HK$ 57.7 billion debt was concealed? After Li Zeju took over, Changhe and his first annual report were questioned.

This time, the short-selling institution GMT Research pointed the finger at the head of Li Ka-shing company, Li Ka-shing retired, and the first annual report of the head's eldest son, Li Zeju, was questioned.

On May 14, GMT released a report on Changhe River (0000 1. HK) In official website. GMT said in the report that Changhe's recently released annual report showed that Changhe, a subsidiary of Li Ka-shing, concealed HK$ 57.7 billion in debt. In this regard, Changhe issued an urgent announcement late at night on May 14 to clarify, and the board of directors strongly denied the innuendo contained in the rumor.

On May 15, Changhe opened 0.25% higher at HK$ 79.000 in early trading. After the opening, Changhe's share price fell. At the close, Changhe's share price was HK$ 78.45 per share, down 0.44% from the previous trading day.

The person in charge of GMT short selling said that it concealed HK$ 57.7 billion in debt and strongly denied it.

Changhe Annual Report shows that the net profit of Changhe 20 18 increased by 1 1% year-on-year to HK$ 39 billion, the first double-digit increase since 20 13. However, there were negative growth in many subjects under Changhe Cash Flow Statement, for example, the cash flow from investment activities decreased by HK$ 59.079 billion. In addition, Changhe's cash flow from operating activities was HK$ 55.734 billion, a year-on-year increase of less than 4%.

At present, Changhe has diversified operations in more than 50 countries, with more than 300,000 employees. Changhe's business involves ports, retail, infrastructure, energy and telecommunications. In 20 18, Changhe Company's revenue increased by 9% year-on-year to HK$ 453.23 billion, and its after-tax profit reached HK$ 46.782 billion.

Changhe and short-selling institutions pointed out that "operating cash flow has always been lower than after-tax cash profit". GMT released a short-selling report in official website, saying that Changhe's 20 18 annual report showed that due to the residual impact of restructuring since 20 15 and the accounting adjustment related to the acquisition of Italian telecom giant Wind Tre in 20 18, Changhe's fiscal profit increased by HK$ 2 billion13.2 billion.

GMT adds up Changhe's non-cash items (depreciation, amortization, deferred income tax, asset disposal income and other non-cash items), and the cash profit in 20 18 should be HK$ 62.9 billion, which is roughly equivalent to operating cash flow except for changes in working capital. However, Changhe's operating cash flow in 20 18 was only HK$ 54.7 billion, a difference of HK$ 8.2 billion from HK$ 62.9 billion.

GMT believes that the difference between Changhe's operating cash flow of HK$ 8.2 billion in fiscal year 20 18 mainly lies in the adjustment of non-cash items, disposal income and other non-cash interest adjustments. In addition, GMT said that Changhe's capital expenditure has been higher than depreciation and amortization, partly because depreciation and amortization expenses are likely to be artificially depressed.

GMT said that by treating some assets as assets for sale, Changhe may have concealed HK$ 57.7 billion in debts related to assets for sale. GMT said that Changhe is using this accounting operation to provide a higher market rating and a lower credit line.

Regarding the short-selling report of GMT, Changhe released a clarification report later that day, saying that "the board of directors strongly denied the innuendo contained in the rumor". Changhe said that the audited financial statements of the Group strictly abide by the applicable Hong Kong financial reporting standards. The matters related to the Group's reported profits mentioned in the introduction have been fully and transparently disclosed in the audited financial statements of the Group in accordance with applicable accounting standards. As for the short-selling report, the debt related to the sale of assets is not fully recorded, which fully meets the requirements of applicable accounting standards and has been discussed with credit rating agencies.

Changhe thinks that the introduction is selective, biased and seriously misleading. It only pointed out the non-cash profit items, but did not mention the non-cash losses that were also reported in the relevant period according to the applicable reporting standards. Refers to the debts that are not fully recorded in the financial statements of Changhe 20 18, but there is no mention of the debts that need to be listed in the balance sheet due to the acquisition activities during the period.

Be questioned to conceal the debt storm or related to its infrastructure assets.

It is worth noting that Changhe said in the annual report that the annual contribution brought by the business purchased by the Ministry of Infrastructure in 20 17, together with the new profit brought by the acquisition of the remaining 50% equity of Wind Tre in September 20 18, made the profit and cash flow increase.

Infrastructure has always been one of Changhe's key businesses. According to Changhe's 20 18 financial report, the Group's infrastructure business includes the equity of Changjiang Infrastructure Group and the equity of six infrastructure assets jointly owned by Changjiang Infrastructure.

According to Changhe's 20 18 financial report, the company's income range includes infrastructure income of HK$ 64.72 billion, accounting for 14% of the total income, an increase of 8% compared with 20 17.

It is worth noting that such infrastructure performance figures are the figures after accounting adjustment by Changhe. Changhe said in the financial report that the total income and other data in the financial report were adjusted, and the performance of Hutchison Port Trust was omitted, reflecting the performance of the remaining 65,438+00% direct interest after the group was separated from Changjiang Infrastructure Group in 2065, 438+08 and 65,438+00.

Changjiang Infrastructure is an important company undertaking infrastructure business under Changhe Department. Before 20 18 and 10, Changhe signed an economic benefit agreement with Cheung Kong Industrial Group and Cheung Kong Infrastructure, with a cash consideration of HK$ 21600 million, completing the separation of its six direct interests in infrastructure assets, accounting for 90% of the economic benefits, reducing its profit contribution compared with 20 17. In the annual report of Changjiang Infrastructure, this is a related party transaction, which also means that infrastructure assets flow between Changhe and its subsidiaries.

20 18, 12, 3 1, these six items * * * have been reclassified as "sale portfolio held for sale" in accounting subjects.

So, how does this part affect Changhe's financial data?

According to the annual report, as of the end of 20 18, the company's net comprehensive liabilities were HK$ 207.965 billion, an increase of 26% compared with the beginning of the year. Changhe pointed out that the net liabilities of the above-mentioned infrastructure assets previously listed in the consolidated statement were reclassified to the sale portfolio account held for sale, that is, they were listed separately, which was consistent with the ordinary financial statements, and the item of "sale portfolio held for sale" was also divided into liabilities and assets.

Changhe said that in this group, "liabilities" included "bank and other debts" with an amount of HK$ 57.707 billion, which was consistent with the amount questioned by short-selling institutions.

Changjiang Infrastructure Group's 20 18 financial report shows that the company's annual operating income is HK$ 7.377 billion, up by18.83% year-on-year; The net profit was HK$ 65.438+0.44 billion, a year-on-year increase of 65.438+0.82%.

In addition, Changhe mentioned in the financial report that the acquisition of the remaining 50% equity of Telecom Italia Wind Tre brought new profits, and both profits and cash flow increased. According to the annual report, among the revenues of Wind Tre's telecom department, Group 3' s business income in Europe was HK$ 78.4.11billion, up by1/%year-on-year.

According to public information, in 20 16, the European telecom operator "Italy 3 Company" under the Yangtze River Hutchison Whampoa Company merged with Wind Telecom Company under the Russian VimpelCom Group. Since then, Cheung Kong has held half of the shares of the new company. 2065438+In July 2008, Changhe announced that it would spend 2.45 billion euros (about/kloc-0.9 billion yuan) to acquire the remaining half of the equity of Wind Tre.

According to the financial report data released by Wind tre 20 1 18 10, the average depreciation and amortization expense of Wind Tre20 18 10-8 was 654.38+78 million euros. However, the monthly expenditure in September seems to have dropped to 94 million euros, saving 84 million euros per month. GMT believes that the adjustment of Changhe during1-August and the adjustment of Wind Tre during 965438+February may increase the profit of Changhe Group by about 835 million euros (about 7.7 billion Hong Kong dollars).

GMT believes that Changhe, a "radical" accounting method, is being used by Changhe to obtain higher market rating and lower-cost credit.

Changhe's share price fell by 25% in two years, and its rating was repeatedly lowered.

However, judging from the trend of Changhe's share price, Changhe's share price has dropped from around HK$ 65,438+004 to a minimum of HK$ 72.8 in the past two years, with the largest drop exceeding 25%.

Merrill Lynch and Bank of America also released research reports saying that Changhe's buy rating was maintained, but the target price was lowered from HK$ 65,438+002 to HK$ 65,438+000 to reflect the lower price of huskies. The bank believes that Britain's withdrawal from the EU block still exists.

In fact, as early as last August, CITIC Lyon released a research report on downgrading and rating. The bank said that the group's efforts to digitize its retail business were encouraging. Although the medium-term interest rate rose by 12% year-on-year to HK$ 0.87 per share, the dividend payment rate remained flat year-on-year, which was disappointing. Therefore, Lyon lowered Changhe's profit forecast from 20 18 to 2020 by 2%-4% to reflect the expected decline in average revenue per user (ARPU) and the number of customers. The target price was lowered from HK$ 102 to HK$ 95, and the rating was lowered from "buy" to "outperform".

In March of this year, Lyon released a research report again, saying that Changhe maintained the rating of "outperforming the market".

Domestic real estate projects have been exposed for sale for one year.

On May 15, the Beijing News asked Changjiang Industry about the situation. Ban Tang Huici, director of corporate affairs of Cheung Kong, said: "The company often receives different bidding suggestions, but some suggestions do not mean that the company will accept and sell the project."

In the first half of 20 18, Changjiang Hutchison and Ant Financial Services Group established a joint venture company in March to jointly manage AlipayHK mobile payment services, and launched real-time cross-border e-wallet remittance to the Philippines for the first time through blockchain technology during the year. In the second half of the year, Changjiang Hutchison acquired all the shares of Wind Tre and wholly owned the major Italian mobile telecommunications company.

In addition, Cheung Kong Industrial Group, a listed company of Changhe Department, completed the sale of Central Center of Central Commercial Building for HK$ 40.2 billion in May 2065438+2008. In June, it acquired 5 Broadgate property in London, England, with a transaction price of 654.38+0 billion.

2065438+June 2009, Changjiang Infrastructure Group, a subsidiary of Changhe Department, placed 43.8 million shares of Power Industry at HK$ 5.293 per share, involving an amount of about HK$ 23./kloc-0.8 billion. The sale of shares accounts for about 2.05% of the issued share capital of electric energy. After the completion of the transaction, the shareholding ratio of Changjiang Infrastructure in the power shares dropped to about 35.96%.

□ Extension

Is the GMT report credible?

What is the origin of short selling and GMT research?

Official website introduced that GMT Research is an accounting research company focusing on Asia, which is supervised by the Hong Kong Securities Regulatory Commission. GMT Research publishes about 30 accounting-based reports every year, mainly to find financial loopholes and sell short.

Last June, GMT sold out a batch of 16 China sporting goods manufacturers, including Anta, Xtep, 36 1 0 and other well-known domestic brands.

According to the report, among the 16 sporting goods listed in Chinese mainland since 2005, nine companies including Red Star Sports, China Sports, Crocodile, Coffey International, Fu Guibo Guide (Hong Kong stock 0 18 19), Pinocchio, Jinji Clothing, Mingle Sports and Naibu are "fraudulent companies".

At the same time, GMT thinks that Li Ning (0233 1), Anta Sports, Xtep International, 36 1, China Trend (038 18), Baosheng International (038 13), Yuyuan Group (005565438+.

GMT questioned Anta Sports in the report, and put forward five specific aspects, including high operating profit rate, large amount of abnormal cash or prepayments, large amount of cash flow derived to cope with inflated income, low proportion of inventory to income, and high proportion of prepayments to inventory.

In addition, the report also pointed out that Li Ning inflated its operating income since 20 1 1, China Mobile inflated its profit since 20 1 1, and inflated its profit by 36 1, which was Xtep International's profit manipulation.

Afterwards, these companies strongly denied it.

In addition, HSBC Securities, Morgan Stanley and other institutions said that there was something wrong with the query research report released by GMT. HSBC Securities said that it would maintain its "Buy" rating based on the forecast of 23 times P/E ratio of 20 18 to 2019 for Anta Sports, with a target price of HK$ 46.9 per share. Anta Sports also said that GMT Research's earlier allegations of financial irregularities were misleading and inaccurate.