Foreign research firm on China’s US listing.pptxVIP

1101070 Xie Renchao Foreign research firm on China’s US listing Muddy Water Company Introduction Muddy Waters Research Group is a privately held due diligence based equity research company that identifies overseas Chinese stocks poised to move 30% or more. The company is especially known for its keen eye for spotting fraudulent accounting practices at Chinese companies. The company is named after the Chinese proverb “ 浑水摸鱼 ” catching fish in muddy waters. In other words, opacity creates opportunities to make money. This way of thinking has been part of Chinese culture for centuries, and it is institutionalized in the modern practices. The company was founded by Carson Block. Three types of research product Business fraud Accounting fraud Fundamental problems Case NetQin’s “Business Partners” ZTE, Huawei and Lenovo, Denied There Was Pre-installation Cooperation NetQin NetQin Mobile,Inc. was established in 2005 as a mobile phone security software company. On May 5, 2011, NetQin was listed on the New York Stock Exchange. Before that, according to the publicly disclosed data by NetQin, the number of paid users was 6 million people. InvestigativeReport NetQin manipulated data on turnover, made false market share claims, and over stated the number of paid users. According to the report, the number of NQ paid users is less than 25 thousand people, which is different from the 6 million NetQin claimed. Pre-installation Cooperation Mobile phone manufacturers ZTE, Huawei, Lenovo, etc., told the Beijing News Reporter they have had no pre-installation business with NetQin. ZTE: Mi-Assistant(掌心管家) Lenovo: “Safe(乐安全)” Product Huawei: has communicated with NetQin, But has never had formal pre-installation cooperation. Results Stock Price Falls 60% Within 3 Transaction Days On October 28, NetQin’s stock price reached a low of USD 7.58, with the closing price falling 17.22%. The stock price of NetQin fell 62%, from USD 23.05 to, USD 8.8 within 3 transaction days; the market val