On the evening of December 16, the muddy water company said it was making empty shells. Muddy Waters said KE Holdings Inc. was systematically fraudulent. It is estimated that KE Holdings Inc. 's commission income data was exaggerated by 77% Muth96%, the total new housing transaction volume (GTV) by 126%, and the stock housing transaction volume by 33%.
Regarding the short selling report of Muddy Waters, KE Holdings Inc subsequently issued a statement on the official WeChat account saying that it would resolutely resist any malicious short selling by any organization. The statement also said that because Muddy Waters did not understand China's real estate market, it lacked a basic understanding of KE Holdings Inc. 's business and a correct interpretation of the three statements. In order to protect the rights and interests of investors and not be guided by misinformation, KE Holdings Inc. will disassemble and reply to the contents of the report one by one within 24 hours.
KE Holdings Inc is an online and offline real estate trading and service platform launched by Lianjia Real Estate in 2018. Its core business is new housing, second-hand housing and rental housing transactions. It was listed on the New York Stock Exchange in August 2020. Earlier, KE Holdings Inc. released unaudited financial results for the third quarter ended September 30, 2021. In the third quarter of 2021, KE Holdings Inc's total revenue was 18.1 billion yuan, down 11.9 percent from the same period last year. The net loss was 1.766 billion yuan, an adjusted net loss of 888 million yuan, compared with a net profit of 75 million yuan in the same period last year.
The report released by Muddy Waters points out that there is a big difference between the trading volume, the number of stores and the number of agents KE Holdings Inc. reports to investors and the trading data obtained from its platform's multi-month data collection program. These differences were confirmed by a spot check on the survey results through a preliminary due diligence of KE Holdings Inc. 's stores, including on-the-spot interviews and field visits.
According to Muddy Waters, it is estimated that KE Holdings Inc. engaged in systematic fraud, increased the GTV of his new home sales by more than 126 per cent, exaggerated the transaction volume of existing homes by 33 per cent, inflated commission income by about 77 per cent, and inflated the total number of shops by at least 23 per cent. In Langfang, the city, field visits and field investigations show that KE Holdings Inc. 's number of stores has been exaggerated by 59 per cent.
Muddy Waters says there are far fewer shops and brokers using KE Holdings Inc. 's platform than KE Holdings Inc. claimed. On-the-spot investigation showed that there were a number of non-existent ghost shops in KE Holdings Inc., which were listed by KE Holdings Inc. as "active" on its platform, but were closed or did not exist at the time of the visit. As a result, Muddy Waters believes that KE Holdings Inc. 's brokerage business is even much smaller than the number of its platforms.
In the case of three Rivers in Langfang, Muddy Waters found two independent active stores in exactly the same location on the platform. The broker confirmed to Muddy Waters investigators that the two stores had been merged into one, but on KE Holdings Inc. 's platform, they were two very different brokerage firms.
Of the 51 Lianjia stores found by Muddy Waters in Langfang, 19 are non-existent "ghost stores". In this city alone, field visits and field surveys show that KE Holdings Inc. 's number of stores has been exaggerated by 59 per cent. Muddy Waters believes that Langfang is a representative, and ghost shops that do not exist are common.
With regard to the above issues, KE Holdings Inc. insiders told Sina Finance: "the cities he investigated are all fourth-and fifth-tier cities, and there is no research in the north, Shanghai, Guangzhou and Shenzhen, so they are not representative. I estimate that KE Holdings Inc. will issue more specific revenue data, which the company has every month. And Beijing has 1600 stores, more than 25000 brokers, the real data online contracts can not be changed, these legal affairs are examined and strictly managed. " It is reported that KE Holdings Inc. 's auditor is PricewaterhouseCoopers.
In addition, Muddy Waters may also underestimate the impact of this year's property market downturn on KE Holdings Inc., with data showing that KE Holdings Inc. had a total of 515500 brokers by the end of the third quarter, down 6 per cent from the second quarter. About 33100 people left KE Holdings Inc. in the third quarter alone.