Muddy Waters, which is famous for shorting concept stocks, issued a short-selling report. The 90-page report stated:
Three affiliated companies, Yimin Wangjin, Yimin Wealth, and Yimin Dai, are all under the control of the same actual controller Zhang Yida, and have engaged in interest transfer and other behaviors.
It also cited a case in which a consortium led by Yimin Fortune and composed of three Yimin-related companies spent RMB 14 billion to acquire the troubled Zhongjiang Trust.
The internal management of this trust company was chaotic, and it defaulted on 35 trust projects, with a total default of nearly 8 billion yuan. The company is not worth the 14 billion yuan price at all.
There must be something fishy about the transaction!
In addition, a large number of Wall Street investment banks that had invested in China Trust have withdrawn on a large scale in recent years.
This is an industry in decline!
Muddy Waters also entrusted Chinese cooperation agencies to conduct investigations where defaulted projects occurred.
It was found that many projects were political trust projects and local debts guaranteed by Chinese local governments, but they defaulted!
As public companies listed in the United States, the three Yimin companies must be responsible to their shareholders.
Yimin Wangjin was also criticized.
Muddy Waters said that Yimin Wangjin was originally a financial technology company, but it spent a large amount of the company's funds to acquire a local traditional bank in Indonesia.
In terms of business operations, it seems short-sighted and stupid. It is not worthy of its current market value and should be valued as a bank stock.
China's P2P industry is being liquidated one after another. Yimin Wangjin is burdened with more than 60 billion in uncollectibles. The transformation is difficult and it is very likely that it will not be able to survive.
Yimin Dai also faced supervision, struggled to transform, and suffered a drastic change in performance.
At the same time, Yimin Wangjin and Yimin Dai also face the same problem, with extremely high bad debts and a large number of borrowers evading their debts.
The document also quoted many screenshots of documents obtained from lurking among borrowers. A large number of borrowers said they would fight to the end and not repay the money.
Finally, Muddy Waters also pointed out that the risk control engines of Yimin Wangjin and Yimin Dai are a joke and full of loopholes.
…
As soon as this report came out, the three US listed companies of Yimin Group fell.
Yimin Fortune's share price fell by more than 15.4%, its market value fell to US$1.692 billion, and more than US$308 million was evaporated...
Yimin Wangjin's share price fell next, reaching 13.28%, and its market value fell to US$2.601 billion, evaporating nearly US$400 million...
Yimindai's share price fell 12.5%, its market value fell to US$1.05 billion, and more than US$150 million was evaporated...
…
The three companies affiliated to Yimin collectively lost $860 million in one day, shocking the domestic financial circle.
Including some bosses of listed companies engaged in mutual funds, such as Lu Min, Xiao Wenjie, Tang Lin and others are paying attention to the further development of the situation and are very worried that Muddy Waters will set their next target on them.
The impact of the three companies of Yimin System was that their respective companies also experienced declines, but not as severe as Yimin System.
Muddy water has a bad reputation, and all Chinese concept stocks avoid it for fear of being bitten by this vicious dog.
…
"Muddy Waters was founded in July 2010. Its founder, Carlson Bullock, graduated from the University of Southern California, majoring in finance and minoring in Chinese, and later studied for a law degree from Chicago-Kent School of Law.
He came to China's Magic City in 2005 and worked for an American law firm; in 2008, he founded a warehousing and logistics company.
In 2010, when Carlson visited Oriental Paper, a Chinese company listed in the United States, he saw that the company's abandoned gates, old warehouse dormitories, and idle workers were completely different from what was described in the financial report, and the company's inventory was basically a pile of waste paper.
So on June 28, 2010, he convened a group of people who were familiar with China's business rules and established "Muddy Waters Company" in Hong Kong. The first target he targeted was Oriental Paper.
Although Oriental Paper launched an investigation and self-defense in conjunction with a law firm and an accounting firm, its stock price plummeted by more than 80%, and its stock price remained sluggish for a long time.
The name "Muddy Waters" is taken from the Chinese proverb "fishing in troubled waters". It can be seen that Carlson is a China-savvy person. He minored in Chinese in college and has also worked in China.
The word "muddy water" is also a pun: it refers to the company that specializes in investigating companies that "fish in troubled waters" in the capital market, and also refers to "it is easier to fish in muddy water". It first muddies the water and then sells it through borrowing bonds.
way to make a profit.”
When such a big thing happened, the heads of the three Yimin companies also gathered together urgently and held a meeting with Zhang Yida to discuss the response plan.
After Ding Siyao introduced the origin of Muddy Waters, Zhang Yida did not express his position directly, but silently thought about how to turn this bad thing into a good thing.
“As of July this year, Muddy Waters has targeted 15 Chinese concept stocks and Hong Kong stocks in the past nine years. If you include us, the number would be 18.
There are roughly three results. One is delisting, the other is the stock price is lowered, and the third is that it resumes its upward trend after a short period of fluctuation."
Ding Siyao said with a serious expression, "There are relatively few people who fall into the third category. Currently, only Manhua Holdings, Spreadtrum Communications, New Oriental and TAL have successfully fought back against Muddy Waters.
Anta and we suffered from short selling at the same time, and are still in a long-short battle, with the result unknown."
Zhang Yida chuckled, "It's not that scary. If we were not included, they would have destroyed 10 of the 15 companies. The success rate was only 66.7%, and it was not a perfect shot."
If you are upright and are not afraid of slanting shadows, if Muddy Waters wants to play, then we will play with him."
Zhang Yida's gesture, calm expression and understatement gave some panicked executives some reassurance.
You're right, isn't it just short selling? Just fight back!
Thinking of this, Fan Hongyang calmed down, looked at Zhang Yida and said: "Mr. Zhang, let's start to clarify now, let the audit committee take the lead, and work with law firms and accounting firms to conduct self-examinations."
Listed companies are public companies and have an audit committee, which generally consists of three directors, all of which are independent, non-executive directors.
Main responsibilities include: reviewing and supervising whether the external audit institution is independent and objective and whether the audit procedures are effective;
Review the company's financial information and its disclosures;
Review the company's internal control system and audit major related transactions...
"Self-examination is definitely necessary, but there is no need to be too anxious."
Zhang Yida snorted coldly, "Take Yimin Internet Finance as an example, the price-to-book ratio is lower than 1, and the market value is not as good as the net assets.
I want to see how far it can fall? In the worst case, we can just buy it back."
"ah?"
Not only Fan Hongyang, but also Ding Siyao and Chen Shaojie were amazed.
"What's wrong?" Zhang Yida didn't understand why the three of them reacted like this.
"Um...Mr. Zhang, I pledged a lot of stocks."
Chen Shaojie said with a look of embarrassment, "If it falls again, the position will be liquidated!"
Zhang Yida thought for a moment and figured out the reason.
Chen Shaojie joined the Yimin Group relatively late. He only had shares in Yimin Dai, holding less than 2% of the shares. He followed Zhang Yida and cashed out more than 10 million yuan in shares before the stock market plummeted.
This little money can be spent on buying a bigger house in Beijing!
If you want to maintain a decent life or maintain and increase the value of your assets, you pledge your stocks in listed companies and use them to make some investments, including equity investments, securities investments, real estate investments... in various forms.
Including Zhang Yida himself also plays this way, it has long been a mature routine.
Li Auto, which came for financing some time ago, received US$530 million in Series C financing led by Huang Xin shortly after receiving investment from Zhang Yida, of which nearly US$300 million came from Huang Xin personally. The source of the funds was the pledge of his personal assets.