Background Introduction 背景介绍 o U.S. investors, Alibaba (NYSE:BABA) is a company with strategic aspiration, significant growth potential and represents expansion options in China 1 . Based on its IPO closing price, with a market capitalization of 231.4 billion, Alibaba had surpassed Facebook (NASDAQ:FB) to become the second largest internet company in the world after Google (NASDAQ:GOOG). However, after three months, Alibaba’s market value is facing significant challenge. Under the combined impact of white paper published by the State Administration for Industry and Commerce (“SAIC”) on January 28 th 2015 and Alibaba’s lower-than-expected fourth- quarter revenue, Alibaba’s stock price decrease by 8.78 percent on January 29 th 2015, with a market capitalization loss of more than 22 billion dollars. The white paper states that many products sold on Alibaba’s websites infringed on trademarks, were banned, substandard or fake. Besides, seven law firms have announced class action lawsuits against Alibaba as of February 2 nd 2015. Jack Ma, executive chairman of Alibaba, responded positively by setting up a personal meeting with Zhang Mao, minister of the SCIA, and promised to “devote more resources to fight against fakes”. The response strengthened the confidence of U.S. investors and ended the downward pressure on Alibaba’s stock price. 1 Damodaran, Aswath. "Alibaba: A China Story With A Profitable Ending?" Seeking Alpha. 9 May 2014. Web. 4 Feb. 2015. <http://seekingalpha.com/article/2206153-alibaba-a-china- story-with-a-profitable-ending>. T Facing the “Wolves of Wall Street” A Special Report on U.S.-listed Chinese Companies 面对华尔街之狼 在美上市中国公司的 生死博弈 Author: Guan Huang, Financial Analyst, Dragon Gate Investment Partners Editor: Xuan Luo, Financial Analyst, Dragon Gate Investment Partners 作者:黄冠,龙门资本金融分析师 编辑:罗璇,龙门资本金融分析师
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Facing the Wolves · 矿业、FAB Universal An Explanation of Short Selling ... Process of Short Selling投资者 If stock price goes down to $15, Investor A buys 100 shares in the
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Background Introduction
背景介绍
o U.S. investors, Alibaba (NYSE:BABA) is
a company with strategic aspiration,
significant growth potential and represents
expansion options in China1. Based on its
IPO closing price, with a market
capitalization of 231.4 billion, Alibaba had
surpassed Facebook (NASDAQ:FB) to
become the second largest internet
company in the world after Google
(NASDAQ:GOOG). However, after three
months, Alibaba’s market value is facing
significant challenge. Under the combined
impact of white paper published by the
State Administration for Industry and
Commerce (“SAIC”) on January 28th 2015
and Alibaba’s lower-than-expected fourth-
quarter revenue, Alibaba’s stock price
decrease by 8.78 percent on January 29th
2015, with a market capitalization loss of
more than 22 billion dollars. The white
paper states that many products sold on
Alibaba’s websites infringed on trademarks,
were banned, substandard or fake. Besides,
seven law firms have announced class
action lawsuits against Alibaba as of
February 2nd 2015. Jack Ma, executive
chairman of Alibaba, responded positively
by setting up a personal meeting with Zhang
Mao, minister of the SCIA, and promised to
“devote more resources to fight against
fakes”. The response strengthened the
confidence of U.S. investors and ended the
downward pressure on Alibaba’s stock price.
1 Damodaran, Aswath. "Alibaba: A China Story With A Profitable Ending?" Seeking Alpha. 9 May 2014. Web. 4 Feb. 2015. <http://seekingalpha.com/article/2206153-alibaba-a-china-story-with-a-profitable-ending>.
Days Before and After the Short Selling Activities
TradingVolume
Stock Price
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交易
量 (
*10
,00
0)
股票
价格
($
)
卖空行为前后的天数
交易量
股价
图 4 描绘了上市公司在卖空发生前 15 天
至卖空后一年的股票价格表现及交易量平
均变化。由于已退市及已摘牌的公司不计
入考虑,所以计
算结果存在选择
性偏差的问题,
实际表现要差于
图中描述。
Reasons on
Skeptical
Report
质疑理由
Some of the U.S.
listed Chinese
companies being
targeted were
under investigation due to their
intrinsic problems, while other were simply
in a case of misunderstanding with the U.S.
investors. Citron Research and Muddy
Water Research, considered as the main
research institutions participating in short
selling U.S.-listed Chinese companies,
frequently use
financial fraud
as the main
reason to
publish skeptical
research report.
在遭到猎杀的
中国公司中,
有因为自身存
在严重问题的,
也不乏因为美
国人没有理解
而被误杀的。
而作为做空中
国概念股的主
要机构,香橼公司和浑水公司屡以财务造
假为出发点撰写质疑报告。
Based on 19 skeptical reports from Citron
Research and Muddy Water Research, Chen
Bin and Liu Huijun summarized ten major
reasons they used to doubt on authenticity
of companies’ financial statements.
Figure4. Average Stock’s Performance Before and After
the Short Selling Activities
Figure4. Average Stock’s Performance Before and After the Short Selling Activities
图 4. 卖空前后的股票平均表现
- 7 -
基于 19 份香橼和浑水的质疑报告,陈彬、
刘会军总结了 10 大质疑公司“财务造假”
的理由6。
Among the above listed companies, RINO
International Corp. (OTCMKTS:RINO) was
delisted due to financial fraud, however
New Oriental Education & Technology
Group Inc. (NYSE:EDU) did well against
Muddy Water. From these two cases, what
6陈彬、刘会军:“什么样的公司有财务造假嫌疑—来自香橼
公司和浑水公司的启示”,证券市场导报 2012 年第 6期.
Print
did firms in short selling industry chain do
and how did Chinese companies protect
their rights and interests?
在上述遭到质疑的中国公司中绿诺科技
(OTCMKTS:RINO)就因财务造假而惨遭退市,
而新东方(NYSE:EDU)对于浑水公司的反击
则尤为精彩。那么在绿诺科技和新东方这
两个案例中,美国人怎么做空,而中国公
司又是怎么保护自己的权益的呢?
Occurrences Reasons
11 Gross profit is much higher than industry average
10
Documents filed to State Administration for Industry & Commerce of the People’s Republic of China and State Administration of Taxation are different from ones filed to Securities and Exchange Commission
8
Concealment of related party transactions or revenue highly relied on related party transactions
8 Share transactions between major stockholders and management
8 Relatively obscure auditing firm with bad reputation
7 The honesty of management team is open to doubt
7 Has changed companies’ auditing firm or CFO
5 Over-outsourcing, revenue reply on sales agents or broker
4 More complex company structure than it really needed
3 Stock issue price much lower than expected
出现次数 质疑理由
11 远高于同行业的毛利率
10 报给工商和税务部门的文件
与报给 SEC 的不一致
8 有隐瞒关联交易的情形或收
入严重依赖关联交易
8 可疑的主要股东和管理层股
票交易
8 审计事务所名不经传且信誉
不佳
7 管理层的诚信值得怀疑
7 更换过审计事务所或 CFO
5 过度外包、销售依赖代理或
收入通过中间商
4 复杂难懂的超过商业实际需
要的公司结构
3 超低价发行股票 Figure5. Ten Major Reasons Companies have
•New Oriental announced that it further strengthened the corporate structure by simplifying the shareholding structure.
Day 7
•Due to the VIE structure adjustment, SEC was involved in the investigation. Once the news was released, EDU shares dropped by 34 percent during the day.
Day 8
•Muddy Water released skeptical report rates New Oriental as “strong sell”, stock price plunged by 35 percent during the day.
Day 9
•Stock price rebounded 17.89 percent after CEO Mihong Yu rebutted Muddy Water’s accusations.
Day 10
•New Oriental announced that members of its senior management team, including its chairman and chief executive officer Michael Michael Yu, director, president and chief financial officer Louis T. Hsieh have informed the Company of their intention to use their personal funds to purchase the Company's American depositary shares ("ADS") on the open market for an aggregate amount up to a maximum of $50 million within the next three months. Stock price raised by 15.27 percent during the day.
Day 14
•Glancy Binkow & Glodberg LLP announced class action lawsuit against New Oriental.
Day 74
•Wells Fargo released a positive report about EDU that caused the stock to rise about eight percent to $14.92 per share
The Below Chart Summarizes important events happened during
the short selling activity, starting from New Oriental’s corporate
structure change.
新东方教育科技集团(简称
新东方)是中国最大的私人
教育服务提供商,其教育
项目包括英语及外文培训,
海外及国内测试备考,以及
中小学教育等。新东方于
2006 年 9 月 7 日在美国纽
约证券交易所上市,成为
中国第一家海外上市的教
育机构。
In the report, Muddy Water
claimed EDU has numerous
franchisees while its CEO
said that company owns all
of its stores. Other
accusations include that the
abnormal high gross margin
wasn’t realistic and that
EDU’s Beijing operation has
prepared fraudulent
financial statement in terms
of tax reduction10.
在质疑报告中浑水公司宣
称新东方有大量特许加盟
店,却自称所有店面归新
东方自有。其他质疑包括
毛利率远高于行业平均水
平以及新东方所获得的税
收减免不合理等。
10 Block, Carson C. "Initiating Coverage on EDU – Strong Sell." Muddy Waters Research. 18 July 2012. Web. 4 Feb. 2015. <http://www.muddywatersresearch.com/research/edu/initiating-coverage-edu/>.
- 12 -
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量 (
*10
0,0
00
)
股票
价格
($
)
交易量
股票价格
However, from New Oriental’s response,
franchisee fees only represent 0.009
percent of the revenue in 2010 and 0.045
percent of the revenue in 2011. New
Oriental considered the franchise fees as
immaterial information, which is different
from what Muddy Water described as “a
fundamental aspect of its business model”,
and therefore did not show on the financial
statements11.
Although New
Oriental should have
stated the franchisee
programs in its
quarterly report
instead of leaving it
completely as
immaterial, this is an
example of the
exaggerations
sometimes seen in
short seller research.
然而在新东方的回应
中,加盟费只分别占
2010 年和 2011 年总
收入的 0.009%和
0.045%。之所以未从
季报中体现只因所占
比例太小,属于细化
项目,远不是浑水公
司所描述的是其商业
模式的基础。虽然新
东方在进行披露时不
够严谨,没有将加盟
费体现在季报当中,
但是从这个案例中可
以发现卖空公司不负
责任的“夸大”行为,
真正将“粉刺”夸大成了“癌症”。
With New Oriental’s fast response point by
point, investors rebuild their confidence in
the company. As a result, the stock price of
New Oriental gradually recovered and
Muddy Water finally failed to prove its
allegations. Michael Yu, CEO of New
11 "Press Release." New Oriental Education & Technology Group. 19 July 2012. Web. 4 Feb. 2015. <http://investor.neworiental.org/phoenix.zhtml?c=197416&p=irol-newsArticle_Print&ID=1716414>.
图 7. 新东方自卖空以来的表现
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ing
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lum
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*10
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00
)
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$)
Trading Volume
Stock Price
Figure7. EDU’s Stock Performance since Short Selling Crisis
13 "China Mobile Games - CMGE - Who Is Really Being Played?" GeoInvesting. 15 Jan. 2015. Web. 4 Feb. 2015. <http://www.geoinvesting.com/china-mobile-games-cmge-who-is-really-being-played/>.