|作者：||Leo LIU,Matt MA|
|摘要：||Report title:JD.com (JD US) - Camsing case should have no impact to JD
Analyst:Leo LIU,Matt MA
■JD has been linked to a suspected fraudulent financing case ■We don’t think the financing registration records circulated on Internet proved JD’s involvement ■Maintain BUY with TP at US$36 unchanged What happened? Recently, the controlling shareholder of a Hong Kong listed company Camsing International holdings (Camsing; 2662 HK; NR) was criminally detained due to suspected fraudulent financing activities. Multiple financial institutions including trusts, asset managers, private equity funds, and third-party wealth managers have involved. Among them, Shanghai gopher asset management, a consolidated affiliated entity of Noah holdings (NOAH US; NR), has provided supply chain financing to Camsing with a total principal amount of about RMB3.4 billion, based on the transfer of accounts receivables generated from Camsing’s alleged business transactions with JD (JD US; TP US$36). To increase credibility, Camsing also provided equity pledge for this financing. To protect its interests, Noah has initiated various legal actions against Camsing and JD. However, according to JD, Camsing is suspected of forging business contracts and transactions with JD to defraud, and JD has already reported the case to police cooperating with the victim company. Our view: According to 21st Century Business Herald, the transferred accounts receivables related to JD can be found registered in the unified registration and publicity system for chattel financing (中登网) under PBoC’s Credit Reference Center (央行征信中间), with complete set of documents including financing contracts and confirmations of AR transfer from JD. However, after carefully reading the principle of registration on the website, we found that the registration institution is not responsible of conducting any substantive examination on the registration contents, and not responsible for the authenticity, legality and accuracy of the contents. In another words, Camsing has the ability to falsify and register documents on the system without letting JD know. We think for such large amount financing with sole underlying asset, it should be natural for Noah to at least request JD management to present and confirm the authenticity However, according to JD’s explanation, Noah did not perform sufficient due diligence work. But no matter the documents are authentic or not, there should be no impacts to JD after all, given: 1) If they are real, then in theory JD must have already recognized inventories and corresponding accounts payable liabilities on balance sheet; 2) If they are fake, then JD would have no obligation at all. No matter which, there should be no additional costs to JD. Moreover, in the case of large amount purchase, we don’t think JD would lack the necessary internal control measures to prevent fake purchases. Maintain BUY; TP unchanged We like JD for its solid position among China’s middle-class consumers and its continuous ability to improve LT margins through ramp-up in capacity utilization and efficiency improvements. We maintain BUY rating with TP $36 unchanged.