In our opinion, evidence suggests that the Company exaggerates its financial performance, inflates profits and conceals that dwindling Company profits are used to privately enrich its chairman. If we value the Company on the profits CMS discloses to Chinese authorities and apply a modest 25% corporate governance discount to its P/E multiple, we value CMS at HKD 3.95 per share, a 62% downside from its current price. Yet given overwhelming evidence suggesting that CMS misleads investors, we believe that CMS is simply uninvestable.

In this Rebuttal, we will unpack CMS’ nonsense and show why only the most gullible investor would believe the Company’s latest obfuscation. CMS’ only hope is to convince investors that its financials are true because it has discovered the greatest tax loophole in the world, which is not available to any other public company. Unbelievably, the Company’s entire defense rests on its claims that 60% of its profits flow through a Malaysian subsidiary which evidence indicates has no current employees, no office, no customs records of shipping goods, no material IP rights, no operations in Malaysia and which is not even audited! Not only does this lone subsidiary supposedly enable CMS to save hundreds of millions in taxes, but no other public company has discovered this loophole.