Second Reports Of Muddy Water Short Selling Anta Came To Accuse Founder Ding Shizhong Of Stealing Company Assets.

Before Tuesday, Anta sports (2020.HK) issued a Clarification Announcement, denying the Muddy Waters Research muddy water issue in the short report on Monday, alleging that a large number of first class distributors were secretly controlled by the Fujian based company.

Anta sports said in a statement that the 25 distributors mentioned in the muddy water report are all independent third parties, and distributors have their own independent teams, independent decisions, independent financial and independent human resources. There is no case of Anta sports control.

Muddy water's first report on Monday accused Anta sports of secretly controlling 25 tier one distributors, which occupy 70% of Anta brand and even up to 80% of sales. The report is also quoted as an interview with four senior managers of Anta sports Distribution Department and a former senior manager of Anta brand China's largest distributor, Guangzhou anda Trade Development Co., Ltd. Muddy water said, Anta sports's first class distributors are controlled by Anta's sports secret. The distributor's legal control is actually the agent of Anta sports chairman Ding Shizhong, while Anta sports assigns personnel managers, financial managers and three deputy positions for the sub distributors.

In the statement, Anta sports refers to the company's unified wholesale discounts for all Chinese distributors, but it will provide guidelines for distributors in sales and marketing strategies, market management and performance assessment, so as to ensure that Anta sports products business can be successful in the region where distributors are responsible, but even so, distributors are self financing and business decisions are independent.

However, Anta sports said in its statement that a distributor who would promote the business convenience would call himself a "subsidiary" or "sub company" of Anta sports, rather than a legal definition. In addition, in order to support distributors, Anta sports allows distributors to use Anta brand names, signs, even e-mail, address and other tools.

As for muddy water, the former manager of Anta has become the real controller of the distributor. Anta sports responded that there are individual employees leaving the group and joining the distributors, or the opposite situation exists, but these situations are related to the individual employees' career planning and decisions, and are not rare in the industry.

At the same time, Anta sports announced resumption of trading on Tuesday, resuming trading, opening at HK $50, or 2.44%.

In view of Monday's muddy water release short report is only the first part, followed by Anta sports response, muddy water quickly issued second short reports, and the report also completely guessed Anta sports response, think Anta sports will routinely deny accusation, think its line to follow local business practices.

In the second short report, muddy water accused a series of transactions shortly after the launch of Anta sports, which convinced the agency that Anta sports insiders had been trying to deceive external investors to seek private benefits at the expense of investors, including in 2008, insiders deprived the company of a valuable asset, the international brand retail business, and tried to cover up the fact.

The second report of muddy water is called Mens rea from Latin guilty mind, which is much more elegant than the first report "ANTA Part I: Turds in the Punchbowl".

In the second report, muddy water said that Shanghai's frontline sporting goods Co., Ltd., which was also highly regarded by Anta sports at the time of IPO, was sold by Anta sports 187 million 400 thousand yuan in 2008, and even 181 million 400 thousand yuan was used to pay the so-called accounts receivable.

At that time, Shanghai had 5 core city branches, distributing Adidas, Reebok, Kappa and other brands, responsible for international brand retail business. Anta sports once said it would invest 695 million 700 thousand yuan to develop these businesses. In 2007, the China Daily and annual reports revealed that the Shanghai frontline opened 98 stores in the second half of 2017, contributing to the company's revenue from 2.4% to 35 million 700 thousand yuan to 6% yuan, or 100 million 800 thousand yuan.

As for the buyer, Jiangsu Hesheng investment guarantee Development Co., Ltd. is a newly registered Credit Guarantee Corporation, which is obviously used in the transaction. After that, Jiangsu and Sheng transferred the Shanghai forward to another third party and cancelled the company. Finally, Jiangsu and Sheng were controlled by Chen Dinglong, and the transaction price was 20 million yuan.

Chen Dinglong was Guangzhou's Anderson shareholder in the above transaction, and according to the rules of the HKEx, Guangzhou anda Anta Sports Association. According to muddy water interview Anta sports internal and related people, Chen Dinglong is currently responsible for Anta sports Kingkow brand, apparently Anta sports sales network part.

After the completion of the Shanghai frontline deal, the legal representative was held by Wu Zeqing, and according to the leader's information, Wu Zeqing served the Shanghai sporting goods Co., Ltd. at that time, and muddy water means that Shanghai is the first distributor in its short selling report, which is controlled by Anta sports.

Therefore, muddy water concluded that only an idiot would believe that the transaction was not Ding Shizhong and his gang stealing shareholder assets.

Similar allegations also occurred before 3998.HK was attacked by short selling agency Bonitas Research.

At the end of last month, Bonitas issued a short report on Bosideng, claiming that Bosideng's major shareholder Gao Dekang and his conspirators had "drawn blood" from their small shareholders, including 807 million yuan to misrepresent profits to attract investors, 2 billion yuan never to disclose insiders' assets to buy assets, to dispose of assets worth 65 million yuan to Gao Dekang at 5 million 400 thousand low price, and to issue high historical dividends to insiders who own more than 65% of the group's shares.

The report of muddy water is still the same as that of the short selling organization, mainly aiming at the company's false income and profit through related party transactions. At the same time, large shareholders use large amounts of hidden transactions or "white gloves" to acquire assets from the listed companies.