Anonymous Analytics: Tianhe Chemicals Is The Biggest Fraud Since Sino-Forest

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Anonymous Analytics just released a strong sell on stock, noting in an email to ValueWalk ‘we think is the biggest fraud since Sino-Forest’. Below readers can find the entire report on Tianhe Chemicals Group Ltd (HKG:1619)

Release Date: 2 September 2014


Tianhe Chemicals





Ticker: 1619.HK
Market Cap: HK$62 billion
Recent Price: HK$2.43
Target Price: HK$0.00
Expected Return: -100%
Conclusion: Strong Sell



  • This report presents substantial, overwhelming, and conclusive evidence that Tianhe is one of the largest stock market frauds ever conceived.


  • SAIC filings and third-party documents show that Tianhe generates a fraction of the revenues and profits it reports.


  • We present smoking gun evidence that Tianhe does not pay the taxes it claims, and therefore could not have generated the profits it claims.


  • Site visits show that most of Tianhe’s SFC customers are related parties that share offices and overlapping management.



You should have expected us


[email protected] Twitter:  @anonanalytics


JP Morgan was lucky to have  withdrawn from Tianhe’s IPO.


It’s hard to imagine that three years after the fall of Sino-Forest, a fraud twice its size could navigate through a sea of regulators, investment bankers, and auditors to list on a global stock exchange.


Yet here we are.


Tianhe Chemicals is a US$8 billion company that went public on the Hong Kong Stock Exchange earlier this year as one of the biggest IPOs of 2014. The listing turned the Company owner and founder, Mr.

Wei Qi into a billionaire and Northeast China’s richest man.1


However, we have conducted months of due diligence, field research and analysis which show that Tianhe is a massive fraud and one of the largest stock market scams ever conceived. This report details our findings, including extensive analysis of government documents and SAIC filings, site visits to Tianhe’s purported customers and review of industry data. Our sources also conducted field interviews with former employees and competitors that completely contradict Tianhe’s stated position as a leader in China’s chemical market.


Additionally, this report will also provide background on Frost & Sullivan, a firm that had a significant role to play in legitimizing Tianhe’s claims, and is cited throughout its prospectus.


In the end, we don’t just expect Tianhe to be unwound and delisted, we also expect the Securities and Futures Commission to bring criminal charges against the architects of its IPO.

Our investigation shows that Tianhe Chemicals (“Tianhe”) is one of the largest stock market frauds ever conceived. We present irrefutable evidence that Tianhe’s IPO prospectus and subsequent earnings announcements massively overstate the scale, scope and profitability of Tianhe’s business.


Overstated profitability: original SAIC filings ofTianhe’s relevant operating subsidiaries show that in2012, Tianhe’s true revenue was 85% less than it reports, and its net income was almost 100% less. Similar overstatements were made for 2011. We present additional government and third-party evidence that corroborate the SAIC filings and discredit the IPO prospectus.


Contradictory tax data: we present smoking gun evidence from relevant tax authorities that Tianhedoes not pay the taxes it claims. If its financial statements were accurate, Tianhe’s tax payments would exceed all the tax revenue collected by the jurisdictions in which it operates


Two sets of books: we provide evidence that Tianhe has created fake SAIC filings to match itsprospectus, and in the process, presented two sets of books to the SAIC. The original set was audited by a registered local auditing firm and shows that Tianhe is a fraud. This set contains anti-counterfeit stamps which can be used to verify the authenticity of the SAIC filings online with the relevant accounting oversight body. A second set was audited by Deloitte and matches with Tianhe’s IPO prospectus. However, we believe this set to be a fake created ahead of the IPO because among other reasons, it does not contain the necessary anti-counterfeit stamps, nor any form of verification code.


Related-party customers: our investigation shows that most of Tianhe’s biggest, disclosed SFCcustomers are all either related parties, very small and/or bordering on non-existent.


Impossible market size: Tianhe claims the secret of its profitability stems from its ability to produce andsell anti-mar in commercial quantities. However, reports by industry experts, backed up by market research show that i) Tianhe’s claimed sales of anti-mar are twice the size of the total market, ii) Tianhe is not known by industry players, and iii) statements by former employees show that Tianhe does not produce anti-mar, but a far less profitable and less valuable solvent used in the anti-mar process.


Conclusion: we believe that this is the end for Tianhe. Tianhe came to the market as one of the biggestIPOs of 2014, and at US$8 billion we believe it will collapse as one of the biggest frauds in history.

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