Analyst

Alasdair Moody

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

Our thematic research refines our unique algorithms while our single stock research focuses on examples where we discover a significant gap between published accounts and business reality.

​Bucephalus Research Partnership:
- Is an independent fee-based research service
- Does not take proprietary positions, long or short
- Does not solicit business or fees from the corporates we review

Forensic Accounting

Man Wah came to our attention in both July’s thematic report on debt manipulation and our up coming tax report.  When we realised that Man Wah has a very unusual approach to its treasury operations and some almost miraculous performance statistics, we felt it was time for a closer look.Man Wah has been surprisingly profitable for several years but, in FY 2017, it outdid itself, reporting Chinese wholesale gross profit margins that appear to be over 60%. This, combined with a 34% increase in…

Man Wah came to our attention in both July’s thematic report on debt manipulation and our up coming tax report.  When we realised that Man Wah has a very unusual approach to its treasury operations and some almost miraculous performance statistics, we felt it was time for a closer look.Man Wah has been surprisingly profitable for several years but, in FY 2017, it outdid itself, reporting Chinese wholesale gross profit margins that appear to be over 60%. This, combined with a 34% increase in…

Man Wah Holdings (1999 HK): Looking Over-Stuffed

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

Thematic (Sector/Industry)

Eighteen sales and marketing executives at Crown Resorts were reported as being detained in China, likely due to illegally soliciting Chinese to gamble in overseas casinos. Our contacts in the industry have already seen immediate termination of marketing efforts in mainland China by Macau casinos, which imply lower near-term gaming revenue in our view. A loss of higher-margin direct VIP business could also mean lower overall VIP margin for the Macau casinos, as junket VIP margins are one to two percentage points lower compared with direct VIP margins. Near-term sentiment will be unfavorable for the Macau gaming stocks. However, we gauge that marketing activities in mainland China will resurface as the dust settles, though casinos will take a lower-profile approach.To reflect the short-term impact, if we reduced 2016 full-year VIP, mass and slot revenue by 7.5% for our Macau gaming coverage, there would still be no impact on fair value estimates. Therefore, we maintain our long-term forecast and long-term-based, DCF-generated fair value estimates. Our narrow moat ratings also remain unchanged.Analyst: Chelsey Tam

Eighteen sales and marketing executives at Crown Resorts were reported as being detained in China, likely due to illegally soliciting Chinese to gamble in overseas casinos. Our contacts in the industry have already seen immediate termination of marketing efforts in mainland China by Macau casinos, which imply lower near-term gaming revenue in our view. A loss of higher-margin direct VIP business could also mean lower overall VIP margin for the Macau casinos, as junket VIP margins are one to two percentage points lower compared with direct VIP margins. Near-term sentiment will be unfavorable for the Macau gaming stocks. However, we gauge that marketing activities in mainland China will resurface as the dust settles, though casinos will take a lower-profile approach.To reflect the short-term impact, if we reduced 2016 full-year VIP, mass and slot revenue by 7.5% for our Macau gaming coverage, there would still be no impact on fair value estimates. Therefore, we maintain our long-term forecast and long-term-based, DCF-generated fair value estimates. Our narrow moat ratings also remain unchanged.Analyst: Chelsey Tam

Negative Near-Term Read-Throughs from the Detainment of Crown Resorts' Marketing Executives in China

Hong Kong

Royale Furniture Holdings Limited designs, manufactures, and sells a wide range of home furniture.

Sundart Holdings Limited is an integrated fitting-out contractor. The Company provides general building contracting, interior decoration, repair, maintenance and alteration, and others. Sundart serves customers in Hong Kong and Macau.

Raymond Industrial Limited, through its subsidiaries, manufactures and sells electrical home appliances in North America, Australia, Europe, and China.  The Company also manufactures and sells cigarette paper in China.  In addition, Raymond Industrial leases properties in Hong Kong.

Yuxing InfoTech Investment Holdings Limited, through its subsidiaries, provides consumer electronic products. The Company manufactures, sells, and distributes audio-visual products, information appliances products, and complimentary to consumer market. Yuxing InfoTech Investment Holdings serves customers in Hong Kong and China.

Fujikon Industrial Holdings Limited, through its subsidiaries, designs, manufactures, markets, and trades electro-acoustic products, accessories, and other electronic products.  The Company also invests in properties.

Suga International Holdings Limited researches and develops, manufactures, and sells electronics appliances on OEM (Original Equipment Manufacturing) and ODM (Original Design Manufacturing) basis.  The Company also sells non-customized products.

Allan International Holdings Limited, through its subsidiaries, designs, manufactures, and sells household electrical appliances and personal care products.  The Company also invests in properties.

Tai Ping Carpets International Ltd. provides carpets and sells yarns. The Company offers single woven, hand tufted, pass tufted, machine woven carpets, and carpet tiles for use in boutique hotels, casinos, hotels, offices, public spaces, residences, restaurants, airports, and convention centers. Tai Ping Carpets International serves customers worldwide.

Sinomax Group Limited develops spinal-care products for use in the office and at home. The Company sells specialty chairs, pillows, matresses, and massage products. Sinomax manufactures their products in China and distributes them globally.

Casablanca Group Limited engages in the design, production, distribution and retailing of bedding products in the PRC and Hong Kong.

HARAKOSAN CO., LTD. develops, sells, and leases condominiums and residential buildings.  The Company also sells solar power systems.

Ainavo Holdings Co Ltd sells and installs housing fixtures such as bathroom equipment and peripherals including tiles, bricks, and decorative stones. The Company also sells, designs, and constructs sanitary equipment, air conditioning equipment, imported stones, and pipe sections.

Top Union Electronics Corp. provides SMT (surface mount technology) services to PCBs (printed circuit boards).  The Company's products are applied to ADSLs (asymmetric digital subscriber lines), LCD (liquid crystal display) controller IC (integrated circuit) cards, etc.

Meiwa Estate Company, Limited develops, sells, leases, and manages condominiums and other real estate properties.  The Company also provides brokerage services, sells furniture and interior decorations, and lends mortgages.

Yen Sun Technology Corp. manufactures and markets cooling devices and home appliances.  The Company's products include cooling fans, water fountains, electric fans, industrial electric fans, and juicers.

Nakanishi Manufacturing Co Ltd manufactures and sells kitchen equipment for commercial use.  The Company's products include rice cookers, roasters, dish washers, tableware, and sterilizing equipment.  Nakanishi's customer base consists of schools, hospitals, caterers, and restaurants, including fast-food establishments such as McDonald's.

Lii Hen Industries Berhad is an investment holding company.  The Company, through its subsidiaries, manufactures and markets dining and other household furniture. Lii Hen also processes kiln drying of rubber wood and timber.

Meiloon Industrial Co., Ltd. manufactures and markets speakers and related parts.

Hanpin Electron Co., Ltd. manufactures and markets consumer electronic products. The Company's products include stereo compact disc (CD) systems, video CDs, karaoke systems, one block music systems, consumer turntables, CD mechanism, and servo boards.  Hanpin also invests in real estate business.

Iriver Ltd. develops, designs, manufactures, and markets audio equipment, such as MP3 players.  The Company's products include CD type, flash memory type, and hard disk type MP3 players.  In addition, Iriver produces and sells accessories for mobile communication devices.

Samson Holding Ltd. manufactures residential furniture in the Peoples Republic of China.  The Company wholesales the furniture to department stores, retail chains, and independent retail stores in the United States, Canada, and elsewhere in the world.

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Samson Holding (531 HK)

Man Wah Holdings (1999 HK): Looking Over-Stuffed

Man Wah came to our attention in both July’s thematic report on debt manipulation and our up coming tax report. When we realised that Man Wah has...

Bucephalus Research Partnership

Negative Near-Term Read-Throughs from the Detainment of Crown Resorts' Marketing Executives in China

Eighteen sales and marketing executives at Crown Resorts were reported as being detained in China, likely due to illegally soliciting Chinese to...

Morningstar, Inc.

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