AutoBeta(AutoBeta.net)11/13 Report--

On November 12th, Bolidas Research (Bonitas Research) released a short selling report on Harmony cars. Feng Changge, chairman of Harmony Automobile Board, deceived investors and falsified Harmony Automobile earnings data, according to Bolidas research.

Bolidas believes: first of all, Feng Changge, chairman of Harmony Automobile Board, stole 1 billion yuan from Harmony. Secondly, Harmony Automobile produces counterfeit cash through the sale of fake equity. Third, Harmony Automobile falsifies profit data in the following two ways: 1, the operating expenses of its main subsidiaries are not merged; 2, the losses caused by failed investments are not written down.

In addition, Bolidas Research also mentioned that Ernst & Young resigned as Harmony Automobile Audit on July 1, 2020. In order to complete its 2019 annual report, Harmony hired Zhonghui Anda, an accounting firm, to audit, which subsequently announced its resignation in July. Bolidas suspected that the resignation of the two accounting firms had something to do with Feng Changge offsetting a loan of 1 billion yuan. In the end, Bolidas concluded that "we shorted Harmony and believed that its stock was worthless."

Some media analysis of the short-selling announcement said that Bolidas research listed several allegations against Harmony cars are lack of data support. In terms of inflated profits, for example, Blidas said that several news reports confirmed that FMC (under the brand name Baiteng) was in financial trouble and could not pay its employees, and then suspended operations and fired all employees after obtaining a multimillion-dollar loan through the US wage protection program, arguing that Harmony Automobile should record an impairment loss of 1.4 billion yuan in its financial report. Bolidas is based on "news", but does not have enough factual evidence to prove his assertion, which is not only lack of professionalism, but also particularly imprecise.

At noon on November 12, Harmony Automobile clarified the short selling report. Harmony Motor said the short selling report was misleading, biased, inaccurate and incomplete, unfounded allegations and irresponsible speculation, and said Harmony Motor was consulting its legal adviser and reserved the right to take legal action.

At noon on November 13, Harmony Automobile issued another clarification notice: since the establishment of Harmony Automobile in 2005, all stores have accumulated unpaid taxes of more than 1 billion yuan, which involves the calculation and payment methods of different local collection authorities. As well as how the tax bureaus distribute taxes, they have been unable to reach an agreement with the tax authorities, resulting in long-term accounts, which has become a problem left over by history and has a negative impact on listed companies.

For the six major allegations of Bolidas, Harmony Automobile also explained and clarified in detail in the announcement. Harmony Automobile points out that the report contains false allegations against the company's financial situation, reiterates that the allegations in the report are wrong, fabricated and unfounded, and the company reserves the right to take legal action and institute legal proceedings in relation to the report.

Bolidas short harmonious cars, on the contrary, many investment banks are optimistic about the future development of harmonious cars. According to a report released by Goldman Sachs, a well-known international investment bank, Harmony Motor is expected to accelerate its profit growth in the second half of the year and next year, and it is estimated that its profit will drop by 25% and 18% from last year and the first half of this year. Improve to 46% and 22% in the second half of this year and next year. At the same time, Goldman Sachs raised its net profit forecasts for the fiscal years 2020-2023 of Meidong, Yongda and Harmony by 1-10% to reflect the bank's new market expectations.

According to the official website, Harmony Automobile is a business automotive service group that currently operates 75 luxury 4S stores in China, including luxury / ultra-luxury brands such as BMW, Lexus, Land Rover, Rolls-Royce and Ferrari.

According to Harmony Automobile's financial results for the first half of 2020, Harmony Motor sold 14613 new cars in the first half of the year, down 5.5% from the same period last year. During the reporting period, the revenue from its main business was 5.755 billion yuan, down 2.3% from the same period last year. The net profit from its parent was 235 million yuan, down 17.98% from the same period last year. The overall gross profit margin was 9.0%, down 0.8% from the same period last year.

Retail sales of luxury brands in China rose 26.8% year-on-year to 2027579 vehicles in October, up 12.6% from a year earlier, according to data from the Federation of passengers. This is enough to show that luxury brand models continue to sell well in China.

As a service company mainly operated by luxury brands, although all kinds of data of Harmony Automobile declined in the first half of the year, the decline was not significant, mainly due to the epidemic situation in the first half of the year and the overall trend of the market. with the recovery of the market in the second half of the year and the strong growth of luxury brands, the overall development of Harmony Automobile in 2020 is good.

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