Investigation On Suspicious Cloud Of Antarctic E-Commerce Fraud: Is Financial Data Suspected To Be "Different From Peers" From OEM To E-Commerce Internet Platform?

In the two trading days at the beginning of 2021, the stock price of "online Red e-commerce concept stocks" in Antarctica appears to collapse, falling to the limit for two consecutive days. Last year, the company's market value soared from more than 20 billion yuan in early 2020 to a peak of nearly 60 billion yuan in July.

Why does Antarctic e-commerce decline without warning? The analysis on "identification of cardiopulmonary bypass fraud" published by an industrial securities analyst in the research report published in 2019 is generally interpreted by the market as pointing to the financial fraud of Antarctic e-commerce, which may be the source of the decline.

On the evening of January 5, Antarctic e-commerce held an urgent telephone exchange meeting with institutional investors to clarify their doubts. That night, the company launched a buyback plan overnight, trying to stabilize the falling share price.

However, in the opening of January 6, the stock price of Antarctic e-commerce continued to decline, closing at 10.37 yuan / share, down 6.49%.

On the evening of 6th, Antarctic e-commerce said on the interactive platform that the company's financial situation was good and there was no major event that should be disclosed but not disclosed.

For the 35400 shareholders of Antarctic e-commerce, the first thing is to know whether there is financial fraud in Antarctic e-commerce? What is the current business situation of the company? Is there a problem with its business model?

In response to the above problems, 21st century economic reporter interviewed a number of auditors and e-commerce insiders, and visited the office of Antarctic e-commerce in Yangpu District of Shanghai, trying to understand the full picture of the incident.

In the two trading days at the beginning of 2021, the stock price of "online Red e-commerce concept stocks" in Antarctica appears to collapse, falling to the limit for two consecutive days. Photo by Gan Jun

Office center in the whirlpool of public opinion

At about 10:00 a.m. on January 6, the reporter of 21st century economic report paid an exclusive visit to the office of Antarctic e-commerce in Yangpu District of Shanghai.

Located in building 3, Shangpu center, Yangpu District, the office space occupied by Antarctic e-commerce is 7-10 floors. Different from the heated discussion, debate and query on the Antarctic e-commerce in the capital market, when the reporter visited, the company's employees were working in succession, and there was no abnormality, and there were few conversations between employees.

There are many different divisions on the four floors. The 7th floor is mainly related business units of Antarctic e-commerce channels, time Internet, food and pet products, cross-border e-commerce business units, etc. The 8th floor is the cosmetics division and the business department related to healthy life. The 9th floor is men's wear, underwear, mother and baby, children's wear, home textile, furniture, live broadcast, outdoor sports and other business departments. On the 10th floor are the president's office, the office of directors and secretaries, the legal department and the administrative center.

After the reporter indicated his intention to the front desk staff on the 10th floor, the staff refused the reporter's request for an appointment, saying that they could not enter without an appointment. When asked about the company's operating conditions, he said that the company was operating normally. In the morning of the same day, the reporter made several public calls to Antarctic e-commerce, but none of them answered.

In the floor where the president is located, the reporter saw that there was a large screen to display the sales situation of Antarctic e-commerce in real time, and there were visitors from time to time. For the company in the secondary market dynamics, some employees said they did not pay attention to.

This is the same as the company's chairman Zhang Yuxiang's response. "I'm in business and don't care about stocks," he said in an interview with the media. We should always care about stocks. This company can't do well. I don't have the energy to study their psychology. "

But are companies really not concerned about share prices? Judging from the emergency teleconference held by Antarctic e-commerce on the afternoon of the 5th, and the buyback plan was introduced immediately, it is not the true idea.

Reporters learned of the above telephone conference minutes show that Zhang Yuxiang said that the company's book capital is enough, investors can be at ease. At the same time, Zhang Yuxiang also said that the company would launch the largest buyback plan in history, referring to it as a response to the company's "so-called counterfeiting query".

Behind the Antarctic e-commerce, there are also a number of well-known institutional investors. By the end of the third quarter of 2020, huitianfu, Taikang Life Insurance, China Europe Fund, China Southern Fund and many other institutional investors have held Antarctic e-commerce.

But behind the sharp fall of Antarctic e-commerce is the concentrated "escape" of institutions. According to the dragon and tiger list data, on January 4, the exclusive business locations of institutions were listed as selling three and four; on January 5, the exclusive business locations of institutions were listed as selling two, four and five. In the two days, the total sales amount of "institutional exclusive" business department reached 322 million yuan, and the corresponding purchase amount was 0.

However, after the fermentation of the matter, there are still organizations to raise the banner and shout for the Antarctic e-commerce.

Soochow securities issued a research report that maintained the purchase rating of Antarctic e-commerce. The reasons for its rating mainly include: 1) the largest share repurchase plan since the company launched its listing; 2) it is estimated that the number of shares to be repurchased this time accounts for 1.36% to 1.90% of the total share capital of the company; 3) the largest repurchase plan since listing, with the scale more than three times that of the previous buyback; 4) abundant cash on hand, with Q3 and Q4 as the main time point of cash return; 5) firm long-term development trust We will continue to be optimistic about the Branding Trend of China's high-quality supply chain.

Suspicion of financial fraud

The Research Report of Societe Generale Securities has become the main argument in the question of financial fraud of Antarctic e-commerce.

According to the report entitled "definition and identification of earnings management and earnings manipulation", the report points out that in the analysis of "identification of fraud in extracorporeal circulation", the report points out that there are six doubtful points in XX e-commerce (referred to as Antarctic e-commerce), namely, the net interest rate is very high without obvious barriers; there is no obvious competitor; the operation mode of very light assets; and the quality of financial data Due to the poor quantity, accounts receivable and business scale doubled; the number of employees decreased; suppliers and customers highly overlapped.

According to the report, compared with the data from 2015 to 2017, the amount of value-added tax payable by XX e-commerce in the current year calculated from the perspective of tax is far lower than that of the quarter from the perspective of financial reporting; the top five customers and the top five suppliers are highly overlapping; the actual controller has no other external business, but frequently carries out equity pledge, and the actual controller's first equity pledge (2016-03-22 ）It occurred less than half a month after backdoor listing (March 7, 2016).

In view of the above doubts, on January 6, the reporter of the 21st century economic report consulted a number of auditors to analyze them one by one.

A professional who once served as the chief financial officer of a listed company pointed out to our reporter, "from the data provided by the research report, some indicators of Antarctic e-commerce are indeed on the high side, which is worthy of attention."

The person pointed out that "in the case of more standardized operation and management, the net profit margin of sales companies is about 5%, that of companies with brands is about 10%, and that of Companies in pure service industry is about 20%

According to the reporter's inquiry, from 2015 to 2019, the operating net profit margin of Antarctic e-commerce was as high as 44.26%, 58.17%, 54.33%, 26.46% and 30.87%, which was indeed far higher than the average level of the industry.

In response to the problem of high profit margin, Antarctic e-commerce replied that the company does not purchase and sell related products, but charges comprehensive brand service fee and dealer brand authorization fee according to the brand authorization service and industry chain service provided by the company. The comprehensive brand service fee is charged based on the ex factory price of commercial products, accounting for about 3% - 6% of Gmv sales. Under this business model, the revenue scale recognized by the company is relatively small, and there is no cost of sales and inventory, so the profit margin is relatively high.

In addition, the research report also raised doubts about the accounts receivable of Antarctic e-commerce.

According to the data inquired by reporters, by the end of 2015-2019, the balance of accounts receivable of Antarctic e-commerce was 280 million yuan, 306 million yuan, 508 million yuan, 725 million yuan and 790 million yuan, accounting for 72%, 59%, 52%, 22% and 20% of the current year's revenue (389 million yuan, 521 million yuan, 986 million yuan, 3.35 billion yuan and 3.91 billion yuan), respectively.

In this regard, the above professionals pointed out that "the accounts receivable balance of pure e-commerce companies generally accounts for 2% - 5% of the annual sales volume; the accounts receivable balance of offline sales enterprises accounts for about 20% - 30% of the annual sales volume."

Obviously, from the comparison of this data, the accounts receivable of Antarctic e-commerce are also significantly higher than the industry standard.

The source also mentioned that "the value-added tax of Antarctic e-commerce does not match well. The expenditure on purchasing goods only accounts for about 30% of the sales. Generally speaking, the value-added tax actually paid accounts for about 7-9% of the sales volume, while the actual value-added tax of Antarctic e-commerce accounts for about 3.5% of the total sales, which may lead to the suspicion of false income increase. "

Another point questioned by the research report is that the top five customers and the top five suppliers of Antarctic e-commerce are highly overlapped.

In this regard, another accountant working in a head accounting firm pointed out that "from the perspective of audit, when the main customers and suppliers overlap, it is indeed one of the characteristics of suspected fraud. It may be false procurement and income in order to recover funds. For retail enterprises like this, if they are e-commerce, they usually place orders on the platform, collect money first and then deliver goods. Most of them should have no accounts receivable. "

However, a person close to the Antarctic e-commerce industry expressed a different view. "It is very likely that the manufacturer is both a supplier and an online shopkeeper, so both sides (suppliers and customers) occupy the market, which forms cardiopulmonary bypass with listed companies. Although there is a large space for counterfeiting, it does not necessarily mean that it is fake. "

Another financial data criticized by Antarctic e-commerce is cash flow data.

From the perspective of operating cash flow, the data of the past two years show that Antarctic e-commerce has the best performance of the whole year in the fourth quarter. For example, the net inflow of operating cash flow in the four quarters of 2018 are respectively: - 47 million, 152 million, 99 million and 347 million, and the data of the four quarters in 2019 are: 91 million, 59 million, 142 million and 963 million.

In this regard, some market participants questioned the suspicion of adjusting profits.

However, the above-mentioned financial personage said, "this is the case for many e-commerce enterprises, and the double-11 and double-12 have contributed more to the performance".

Business model thunder point

In addition to questioning the abnormal financial data, the reason why the market has criticized Antarctic e-commerce is quite a lot, and the most fundamental reason is the query of its OEM model.

According to previous media reports, most of the home textile dealers of the Antarctic e-commerce are concentrated in the Dieshiqiao market in Nantong, and most of the dealers pick up goods in the market and affix the trademark of the Antarctic. Many people who do home textile business in Dieshiqiao, Nantong, have heard of this "OEM model".

"There is no entity in Antarctic e-commerce any more. There is a special department that calls to sell brands every day. I can receive calls from several Antarctica and Arctic velvet every day. Now, many brands, not only them (selling brands), are the leaders of the Antarctic people." January 6, a home textile business to the 21st century economic reporter said.

But when the OEM model is popular, quality control has become the biggest hidden thunder point.

The reporter searched the judicial document website and found that there were 74 litigation disputes about Antarctic e-commerce, including franchising contract disputes, trademark infringement disputes, patent infringement disputes and appearance design infringement disputes.

On the issue of quality control, Antarctic e-commerce responded that product quality control has always been the top priority of the company, which is related to the sustainable operation and development of the company.

In addition, the management of dealers by Antarctic e-commerce is also chaotic. According to the reporter's exclusive understanding, in July last year, the person in charge of Weimi exclusive store, the head of the Antarctic's OEM tmall, ran away and took away a huge amount of money. After the relevant supplier reported the case, the person in charge was arrested and is going through relevant legal procedures.

Or recognize the disadvantages of the OEM model, from the perspective of the business structure of Antarctic e-commerce in the past two years, a major change has taken place.

Taking the annual report of 2019 as an example, the proportion of "brand comprehensive service business" in revenue is 31.76%, that of dealer brand authorization business is 1.68%, and that of "mobile Internet media delivery platform business" is as high as 62.23%.

Brand integrated service business refers to that Antarctic e-commerce provides comprehensive services such as brand authorization and supply chain services for authorized manufacturers according to the batch of trademark accessories issued, and charges comprehensive brand service fees. The dealer brand authorization business is that Antarctic e-commerce provides brand authorization and e-commerce services to authorized dealers, and charges the dealer brand authorization fee. Dealers mainly sell products to consumers through e-commerce platforms such as Ali, Jingdong, pinduoduo and vipshop.

In other words, the above two major commodity sales business of Antarctic e-commerce accounted for only 33.44%, and the main source of income was the mobile Internet media delivery platform business. According to the annual report, the business entity of the latter is acquired in 2017, mainly responsible for the time interconnection of Internet marketing business. Before 2017, the main business source of Antarctic e-commerce was indeed brand service fee.

An e-commerce industry practitioner told the reporter, "Antarctic e-commerce was the first to do brand authorization and distribution of" southerners ". Later, there were more distributors and brands, and it was necessary to promote them, which led to the development of flow guiding marketing business. The marketing business of these guided traffic has been expanded from the brand demand of the earliest batch of dealers. Now Antarctic e-commerce has gradually transformed into an e-commerce platform company. "

According to the annual report, with the change of business structure, the five major customers and suppliers of Antarctic e-commerce have also changed greatly.

In 2019, the top five customers of Antarctic e-commerce are Shenzhen Qianhai xinzhijiang Information Technology Co., Ltd., Beijing Mai * * Co., Ltd., Fuzhou 3600 network micro loan Co., Ltd., Beijing Zi * * Co., Ltd. and Taobao (China) Software Co., Ltd. The top five suppliers are Guangzhou Xiaomi Information Service Co., Ltd., vivo Communication Technology Co., Ltd., Shenzhen Tencent computer system Co., Ltd., Huawei Software Technology Co., Ltd., and Hubei todaytoutiao Technology Co., Ltd.

This has changed dramatically compared with the textile and apparel companies listed as the main suppliers and customers of Antarctic e-commerce in 2015.

In this regard, the aforementioned industry insiders close to the Antarctic e-commerce further analyzed that "before, the Antarctic e-commerce mainly sold tags, and then provided some store drainage services. These stores have the need to purchase traffic business. Antarctic e-commerce slowly develops this business into a central business. It may be more appropriate to understand it as an E-commerce Internet platform rather than a retail company. "