Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

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

Equity Bottom-Up

Receivables have grown so much faster than revenue that we worry reported profit is an illusion. Rising receivables leave Lenovo vulnerable to default.Liquidity may be tight because their short term facilities are largely used up and payables days are rising. Lenovo seems to be very reliant on its suppliers for credit. In FY2020, cashflow will only cover costs, if receivables get paid. Otherwise, Lenovo will be out of cash.Ignore reported cash because of there is a $4bn short term asset/liability deficit. If customers default and/or supply is constrained due to COVID19, Lenovo would struggle and we are not convinced China will bail out the minorities.

Receivables have grown so much faster than revenue that we worry reported profit is an illusion. Rising receivables leave Lenovo vulnerable to default.Liquidity may be tight because their short term facilities are largely used up and payables days are rising. Lenovo seems to be very reliant on its suppliers for credit. In FY2020, cashflow will only cover costs, if receivables get paid. Otherwise, Lenovo will be out of cash.Ignore reported cash because of there is a $4bn short term asset/liability deficit. If customers default and/or supply is constrained due to COVID19, Lenovo would struggle and we are not convinced China will bail out the minorities.  

Lenovo (992 HK): Starting to Look like Fraud. Fair Value HK$3.35 40% Downside