Citron vs Lngtop.docVIP

东南融通被Citron指控造假（英文原文） 　2011-04-26 23:46:05　来源： HYPERLINK /media/Citron Citron HYPERLINK / 原文链接　 “Money made through dishonest practices will not last long”…Chinese Proverb Introduction To think the fraud in the US listed Chinese stocks is limited to the RTO market is na?ve. Citron introduces a story that has all the markings of a complete stock fraud — with off balance sheet transactions that create outsized margins and management with backgrounds unsuitable to run a public company. The most obvious risk factor in the China space, and the factor that has linked so many of these collapsed stocks, is obviously “the story too good to be true”. Which brings us to the curious case of Longtop Financial (NYSE:LFT), a company that produces software for the banking sector. In this report, Citron outlines several concerns which should be considered by the auditors as they prepare the company’s annual audit. It is the opinion of Citron that every financial statement from its IPO to this date is fraudulent … read on to understand. Margins far in excess of competitors ?Ticker ?Company ????? Market Cap? ?ISS ?Isoftstone ?388 m? ?VIT ?VanceInfo 1,450 m? ?HSFT ?HiSoft ?619 m? ?CIS ?Camelot Information Syst. 916 m? ?LFT ?Longtop Financial 1,460 m LFT reports spectacularly high margins — much greater than any peer company. In the fiscal year March 2010 LFT reported gross margins of 69% and non-GAAP operating margins of 49%. Peers report gross margins between 15-50% and operating margins of 10-25% or even lower. Managements explanation for the high margins is that they have more standardized software sales then peers and standardized software has very high gross margins of around 90%. The company claims that these solutions and modules can be deployed to new customers with fewer man-hours and expenses. Furthermore, even if you believe the standardized software gross margin is 90%, then this implies that LFT is generating 60-65% gross margins on customized software developmen