20130125-Glaucus-China Metal Recycling Holdings Ltd (0773.HK)

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1、GLAUCUSRESEARCHGROUP“Thingsgainedthroughunjustfraudareneversecure.”-SophoclesTHISRESEARCHREPORTEXPRESSESOUROPINIONS.UseGlaucusResearchGroupCalifornia,LLC’sresearchopinionsatyourownrisk.Thisisnotinvestmentadvicenorshoulditbeconstruedassuch.Youshoulddoyouro

2、wnresearchandduediligencebeforemakinganyinvestmentdecisionwithrespecttothesecuritiescoveredherein.WeareshortCMRandthereforestandtorealizesignificantgainsintheeventthatthepriceofCMR’sstockdeclines.Pleaserefertoourfulldisclaimeronpagethreeofthisreport.COMPA

3、NY:CHINAMETALRECYCLINGHOLDINGSLTD

4、HK:0773INDUSTRY:ScrapMetalRecyclingChinaMetalRecyclingHoldingsLtd.(“CMR”orthe“Company”)purportstobethelargestscrapRecommendation:metalrecyclingcompanyinChina.Webelievethatthisisalie.PubliclyaccessibleimportdatafromtheChin

5、esegovernmentsuggeststhatCMRisablatantfraudthathasdeceivedthemarketStrongSellaboutthesizeofitsbusiness.Price:1.CMRisNowhereNearitsReportedSize.MultipleindependentsourcesshowthatCMRHK$9.43couldnotbesourcinganywhereclosetothevolumeofscrapnecessarytoproducei

6、tsreportedAsofMarketClose1/25/2013volumeofprocessedmetals.MarketCap:a.MEPImportDataIndicatesFraud.PubliclyavailabledatafromtheChineseMinistryHK$11billionofEnvironmentalProtectionindicatesthatCMRhasneverbeenlegallyallowedtoimport~morethan87,500tonsofnon-fe

7、rrousscrapmetalinanyyear,eventhoughthePublicFloat:Companywouldhavetobeimportinganaverageof~120,000tonsofnon-ferrousscrappermonthin2011-2012(~1,440,000tonsperyear)toproduceitsreported464mmsharesoutput.DailyVolume:b.CustomsDataforCopperImportsIndicatesFraud

8、.Similarly,inordertoproduce5.5mmsharesCMR’sreportedvolumeofcopper,CMRwouldneedtoimport~113,000tonsofscrapcopperpermonth,whichwouldmakeitbyfarthelargestscrapcopperimporterinChina.(Avg.10days)Yet2011and2012customsdatashowsthatCMRisnoteveninthetop10ofmonthly

9、thAuditor:scrapcopperimporters,andthatChiho-Tiande(HK:0976),acompetitorsupposedly1/5thesizeofCMR(measuredbysales),islistedasthetopimportereachmonth.DeloitteToucheTohmatsuUnderwriters:c.AlltheScrapinChina.Inordertopr