GlaucusResearch-Second_Rebuttal_to_Real_Nutri-HK_2010-Maintain_Strong_Sell_Jan_11_2016

GlaucusResearch-Second_Rebuttal_to_Real_Nutri-HK_2010-Maintain_Strong_Sell_Jan_11_2016

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“May you live in interesting times.” - Robert Kennedy On October 22, 2015, we publi shed our investment opinion (the “ Report ”) on Real Nutriceutical Group Limited (2010.HK) (“ Real Nutri ” or the “ Company ”), a PRC based producer of nutritional supplements and health drinks. 1 In our Report we presented publicly available evidence, including PRC government filings, tax rankings, and the results of retail channel checks, which in our opinion, indicates that Real Nutri’s sales and net income are substantially less than reported to investors and regulators in the Company’s Hong Kong filings. On Christmas Eve at 11:00 p.m. (Hong Kong time), Real Nutri responded with a Clarification Announcement (the “ Clarification ”). Real Nutri took 64 days to respond to basic questions about its business and the timing of its Clarification suggests that the Company was trying to sneak back into the market without adequately addressing the substantial, independent evidence indicating that Real Nutri is fabricating its reported financial performance. On December 28, 2015, Glaucus issued a detailed, 30-page rebuttal (available here ) (the “ Rebuttal ”), which picked apart Real Nutri’s contradictory and nonsensical respon ses and offered NEW evidence indicating that Real Nutri does not pay the amount of taxes that it claims (and thus does not generate the net income that it claims) . On January 5, 2016, Real Nutri issued a flimsy one-and-half page response (the “ Second Clarification ”) which addressed neither the new evidence raised in our Rebuttal nor our detailed, line-by-line dissection of its inadequate responses. Real Nutri is hiding, and each day, the Company continues to fail in its legal obligation to give sufficient and accurate information about its business to the investing public. We do not believe that Real Nutri will be able to hide for long, as we think it will fail both its annual audit (by Deloitte) and its special, independent investigation by a big four accounting firm. 1) Real Nutri is Hiding In our Rebuttal, we challenged Real Nutri to answer basic questions about its business, which, if the Company was not deceiving investors about its reported financial performance, would be easy. Every day that the Company is silent is a stain on the integrity of the capital markets. Here is a brief list of questions and evidence, to which Real Nutri has failed to respond: We directly challenged the Company: if your retail store count is true, then provide the addresses of all 200 stores and we will visit each one. Any legitimate company would have quickly disclosed its retail store locations. Yet, given two weeks, Real Nutri has inexplicably failed to provide a list of its retail stores , reinforcing our conviction that the Company is lying about its retail presence.
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  • Fall '16
  • Doc.Kelein
  • Real Nutri

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