New Oriental waters questioning double vie for fear of implicating

Every reporter Chen Chenting Wu Wenkun from Beijing July 18, has been short of 4 Chinese listed companies in the muddy water again, questioning the new Oriental (nyse:edu), the unit rating to "strong sell".　　Affected by this news, the new Oriental in 17th after the collapse of 34% 18th again collapsed 35%, two days has tumbled 57.32%, only 1.5 billion U.S. dollars, the stock price of a 5-year low. In response, Mr Yu, a silent new Oriental chairman, finally showed up for the first time to respond to the vie adjustment and muddy Waters, saying that the new Oriental brand is full of direct stores and no privatisation plan.　　By this effect, as of 19th 22:40 Beijing time, the new Oriental shares rose 30%, reported 12.35 U.S. dollars.　　But the weight of the response seems to weigh.　　Belated response In fact, this is not the first time the new Oriental encounter institutions short. November 17, 2011, the U.S. investigation agency Olpglobal issued a report on the new Oriental questioned, and the next day, the new Oriental stock prices tumbled 8.48%.　　At that time, the new Oriental management quickly responded to the question, and the share price then bucked the trend.　　On the evening of 18th this month, Mr Yu, the chairman, finally sat down. "At present, the management and operation of New Oriental in the normal orbit, the reason for the fall in the shares of New Oriental 17th was not the business problem, but the impact of the SEC's letter on the restructuring of the new Oriental vie, and the fall in the shares on 18th because of the new Oriental Challenge report issued by the Muddy Water Company of the international short.　　Mr Yu responded to the fall in share prices.　　In the two days, despite the CFO's prior emphasis, the VIE adjustment in New Oriental is not the same as that of Ma Yun (Weibo), but the sound of Mr Yu's privatisation of the new Oriental has spread.　　In this regard, Mr Yu reiterated that new Oriental had no privatisation plans, stressing that the company was unable to share repurchase during the SEC's investigation into the Vie.　　But for muddy water this question in the new East existence franchising, gross margin, enterprise structure risk and the Beijing area fraud and other problems, Mr Yu did not follow the convention one by one response, but selectively made a general explanation.　　The temptation to join but, in the franchise issue, Mr Yu explained more clearly.　　In June this year, the CFO of New Oriental had made clear to muddy water to say that there is no "franchise" said, all school property is owned by the new Oriental 100% all, muddy water on the official website released the talk recording evidence.　　In Mr Yu's response, he admits that there is a franchise for children's education in the bubble. "At present, the new Oriental brand of schools, all of the new Oriental Direct camp; In addition, the new Oriental brand bubble children's education in the country authorized 19 to join the school, stars brand authorized 2 to join the school.　　Mr Yu explains. In addition, Mr Yu stressed that the 21 schools, all licensed only to use the bubble children and stars brand, rather than authorize the use of the new Oriental brand. RemoveFranchise fees, these joined the school's own operating income has never been reflected in the new Oriental consolidated financial statements. The daily economic news reporter travelled to new Oriental to investigate the newly opened campus Garden Bridge campus in Beijing, which is located in a small yellow building in the northeastern corner of the garden bridge in Haidian District.　　Reporters at the scene to see a succession of people to consult, registration. It is noteworthy that in the main entrance of the campus, the new Oriental signs next to the bright, "bubble children's education" signs. Reporters through the field, telephone and other means to understand, bubble children's education curriculum is also attributed to the new Oriental Curriculum system, and in the same building class.　　In this respect, the daily economic news reporter repeatedly called the new Oriental Public Relations Department, no answer.　　Implicating？　　In Muddy Waters, the new Oriental problem is far more serious than an unstable vie structure, and the schools run by New Oriental are state-owned and do not know how to integrate into the company's assets. In this respect, there are insiders told the Daily economic news reporter, the current Chinese education and training institutions generally adopt the company and the school two models to run school. At present, the state of the company to operate in the form of training institutions have not yet issued clear regulations, so many enterprises on the market are registered with the education consulting company, and then open different training courses. New Oriental is to apply for private education and training institutions, the establishment of private schools throughout the country.　　This model is safer than the corporate model, but there are some uncertainties. The muddy water in the 13th page of its report listed the new Oriental Beijing Haidian School profit and Loss statement, a person engaged in education and training for many years in the industry told reporters, according to the current model of New Oriental, New Oriental Beijing Haidian School enrollment, Beijing New Oriental will send teachers to their Haidian school teaching, And the majority of Haidian school's enrollment income will enter Beijing New Oriental Company's account. As a result of the contract between the two sides, the new Oriental has provided the right to use the new Oriental trademarks and the teacher Labor dispatch.　　And Beijing's new Oriental will take these revenues minus the rest of the expenditure, and then into Beijing's new oriental foreign companies overseas. "New Oriental Haidian School to Beijing, New Oriental also has a disguised vie, then the whole structure of the east into a double vie."　　The industry added.　　One of the key points of muddy water questioning is such a double vie structure.　　However, some analysts who are concerned about the new Oriental said that such a disguised vie pattern from school to Enterprise, many of the current education and training institutions through private schools are based on the new Oriental model. Industry worried that if muddy waters attack the success of the new Oriental enterprise structure, other overseas listed education and training enterprises may also be difficult to escape. • RELATED LINKS muddy water doubts or omissions every reporter Yang Ke zhan shu with the short body Muddy Water company issued against the new Oriental Query report, its share price plunged 35%. In the report, Muddy Waters elaborated the so-called "five sins" of New Oriental, questioning that its new oriental schools are state-owned assets and cannot be merged into the new Oriental Education Group.Consolidated report.　　Li Yunhui, a director of Blue County Consulting, who has long engaged in overseas IPO strategy studies, told the Daily economic news reporter that the new Oriental private school had the essence of a business entity and needed to merge its financial statements into the new Oriental Education Group, which could be overlooked. Muddy water Questioning the argument is not fully learned that muddy water this time mainly raised five questions, including never disclosed to investors franchise operation, the use of one-time franchise fee to enrich the cash account; During the 2009-2011-year period, the operating agency of New Oriental Beijing was fraudulent in its earnings; the VIE complex structure　　Its schools, which are owned by state property, cannot be merged into consolidated earnings; New Oriental may need to report historical accounting figures and its auditors will resign. In the view of Muddy Waters, Li Yunhui said it was not sufficient to question whether the new Oriental was a merger of Vie.　　Li Yunhui told reporters that the main argument for the current mixed water dispute is that the new Oriental School is not a business entity, because it belongs to state-owned assets, non-profit institutions. In other words, the focus of its questioning is essentially whether the VIE is an operating entity.　　In this respect, the supporting argument for muddy water is an annual inspection report from the Civil Affairs Bureau produced on page 68th of its report, which refers to the Beijing New Oriental Private school as a private non-enterprise unit. But Li Ze pointed out that according to the October 25, 1998 State Council announced the implementation of the "Private Non-enterprise Registration Management regulations", the private non-enterprise refers to enterprises and institutions, social groups and other social forces, as well as citizens of the private use of Non-state-owned assets held in the non-profit social services activities of social organizations.　　One obvious characteristic of it is that it is not held by government or government departments, that is to say, the private new Oriental school in Haidian District, Beijing, is not a state-owned asset. Li Yunhui further explained that, although the new Oriental private schools to the Civil Affairs Bureau to declare, but in the trade and Industry Bureau, the IRD information is a business unit, can not change its pursuit of reasonable return of the essence of the operating entity.　　As a result, the new Oriental Private school is in line with the concept of a business entity, so the new Oriental private school should be the vie of the new Oriental Education Group and the new Oriental Education Group should be merged into other conditions.　　In response to fears of trouble. Mr Yu yesterday responded to doubts about shorting the firm's muddy Waters, according to China News Network.　　Mr Yu said it was not convenient to disclose further progress at a sensitive time, but the company is actively cooperating with the SEC in its investigation. Li Yunhui told reporters that "the vie adjustment has no effect on the shareholder structure of listed companies", and that one sentence does not solve the public's doubts about the SEC's investigation of the new Oriental vie, and new Oriental should publish the SEC investigation letter. Moreover, the new Oriental Income confirmation rules do not mention the franchise fee, Mr Yu needs to grant the share of total income, and record in the income of which category.　　In fact, Yu's response has increased the market's doubts about the financial problems of the new Oriental. Daily economic news reporterTried to contact the new Oriental for the above questions, but did not receive any response until the deadline. And for the future of new Oriental business performance, the market has been divided. Integrated 14 institutions forecast that the new Oriental 2013 ~2015 year earnings forecast for each share of 1.18 U.S. dollars, 1.44 U.S. dollars and 1.75 U.S. dollars. The U.S. investment bank PiperJaffray Wednesday to maintain the new Oriental "overweight" rating. However, another big bank, Goldman Sachs, has suspended its rating on the new Oriental, explaining that it is not sufficient to determine its investment rating and target price.