浑水做空安踏报告：用“提线木偶”操纵利润-2010.7-106页.pdf

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courts located in San Francisco,California and waive your right to any other jurisdiction or applicable law,given that Muddy Waters Research and its affiliates are based in San Francisco,California.The failure of Muddy Waters Research or Muddy Waters Capital to exercise or enforce any right or provision of these Terms of Use shall not constitute a waiver of this right or provision.You agree that each Muddy Waters Related Person is a third-party beneficiary to these Terms of Use.If any provision of these Terms of Use is found by a court of competent jurisdiction to be invalid,the parties nevertheless agree that the court should endeavor to give effect to the parties intentions as reflected in the provision and rule that the other provisions of these Terms of Use remain in full force and effect,in particular as to this governing law and jurisdiction provision.You agree that regardless of any statute or law to the contrary,any claim or cause of action arising out of or related to this website or the material on this website must be filed within one(1)year after the occurrence of the alleged harm that gave rise to such claim or cause of action,or such claim or cause of action be forever barred.Page 1 of 92 Report Date:July 8,2019 Company:ANTA Sports Products Ltd.Ticker:2020.HK Industry:Sportswear Stock Price:HK$55.30 Market Cap:HK$150 billion Float:41.6%Average Daily Volume(90-day):HK$365.0 million ANTA Part I:Turds in the Punchbowl We thought long and hard about the title of this report,which is the first in a series evidencing endemic fraud at ANTA.We kept coming back to“Turds in the Punchbowl.”ANTA is a real business,and in terms of operations and marketing,theres much to be admired.Presumably,this is why accomplished sportswear entrepreneur Chip Wilson recently agreed to invest in it.1 But within all this goodness,theres a distinctly awful truth.Investors cannot rely upon ANTAs financials.We believe that ANTA posts industry-leading operating margins not because its so well operated;but,rather because ANTA uses numerous secretly controlled Tier 1 distributors to fraudulently boost its margins.We have“Smoking Gun”evidence that ANTA secretly controls a material number of its distributors.In this report,we present documentary evidence that ANTA secretly controls 27 distributors.At least 25 of these of these appear to be Tier 1 distributors.The total number of Tier 1 distributors ANTA controls could be over 40 of the approximately 46 the company has.2 The secretly controlled distributors collectively appear to account for approximately 70%of ANTA brand sales.ANTA resolutely claims that its Tier 1 distributors are independent third parties.This is a lie.The fact that ANTA controls its Tier 1 distributors is well-known among senior ANTA executives.ANTAs senior executives know that ANTA conceals its control of the distributors by using proxy owners.However,this notion of independent distributors is such a charade that ANTAs senior executives frequently refer to the distributors as“subsidiaries”.3 We believe ANTA controls these subsidiaries in order to manipulate its reported financials.During our research process,we first followed paper trails,such as SAIC files,credit reports,and online articles.This research evidenced control of numerous Tier 1 distributors.One of many examples is that for a number of years,the Supervisor of one of the largest distributors was 1 http:/www.files.services/files/394/2019/0626/20190626081501_97300901_en.pdf 2 ANTA 2018 ESG report,p.38 3“?(subsidiaries)and?”(branch companies)Page 2 of 92 ANTAs Executive Director with responsibility for sales,Wu Yonghua.Four former senior managers of ANTA and one former manager of a major distributor then expressly stated in interviews that ANTA controls the distributors.We organized this report in three sections.In A,we explain how the fraud works.We include brief excerpts of our interviews with sources to corroborate the high-level points.In B,we show the extensive paper trail that demonstrates Antas control of 25 Tier 1 distributors and two smaller distributors.C is the Appendix,which contains more evidence and larger excerpts of source interview transcripts.A:How the Fraud Works ANTA began as a manufacturer of sneakers for other brands.When it wanted to become a domestic brand of its own,large distributors would not work with it.ANTA had to create its own network of distributors and retailers.ANTAs controlling shareholder used his capital to invest in a network of distributors to give the brand traction.The strategy worked,and ANTA grew.As ANTA planned for a 2007 IPO,a more nefarious strategy took hold.ANTA insiders realized that they could create the illusion of independent distributors.ANTA made a big show of reorganizing its distributors into purportedly independent,arms-length parties.Rather than merely re-naming their companies,distributors that had used ANTA in their names actually de-registered their entities.4 Individuals then formed new entities that did not use the ANTA name.ANTA claims that its ANTA brand distributors are arms-length parties.The company accordingly insists that it has only limited visibility into its distributors financials because it does not own them.5 ANTA also recognizes revenue at the point of sale to distributors.6 However,this is a charade.In the substantial majority of cases,the owners of these distributors are merely proxies for ANTA Chairman Ding Shizhong.In March 2008,a company called Jinjiang Yundong Business Consulting Co.Ltd.(?r,“Yundong”)was formed.Yundong is nominally owned by Peng Qingyun,but he is a proxy for Chairman Ding.Chairman Ding controls Yundong,while senior ANTA executive Wang Huayou is its General Manager.7 Yundong,in turn,controls many of ANTAs Tier 1 distributors.ANTA executives frequently refer to this arrangement as a“left hand-right hand relationship”(“?”),with ANTA the ListCo being the“right hand”,and the distributors being the“left hand”4 ANTA Prospectus,p.87,“We permitted the distributors to