China MediaExpress Holdings CCME
CCME is a fraud: a recorded salesperson admits doubling the bus count for SEC filings, and Chairman Cheng's rebuttal cited fabricated license plates — fair value $3.54 vs $12.27.
Thesis
Muddy Waters' March 2, 2011 follow-up to its February 3 short report argues that China MediaExpress Holdings (CCME) is a substantial fraud whose management is now running an active cover-up. The centerpiece is a recorded February 23 phone call in which a CCME salesperson states that the company reports double the actual vehicle count to securities regulators and has replaced hard drives amid Deloitte's investigation. The report further shows that three Shanghai Ba Shi license plates cited in Chairman Zheng Cheng's February 7 rebuttal are fabricated — two belong to passenger cars, one was retired — and that five hours of meetings with Jiaoyun Ba Shi officials, plus a mini-documentary of inter-city buses, confirm no CCME hardware is installed. Muddy Waters cuts its estimated value by one-third to $3.54 (from a $12.27 market price) and flags NASDAQ de-listing risk.
SCQA
China MediaExpress Holdings trades on NASDAQ at $12.27 with a $420m market cap, claiming to run China's largest inter-city bus LCD advertising network across 27,200+ buses.
CCME's own salesperson, caught on tape, admits the reported bus count is double the real number and hard drives have been wiped since Deloitte began investigating — and Chairman Cheng's rebuttal cites fabricated license plates.
Reject Chairman Cheng's February 7 rebuttal as fraudulent and treat CCME as a substantial fraud; Muddy Waters maintains a Strong Sell and expects NASDAQ de-listing.
Estimated intrinsic value cut by one-third to $3.54 per share versus the $12.27 market price — roughly 71% downside, with potential de-listing eliminating remaining value.
The three reasons
- 1
Recorded CCME salesperson admits the company doubles its reported bus count for SEC filings
- 2
Chairman Cheng's rebuttal cites three Shanghai Ba Shi license plates that are demonstrably fabricated
- 3
On-site JB meetings and video show no CCME hardware on the largest purported operator's buses
Primary demands
- Sell CCME shares
- Treat Chairman Cheng's February 7 rebuttal as fabricated
- Expect de-listing from NASDAQ
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Notable slides (5)
Notes
Follow-up short report to Muddy Waters' initial Feb 3, 2011 CCME report. Structured as a Word-style research note (not a designed deck) with embedded photos of passenger cars, bus interiors, and a Sales Presentation screenshot annotated '296 buses in Shanghai'. Rhetorical centerpiece is a verbatim transcript of a recorded CCME salesperson confessing fraud ('The number we reported is times two, or doubled'). Appendix D reproduces Chairman Zheng Cheng's Feb 7, 2011 rebuttal letter, which Muddy Waters uses against him to show fabricated license plates. Campaign outcome: CCME trading was halted later in March 2011, Deloitte resigned as auditor, and the stock was subsequently de-listed — this became one of Muddy Waters' most celebrated campaigns. Author/signatory: Carson C. Block (listed as Director of Research on cover).