http://seekingalpha.com/article/3172676-vipshop-we-are-not-buying-the-financial-statements?ifp=0
Mithra Forensic Research, mithraforensicresearch.com
Long/short equity, growth, contrarian, activist investor
Vipshop: We Are Not Buying The Financial Statements
Top Idea | May. 12, 2015 5:00 AM ET | 10 comments | About:
Disclosure: The author is short VIPS. (More…)
Summary
Vipshop has enjoyed share price appreciation of 45% in 2015 year-to-date.
Forensic models suggest that the firm has manipulated sales, receivables, profit and other asset accounts.
In several instances, the company’s financial statements are contradicted by management’s own disclosures.
May 11, 2015
Vipshop: We Are Not Buying Your Financial Statements
TABLE OF CONTENTS
Executive summary
VIPS has recorded consistently impressive results since its IPO
A reliable fraud indicator warns that VIPS is a potential manipulator
The multiplier effect: if VIPS uses cash from related parties, it can Gross them up to report even higher fake sales
This is downright Gross
Inventory: what’s mine is mine, and what’s yours is also mine
Lefeng and ovation: sweetheart deals on Valentine’s day?
Logistics investments: the last mile may be the last straw
CAPEX: aren’t we already swimming in excess capacity?
As RPTs grow, so grows ‘Other Receivables’
Held-to-maturity: is this another name for Related Party Loans?
Vipshop: We Are Not Buying Your Financial Statements
China’s leading discount ecommerce retailer has been flagged as possible manipulator by reliable forensic accounting quant models. Our qualitative analysis of the company’s financials also reveals possible improper GAAP accounting and financial anomalies that suggest that the quant models are indeed correct. In our opinion, VIPS may have grown its 2014 gross profit by $573M by possibly diverting funds to related parties to be used to transact fake sales. Continue reading
AsianExtractor: Unearthing Accounting Fraud in Asia 