EVERGRANDE -- explosive expose of fraud

Quoting Citron Research as follows:


By market capitalizan, Evergrande ranks among the top 5 listed Chinese companies.

Our analysis and primary research reveal that:

1] Evergrande is insolvent; and
2] Evergrande will be severely challenged from a liquidity perspective.

• The Company’s management has applied at least 6 accounting shenanigans to mask Evergrande’s insolvency. Our research indicates that a total write-­down of RMB 71bn is required and Evergrande’s pro forma equity is negative 36bn.

For the full report, click link to Citron's website.

Evergrande plunged today in HK bourse to 3.970 HKD, down 0.510, or 11.38% .

To be fair, there is another side to the story:

Evergrande said its cash flow is sufficient and denied Citron’s allegations that it has acquired land illegally, the Securities Times reported today, citing Chairman Hui Ka Yan as saying on an investor call. The company’s directors will consult with lawyers, the report said, quoting Hui.

More at:
www.businessweek.com/news/2012-06-21/eve...port-hong-kong-mover

These guys at Citron Research don't mince their words!

See :

Evergrande is not a story about the “China real estate bubble”; rather it is a tale of a company who has abused the capital markets as well as the generous lending of the Chinese Government in order to enrich one man, aggrandize his personal ego and support his pet projects.

Bribery, excessive spending, and off-balance sheet transactions are the foundation of Evergrande’s financials.

The situation at Evergrande is so murky that, within the last year, even the Chinese Ministry of Finance fined Evergrande for reporting inaccurate financial statements.

Citron wants to make one thing clear: we do not recommend shorting any of China’s state owned banks or any construction project backed by the Government of China. On the other hand, we believe that Evergrande has misled investors and represents the worst of Chinese neo-capitalism, and therefore represents a good short opportunity in relation to other exposure in the Chinese capital markets.

Whether it be the capital markets, government enforcement, hard or soft landing, the endgame for Evergrande is a certainty; the only uncertainty is the timing.

Today, down to 3.830 HKD, which is 14 cents down.
Only 3.53% =- which is not as severe. Maybe report by Citron was overdone.
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[Evergreen 21-06-2012]:

Evergrande plunged today in HK bourse to 3.970 HKD, down 0.510, or 11.38% .