and social organizations.",
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      "text": "Again, we believe our deduction based on the limited information the company disclosed is reasonable, and if the company does not agree with our findings, they are welcome to offer a much more detailed explanation to the investors.",
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      "text": "If these three buildings that GSX mentioned in their press release are in fact the three buildings (2 R&D buildings and 1 product display sales center) Zhengzhou Kaitong applied to construct in 2016, our question would be why does GSX want to pay RMB 333.8 million for three buildings while the total investment of this project from Zhengzhou Kaitong is only RMB 75 million? This payment, although in installments, is over 4 times the total investment Zhengzhou Kaitong spent just a few years ago. GSX could be vastly overpaying, but we strongly suspect CAPEX fraud. We believe GSX overstates its capex investment in order to wash off the cash that was exaggerated on its balance sheet in the first place.",
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