{ "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", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 47, "pageCount": 59, "prevPage": 46, "nextPage": 48, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "dense", "nDataPoints": 0, "notes": "The slide uses investigative research to cast doubt on the integrity of the company's financial officers.", "elementsJson": [ "headline_text", "paragraph", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-d9e512d5a5f7/47", "deckHref": "/decks/019dd923-622c-750b-8b9a-d9e512d5a5f7", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-d9e512d5a5f7.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-d9e512d5a5f7#slide-47", "components": [ { "bbox": null, "kind": "callout", "text": "Would you exit just when the big pay day is about to arrive? Color us skeptical.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-78b5-7512-b5b0-8e5cf9145c17", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.7, "x": 0.15, "y": 0.25 }, "kind": "paragraph", "text": "In an interview in November 2014, when introducing the 6 co-founders (including Xiangdong Chen himself), Xiangdong Chen stated that one of the co-founders, Yuxiao Song, was in charge of company's finances. Yuxiao Song used to be in charge of financial data organization and analysis, related party transactions, and management of financial managers before the current public company EDU was listed in the U.S. This seems to be a credible background. However, it was reported that just before GSX went public, Yuxiao Song resigned from the position and the reason internally announced was due to family reasons. Although it is unclear when exactly Song resigned, judging from the disclosed information it seems that the current CFO, Nan Shen, was in position since December 2018. So GSX's former CFO must have resigned just 3 months before GSX submitted its initial filing to the SEC. Again, we found it strange that Song resigned just months before GSX's filing for IPO. Would you exit just when the big pay day is about to arrive? Color us skeptical.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "2e7f2e8f-9124-40a6-8055-e3e0f5095655", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.52 }, "kind": "paragraph", "text": "Moreover, we also question the credibility of its newly appointed CFO, Nan Shen. According to GSX's introduction, \"Ms. Nan Shen has served as our chief financial officer since December 2018. Prior to joining us, Ms. Shen was the chief financial officer of China Sinoedu Co., Ltd. from November 2017 to November 2018. Before that, Ms. Shen served multiple positions at PricewaterhouseCoopers between February 2012 to November 2017...\"", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "818d9917-52ea-484e-8f3a-8f114ef90f72", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.68 }, "kind": "paragraph", "text": "We were particularly interested in Ms. Shen's experience as CFO of China Sinoedu Co., Ltd. First of all, based on the direct Chinese translation of this company's English name, we failed to find any corresponding Chinese company per SAIC. However, we did find one company called Beijing Sino Sunshine International Culture Communication Co., Ltd. (北京新诺阳光国际文化传播有限公司, “Beijing Sino Sunshine”) which operates a brand called Sinoedu (外教中国) (Facebook page: https://www.facebook.com/sinoeduBJ). According to the introduction on the Facebook page, Sinoedu's website is http://www.sinowaijiao.com/, which is the same registered website as Beijing Sino Sunshine (website page does not work anymore).", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8acf191e-aa4d-4c34-acc7-b5119e6c06bc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.7, "x": 0.15, "y": 0.85 }, "kind": "paragraph", "text": "After researching Sinoedu online, we found an unproportionally large amount of detailed posts that allege Sinoedu of being an outright scam. Below are a couple of examples: WARNING! SinoEdu & Sino J are China Job Scams targeting Foreign English Teachers (posted on April 2, 2018) \"Attention all TEFL & ESL teachers looking to work abroad teaching in China...SinoEdu is a Chinese chain school that also uses the alias brand of SinoJ or Sino J. Do not believe anything they tell you even if they put it in your contract. They exploit foreigners and do not pay what they promise and force you to work unpaid overtime. If you dare to complain they threaten to get you", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b98b044c-689a-46c7-b10b-df8574d106c5", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.18 }, "kind": "paragraph", "text": "One thing that we always pay attention to is the turnover and credibility of a company's CFO. Our due diligence on GSX's CFO history produced concerning results.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e3e81f9a-4a7c-4319-ba47-378d9e7a883d", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "Attention all TEFL & ESL teachers looking to work abroad teaching in China...SinoEdu is a Chinese chain school that also uses the alias brand of SinoJ or Sino J. Do not believe anything they tell you even if they put it in your contract. They exploit foreigners and do not pay what they promise and force you to work unpaid overtime. If you dare to complain they threaten to get you — Warning posted on April 2, 2018.", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-78b5-7512-b5b0-92ae816c0b91", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.7, "x": 0.15, "y": 0.1 }, "kind": "title", "text": "7. Mysterious Departure of CFO Before IPO, Currently Untrustworthy CFO", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "abcd2a80-77ad-4c14-9742-02c64dc52e71", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }