BEIJING, June 22, 2012 /PRNewswire-Asia/ -- Citron, an
international professional short seller company, published a report
with a very sensational conclusion on June
21: Evergrande Group, China's largest real estate company listed in
Hong Kong stock market, is
insolvent and has been reporting false information to investors in
the past. This report suffered severe reprimands from the investors
and Evergrande once it was published. The meaning of the report is
shorting in the overseas-listed Chinese firms for profit. An
original report by Sina Leju follows:
Deutsche Bank thought Citron allegations against Evergrande were
invalid and Citron misunderstood clearly the basic operations of
Evergrande.
According to the publicly available information, Citron was
founded in 2007 and there was only one full-time employee,
Andrew Lefort. His profession was
shorting in the overseas-listed Chinese firms. The most well known
event in China was 4 times of
fruitless attacks on Qihoo started in last year.
Since the global financial crisis in 2008, the shorting
companies have found many opportunities, to form a single but
mature chain, with the purpose to seek excessive profits. The
shorting companies, represented by Muddy Waters, because of their
manipulation of the stock price, and malignant disruption on the
market, have long been considered to have deviated from the value
of anti-regulatory, and invested by the government institutes of
the US, Canada etc. which are
considering systemic solutions.
The investors in the U.S. market have experienced a number of
short storms and could have more rational treatment on this type of
behavior. In the month Citron attached Qihoo, Qihoo's stock rise
was up to 12%. And, when Andrew
Lefort mentioned that dangdang financial report was not
credible, the stock jumped by 19.78％ in contrarian.
The monthly performance report released on June 11 said that the sales of Evergrande Group
in May exceeded 10 billion for the first time. Under the
expectation of market rebound, Evergrande will have the best
performance outbreak in the coming months this year.
In the last year's performance report, the total assets of
Evergrande were 179 billion Yuan,
mobile fund was up to 65.1 billion
Yuan. According to the details revealed in the monthly
report, the balance sheet was unprecedented and Evergrande received
a higher level of accreditation and assessment by domestic and
foreign banks and investment institutions.
By the impact of the good news, Evergrande's stock price will
have a significant rise in the near future. In the weekend before
Evergrande released the performance report in May, the closing
price from the last trading day was up to 4.03 to 4.32, and rose to
4.55 Yuan in Monday, increased by
13%. Citigroup, Goldman, Deutsche Bank and other investment banks
thought that Evergrande's stock price is expected up to about
6-8 Yuan.
According to professional analyst, these backgrounds, perhaps
constitute the reason Citron attacks Evergrande.
For Chinese mainland stock market, Citron and other agencies are
unable to interfere. The attacks on the U.S. market listed Chinese
firms suffered repeated rebuffs. Selecting Hong Kong stock as the target, with its
skilled operational practices, is expecting an impact that once
again, is the real purpose of Citron. A very simple reason to
select Evergrande is that Evergrande is a Chinese Hong Kong real
estate firm and also the representative of large national
enterprises, and their recent performance was very good, doing
backhand short at this point will have the space second to
none.
Another un-ignored reason is that Europe's debt crisis is deepening still. To
transfer the pressure, we do not rule out that under the auspices
of some hard-to-self-protection interest groups, the shorting
institutions deliberately create a conspiracy theory, to stick
together to attack other markets with better performance.
Evergrande was the first to be attacked.
Since this report published, Evergrande quickly made a public
response to clarify that the report is untrue. The Chairman of
Evergrande, Mr. Xu Jiayin, said that he will clarify them one by
one. The contents of this report, even some very serious criminal
charges, mean clearly that the Evergrande does not plan to give up.
The biggest challengers in this event must be market and
investors.
In fact, Evergrande did not expect such sudden attacks. The
stock price of Evergrande at that date fell to 3.60 Yuan, the biggest decline in record. Then,
Evergrande responded quickly to regain lost ground. The stock price
was since soaring. The closing price on that date was 3.97 Yuan, rising about 10 percent.
SOURCE Sina Leju