Muddy Water Show Sniper Wei Water History Continues To Bite Anta And Send Fourth Short Selling Reports

Muddy water (Muddy Water) continued to "argue" for Anta (02020-HK). In July 14th, it released fourth Anta short selling reports. It also exposed the history of Wei Shui in the past 9 years and successfully attacked the listed companies, and did not bow to Anta.

Muddy water in the latest Anta short selling report pointed out that muddy water has been issuing fraud listed companies for 9 consecutive years, and has never been accused by the regulators of lying. And the listed companies exposed by the muddy water are basically denying the conclusion of muddy water. Summing up past achievements, according to muddy water sniper action is quite brilliant, 6 of the 14 mainland enterprises that have been targeted, 6 have been removed, 1 have been suspended for more than 5 years, 2 have been bought at premium by the management, 2 shares have fallen more than 90%, 2 shares have also declined significantly, and only 1 stock prices have continued to rise.

In the case of Anta, the other side continued to deny the accusation, while Anta agent also defended the company. Anta has outsourced most of its counterfeiting behavior to marionette to reduce its reputation risk. The latest report sums up 3 lies of Anta:

Lie 1: "we never said that we own all Fila shops".

However, before calling Anta's short selling report, Hun Shui once called the investor relations representative of Suki Wong, asking whether Anta owns all the Fila shops in the mainland, and she responded "yes".

Q: in 2014, Fila business shifted from wholesale to retail, and all of them owned and operated independently?

A: Yes, we have brand names and sell products directly to our customers.

Q: Fila?

Answer: Yes, we are engaged in Fila retail business ourselves. In the Anta income statement, the revenue from Fila comes from the retail business.

Q: how many Fila shops do Anta have in the mainland?

A: on the twenty-second page of our official website, we have 1600 Fila brand shops.

Q: is everything self-employed?

Answer: Yes, because we own it, it will be easier to manage inventory.

In addition, Lai Shixian, chief financial officer of Anta, also said at a conference call, "we have no intention to engage in wholesale business of Fila. We will continue to operate Fila in a proprietary mode."

However, according to earlier reports of muddy water, Anta's Fila brand is partly operated in wholesale mode.

Lie 2: selling Shanghai forward and its subsidiaries is a normal transaction.

The muddy water report reiterated that Anta sold Shanghai's frontline deal on corruption and misconduct on the grounds of poor international brand retail business. In fact, the new expansion and rapid development of the business, the initial record of the loss is a common thing, on the grounds that the rationale for the sale of business is inadequate. As reported in the second report, the Shanghai frontline was sold to a purchasing agent. After 6 months, the Shanghai frontline was finally resold to the Anta stakeholder, Chen Dinglong, the largest shareholder of Guangzhou Anta, and it belongs to a connected transaction.

Lie 3: Anta distributors are independent, not related parties.

Muddy water's first report has detailed that Anta and distributors are not independent, Anta controls the financial departments of these distributors, Anta employs the financial manager of distributors, and pays salaries to financial staff. The report finds that such an arrangement is not appropriate and has the opportunity to create false transactions.

The report believes that collusion with counterparties is an important hotbed for mainland stock market fraud. Whereas auditors generally do not audit the so-called independent third party, they only send confirmation letters to the independent traders at the same time, requiring the other party to confirm the accuracy of the transactions related to the listed companies. Mainland law enforcement is also inadequate for false statements.

In Anta's official response, Anta executives have not been assigned to distributors. Muddy water believes that Anta is still lying.

Affected by muddy water's fourth short selling reports, Anta's performance in the early July 15th was reversed. At 9:31, it had seen HK $50.2, down 51.45 from HK $51.45 on Friday, and rebounded to HK $52.5 at 10:01, rebounding 2%.

In July 12th, before the fourth short selling report, Anta's short selling disk was not active, involving 461 thousand shares of short selling and short selling ratio of about 3.9%.

After muddy water issued third Anta short selling reports in July 11th, Anta issued a clarification announcement at noon. On the same day, it announced the retail sales data for the second quarter of 2019, which appeared to be expressed in the form of data. Anta's operation condition has been good. The announcement showed that the retail sales of Anta brand products increased by 10%-20% in the second quarter, while the retail sales of other brands increased by 55%-60% over the same period last year.

In the face of the fourth sniper, how Anta will fight back is worth noting.