Thread by @HindenburgRes

NEW FROM US: We Are Short Golden Heaven Group, Another Classic "China Hustle"

$GDHG

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$GDHG is a NASDAQ-listed company that operates 6 properties in southern China, consisting of amusement parks, water parks and recreational facilities.

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$GDHG IPO’d on NASDAQ in April 2023 at $4/share.

Its stock has mysteriously rocketed ~493% in 7 months despite little news to justify such a move.

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$GDHG claimed that in 2022, the company hosted 2.41 million guests across its 6 parks, driving $41.8 million in fiscal 2022 revenue, hardly levels that would justify its ~$1.2 billion market cap as of yesterday’s close.

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Our research shows:

- $GDHG's CEO has a history of undisclosed fraud allegations and asset freezes in China.
- The company was taken public by securities firms with multiple FINRA infractions.
- GDHG’s claimed high-tech parks in China appear to be dystopian hellscapes.

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In 2019, $GDHG's Chairwoman & CEO Jin Qiong and her husband were accused of defrauding Chinese investors in a pharma company they controlled.

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Unpaid judgements from the alleged fraud resulted in Jin Qiong being restricted from travel and court orders determined $GDHG HQ’s address be shuttered.

None of this has been disclosed to U.S. investors.

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Golden Heaven’s Chairwoman & CEO is currently subject to limits on high consumption, and equity freezes, according to QCC.

Again, none of this is disclosed to U.S. investors.

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Days after the consumption restriction order, an entity owned by Qiong transferred the 6 amusement parks to Golden Heaven for $7.4 million.

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Barely a year later, in 2022, $GDHG filed to IPO the same six parks.

The IPO valued the company at over $200 million, an extraordinary 27x what the operating companies changed hands for previously.

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$GDHG's underwriters, RF Lafferty and Revere, have a track record of failed microcap IPOs, with combined 2023 IPOs down an average of 51%, per our calculations.

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RF Lafferty’s BrokerCheck report shows 7 disclosures, including a censure and fines in 2013 following allegations that the firm failed to properly detect suspicious transactions.

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We visited each $GDHG park on the weekend, typically when amusement parks are busiest, expecting to find vibrant and heavily trafficked parks as suggested in the company's investor materials.

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$GDHG's largest park, Yueyang, accounted for 36% of total reported guests.

According to the company, it had 890,000 guests in 2022, or 2,400/day, despite having just a 1,100 guest capacity.

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Our investigator visited $GDHG's claimed most-visited property on a Saturday and observed only about 10 cars in the lot around noon.

The park was nearly empty.

A "water attraction" was a large pond full of trash.

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Here is a video of the rollercoaster for $GDHG's claimed highest-traffic park during peak weekend hours.

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Golden's second largest park, Changde Jinsheng, accounted for 21% of guests across all parks.

We visited on a Sunday at around 10am. There were about 20 cars in the lot and slightly more visitors. (17/n)

$GDHG's 3rd largest park, Yunnan Yuxi, accounted for 16% of total guests in 2022.

The company reported about 370,000 guests in 2022 or an average of ~1000 per day.

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Our investigator arrived at the park around 9am on a Saturday, and stayed for around 7 hours.

The investigator checked the parking lot roughly every hour. The checks show activity peaked at around 63 cars in the afternoon.

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The company's 4th Largest Park, Tongling West Lake, accounted for 15% Of Golden Heaven’s total guests in 2022.

Its 'water feature' was a small blow-up pool with dirty water in what seemed to be a far larger, otherwise empty pool structure.

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At the company's 5th Largest Park, Qujing Jinsheng Amusement Park, we counted a maximum of 44 cars in the parking lot during late morning and early afternoon.

An attendant told our investigator that the park was as busy as it normally was.

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$GDHG's 6th largest park, was claimed to be temporarily closed in September 2023 with the expectation of reopening under a different business model.

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$GDHG disclosed the Mangshi Park closed Sep 30 2023, however we found the park overgrown with mature weeds and other signs of long-term deterioration.

Our investigator's photos:

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We have major doubts about $GDHG’s reported financials given the difference between its reported park activity and observable reality, and given the undisclosed fraud allegations & issues facing its Chairwoman & CEO.

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The company switched auditors a week ago from one bucket shop auditor, BF Borgers, to another, Assentsure.

The latter has been registered with the PCAOB for only 2 years and has 11 microcap companies as clients.

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Two of Assentsure's partners were previously partners at RT LLP, another Singaporean auditor, which was fined and had its registration revoked by the PCAOB earlier this year.

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All told, $GDHG strikes us as yet another disgraceful example of a company that should have never been allowed to list on the Nasdaq had anyone performed even basic checks on the executive’s scandal-plagued background and operations.

We are short.

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In the week following our report, $GDHG cleaned the trash and much of the dirt from the 'water attraction' at its claimed most-trafficked park.

On another follow-up visit during peak weekend hours, the park was again mostly empty.

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Despite being an obvious Potemkin Village scam, $GDHG still trades at 142x of what its assets last changed hands for prior to its recent April IPO.

The $7.4 million value for its park assets would amount to $0.14 a share.

cc @Nasdaq @adenatfriedman

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