Air Force Muddy Water Launched The Fifth Round Of Attack, Anta's Stock Price Stayed Lazy And Rose 3.3% At Noon.

(Financial News Agency) short selling muddy water launched a fifth attack on Anta sports (02020-HK) on July 21st (Sunday). The short selling report entitled "controlling main suppliers and some Fila lies". However, Anta's lazy price rose 3.3% at noon in July 22nd.

The latest report of muddy water report shows that Anta claims to be the third largest supplier and is secretly controlled by Anta. The supplier is owned by Peng Qingqi, Anta's agent, while Mr. Peng is a senior staff member of Anta. The report reiterates that Anta's financial report is not credible.

In response, Anta sports issued a clarification announcement at noon, noting that Muddy Waters published a research report which contained a number of allegations about one of the suppliers and group business of the group. Anta sports strongly denied the allegations in the report, saying the allegations were inaccurate and misleading. And reserves the right to take legal action against those who are responsible for muddy water or related allegations.

Today, Anta's short selling situation is very active. In the morning of July 22nd, the amount of short selling amounted to HK $42 million 880 thousand, which involved 739 thousand shares. On Friday (July 19th), Anta's total short selling amount was only HK $21 million 547 thousand and short selling shares were 384 thousand shares.

Look back at the latest short selling report. It is reported that these suppliers of Anta are not within the scope of audit of listed companies, and Anta's real gross margin should be at a lower level. Anta's largest supplier, Henan sharp Sports Goods Co., is controlled by Peng Qing, a Anta official. He holds 95% rights and interests of Fujian Rui Li Limited company. At the same time, Anta holds 85% Sprandi China and Xiamen Sprand, and its legal representative and general manager is Peng Qingqi. Peng Qingqi is also vice president of Fujian Anta Investment Co. Ltd., which is a private investment enterprise of Anta founder family.

Anta seems to shift costs from other production lines to Henan's strength. During the period from 2016 to 2017, Anta's 3 manufacturing enterprises had a net profit margin of 20% to 30%, but only 2% of Henan's sharp power, while the average value of the industry was about 5%.

Muddy water estimates that most of Henan's products will be sold to Henan Anta sports company, a listed company. The report believes that the two companies are closely related. Henan sharp is the largest third party supplier of Anta. According to the annual report of Anta 2018, the largest supplier accounts for 3.5% of the listed companies, and the sales cost of Anta's 11 billion 400 million yuan in 2018 is 3.5%, which is equivalent to about 400 million yuan.

Muddy water believes that Henan will not be the only supplier who is abnormal. I believe there will be other Anta related suppliers, together with the controlled distributors, to whitewash Anta's gross margin.

Muddy water also reveals the problem of Anta's online sales. The report points out that Anta employee Peng Qingqi also owns Anta and Fila brand online store. Peng Qingqi's enterprise, Fujian sharp, also operates a number of Anta online stores, including Anta's sharp move on Tmall and the vertex of Jinjiang.

Anta once said that sales growth of the main brands of the group came mainly from online store sales. Management expects the online sales of e-commerce channels will account for 20 to 30% of the group's sales. Similarly, the online sale of its Fila is mainly represented by the group. However, according to mudshui and former Anta executives, Fila is operated by the independent working group and separated from Anta brand and channel management. According to the preliminary results report of Hangzhou city network commodity inspection, Jinjiang's top Fila also operates in Tmall online store, and its operation period has reached 7 years. The selling price of the online store is 20% to 40% discount of the general price. Many messages are not credible in showing Anta's financial report.

However, the news continued to have no negative impact on Anta's share price. Anta reported HK $58.1 at noon on July 22nd, 3.3% or HK $1.85 against the market, and the turnover was HK $315 million. Since muddy water released its first Anta short selling report in July 7th, Anta fell 7.3% in the first half of July 8th. The subsequent report has little influence on stock prices; since July 11th, Anta's share price has risen steadily, and has risen by HK $5.45 or 10.7% to HK $56.25 in July 19th.