Fullshare Holdings – Glaucus Research

We believe that Fullshare Holdings Ltd. (HK: 0607) (“Fullshare” or the “Company”), a 2013 reverse merger, is one of the largest stock manipulation schemes trading on any exchange anywhere in the world. In our opinion, Fullshare resembles Tech Pro Technology (HK: 3823), Huishan Dairy (HK: 6863), and Hanergy (HK: 0566), schemes whose stock price collapsed in spectacular fashion.

In this report, we present independent evidence from intraday trading patterns indicating, in our opinion, that Fullshare’s share price has been manipulated. We believe that insiders have used the smokescreen of a rising stock price to secretly transfer some of the Company’s most valuable assets to the chairman and his family.

Fullshare is supposedly a commercial and residential property developer, but this business is tiny compared to its market capitalization. In FY 2016, Fullshare generated a paltry RMB 132 million in EBIT from continuing operations, meaning it currently trades at 431x recurring operating profits. This is a ludicrous valuation. Even if we ignore all evidence of corruption or embezzlement, Fullshare’s operating business is so insignificant that if we value Fullshare at the median multiple for HSCIPC companies (either on an adjusted P/E or adjusted P/B ratio), we would expect Fullshare’s stock price to decrease by 70-80%. However, given the evidence of multiple undisclosed related party acquisitions and dispositions, we believe that Fullshare’s management displays such a blatant disregard for shareholders and Hong Kong securities rules that the Company is simply uninvestible.