Thusday, Muddy Waters Research released a report on its latest short sale target: A U.S.-listed and China-based real estate trading platform, KE Holdings, has dropped its shares by as much as 10% in pre-market exchanges.
The report said, âThe reason we are short on KE Holdings is because we have concluded that the company is suspected of systematic fraud, which in our opinion is a huge scam. We estimate its second and third quarter revenue data is exaggerated by 77% to 96%, and total new home sales (GTV) is exaggerated by 126% and inventory home sales. is exaggerated by 33%.
Muddy Waters also said on corporate earnings calls a constantly repeated phrase was “do the right thing, even when it’s hard.” This is not the case. In short, they uncovered massive fraud, including a fake takeover that appeared to be designed to conceal fraudulent income. Their field research uncovered ghost shops, clone shops, and secret ploys to return money through affiliate brokerage firms in order to increase income. Like Luckin Coffee before, this is a real business with a lot of real frauds.
KE Holdings responded Thursday evening that the company has always ensured the authenticity and standardization of data in its financial reports. They welcomed the survey of their numbers, but strongly oppose malicious short selling by any institution. The company said Muddy Waters did not have the basic knowledge of the business and the correct interpretation of the three reports because they did not understand the Chinese real estate market. In order to safeguard the rights and interests of investors and not to be guided by misinformation, KE Holdings will disassemble and respond to the contents of the report one by one within 24 hours.
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KE Holdings third quarterly report shows that in the third quarter, KE Holdings achieved operating income of 18.1 billion yuan ($ 2.84 billion), down 11.9% year on year on the other. After the adjustment, the net loss was 888 million yuan. Revenue was 830.7 billion yuan, down 20.9% year-on-year. Among them, the turnover of the storage house business amounted to 378.2 billion yuan, down 34.3% year-on-year. The turnover of the new housing business amounted to 410.1 billion yuan, down 2.5% year-on-year. Emerging and other services revenue was 42.3 billion yuan, down 20.4% year-on-year.