Anonymous Analytics released the first salvo against Tianhe Chemicals Group Ltd (HKG:1619) a few days ago, accusing the $8 billion company of being a fraud – the company issued a response a short while later – Now Anonymous has just unleashed a 19 page response to Tianhe. The full report from Anonymous Analytics can be found below.
Executive Summary
- Bogus Hacking Claims: Tianhe Chemicals Group Ltd’s bogus claim of hacking made so that it could bypass HKex review procedures and process.
- There Are Still Two Sets of Books: By claiming forgery, Tianhe has put itself in a corner. The original SAIC documents that we presented are authentic, have verifiable anti-counterfeit codes attached, and contain financial information corroborated by official government announcements and public news articles. We submitted the original SAIC filings to the SFC to be scrutinized and verified.
- Tax Evidence Still Does Not Support Prospectus: Tianhe Chemicals Group Ltd did not provide any proof they paid taxes that would support the numbers claimed in the prospectus. Moreover, Tianhe did not discredit any of the evidence we originally presented, including records from the Yi County government and the Fuxin Haizhou District Tax Bureau.
- Related-Party Customers Are Still… Related-Party Customers: Simply ignoring facts does not make them go away. Management has blatantly lied in the face of overwhelming evidence that its biggest customers are related parties and in no way can discredit the evidence we presented. In this response we provide new and additional evidence that Tianhe and its customers are related to each other.
- Export Data Shows CITIC International Cannot Do the Size of Business Claimed by Tianhe: CITIC International is the only undisputed independent third party SFC customer of Tianhe, but in this response, we present additional evidence that Tianhe Chemicals Group Ltd has egregiously overstating its business relationship with CITIC International.
- Tianhe Marred by Evidence of True Size of Anti-Mar Market: Management’s response neither provided an estimate for the anti-mar market size that would make Tianhe’s claims plausible, nor provided the names of any of its end-users of its anti-mar product.
- Morgan Stanley Due Diligence “Seal of Approval” Worthless: Morgan Stanley due diligence is suspect at best, particularly where they have a significant financial interest in the subject company that they are seeking to further monetize. We point out an example of failed due diligence by the very same private equity fund that invested in Tianhe. Morgan Stanley is the only IPO promoter still publically supporting Tianhe.
Tianhe Chemicals Group Ltd – Introduction
After taking more than a week, Tianhe released a half-baked response to our 67 page report dated 2 September 2014, questioning its accounts. The 10 September release of Tianhe’s “clarification” was rather unceremonious, with Tianhe Management claiming its email system had been “hacked into” and was therefore compelled to release the clarification response immediately. This is despite the fact that the language of the clarification announcement makes clear that the HKex appears to have requested information and explanations from Tianhe and had still not received satisfactory answers.
For the record, we have no knowledge of any attempted hack. We seriously doubt there was ever any attempted hacking. We’re not even sure we understand the rationale behind why the supposed attempted hacking necessitated Management’s release of a clarification announcement while there were still outstanding queries from the HKex.
Shortly prior to these claims of being “hacked”, Reuters’ had published an article noting that the cost of borrowing Tianhe shares was climbing and further suggested that our report was gaining traction with investors. See the article here: http://www.reuters.com/article/2014/09/10/tianhe-chemicals-shorts-idUSL3N0RA2J520140910
We believe this whole farce of “hacking” was concocted by Tianhe so Management would have an excuse to release their response as soon as possible in order to stem the rising criticism in the media and among investors – without having to provide satisfactory answers to the HKex –in the hopes of temporarily propping up their sinking ship.
Full document below
