Diverting Cash into an Undisclosed Business That’s Bigger Than the Official One
The Equity Dispatch #18
This Chinese company’s executives have built a huge international operation on the backs of shareholders, as sales collapse within China. Once an international related party looks viable, the listed company buys it from executives with shareholders’ cash. It’s a great job if you can get it.
The company is now trading at about 11.6x sales, even though its sales have shrunk by over 80% since 2021, when the shares reached their peak price, and the company traded at a much lower sales multiple.
Our work on this company is so extensive that we are extending this across two newsletters. This week focuses on the cash siphoning by executives while our next newsletter will cover promotional activity by the company to cover up its dead China business.