I presented at Sohn Hong Kong on Dali Foods (3799.HK), explaining why FG Alpha was short the company’s stock. The original presentation can be seen here, but to summarize:
- Based on CTR reports from 2012-2014, Dali’s advertisement spending is ranked higher than Want Want’s, conflicting with Dali’s and Want Want’s annual reported numbers. From 2014-2016, Dali’s A&P expense tripled but its CTR ranking decreased.
- Dali took questionable cash advances from its controlling shareholder in the years leading up to its IPO.
- We consulted an industry expert to estimate Dali’s capex spend in 2013-2014. Their cumulative estimate for both years is about $1 billion RMB less than Dali reported.
- Based on our research, the company’s operating expenses and salary are unbelievably lower than publicly traded peers.
- Inconsistencies between Dali (PRC) and Fujian Dali, across SAT and SAIC files, are reminiscent of Price Frog and Tianhe in that reported SAIC information does not match SAT data.
Appearance on Bloomberg About Dali Foods
I subsequently had a chance to speak with Bloomberg about the thesis, an interview that can be viewed below.