GMT research, a Hong Kong based short selling investment firm, recently focused on Feihe dairy, referring to China's Feihe high revenues and profits, but has not paid dividends for many years, which is fraudulently risky, and advised investors to avoid the stock. In response, Feihe said that the company is actively preparing relevant materials and applying for temporary suspension to protect the interests of investors to the maximum extent.
According to the report of GMT, compared with the same industry, Feihe's operating profit is 26% and the return on production assets is 165% in 2018, ranking in the top 5% of the market. The accumulation of free cash inflow has formed a huge cash balance of about 6 billion yuan, equivalent to 51% of the revenue. But flying crane has not paid any dividends in the past five years, so it is worried about the authenticity of this part of the fund, and doubts that China flying crane may use part of the IPO revenue to pay huge dividends to shareholders before the IPO.
At the same time, the report points out that China flying crane does not necessarily have a false income, but it cannot find convincing reasons to explain the rapid transformation of flying crane. In addition, it is doubtful that the fund raised by Feihe's IPO in Hong Kong is used to repay debts, so investors are advised to avoid it.
On November 13, Feihe was listed on the Hong Kong stock exchange, offering 893 million shares at a price of HK $7.5, with a net financing of HK $6.564 billion. However, the stock price trend of Feihe in China was not ideal. On November 21, the closing price of Feihe was HK $6.26, down 16.5% from the issuing price.
According to the listing plan of Feihe, 40% of the funds obtained by Feihe dairy will be used to repay the offshore debt, 20% will be used for potential M & A opportunities, 10% will be used for investment projects in Canada, 10% will be used for overseas baby powder and nutrition supplement research and development activities, another 5% will be used for vitamin world's business expansion in the United States, another 5% will be used for marketing, and 10% will be used for supplement Working capital.
On November 22, Feihe suspended trading temporarily in the morning in response to the allegations by the short selling agency. Externally, the company is actively preparing relevant materials to respond to various queries in the short report issued by GMT research. In line with the attitude of being responsible for the majority of investors, the company applies for temporary suspension to protect the interests of investors to the maximum extent.
In addition, Feihe strongly denies all the allegations contained in the report and believes that the allegations are seriously untrue, groundless and misleading to investors. Flying crane is actively preparing relevant supporting materials.
It is understood that GMT started as an accounting research institution established by an analyst, because it is often active in Hong Kong stocks and the United States stocks to short some Chinese stocks and become famous. The company used to sell short: 58 Tongcheng, Jingdong, CCCC, China traditional Chinese medicine, Sinopharm holding, Anta, etc., all of which are leading companies in related industries.
Feihe said that the company will issue a clarification announcement to deal with the allegations or comments raised in the report, and the latest progress will be subject to the company's announcement.
In addition, it is worth mentioning that Feihe is not the first domestic dairy company targeted by GMT research, and Aoyou dairy industry was shorted by shorting institutions not long ago.
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