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

<p>Li &amp; Fung has been decimated by the internet. Since 2015, revenue has fallen 38%, their core EBIT margin has halved and the stock is down 90%. Seasonality means the second half should be better, but we think they are still in trouble. Reported net debt is low, but we suspect it is being manipulated. Working capital is a concern and cashflow is limited. Related party deals leave minorities exposed and may cause the company to collapse. The recent sale of 22% of the logistics business to Temasek is helpful, but even if they IPO the logistics business, it may not save the parent. </p>

Li &amp; Fung has been decimated by the internet. Since 2015, revenue has fallen 38%, their core EBIT margin has halved and the stock is down 90%. Seasonality means the second half should be better, but we think they are still in trouble. Reported net debt is low, but we suspect it is being manipulated. Working capital is a concern and cashflow is limited. Related party deals leave minorities exposed and may cause the company to collapse. The recent sale of 22% of the logistics business to Temasek is helpful, but even if they IPO the logistics business, it may not save the parent. 

Li & Fung Ltd

Li & Fung (494 HK): Survival in Doubt