The GeoTeam Publishes Fraud Call on Zhongpin

On Wednesday, The GeoTeam published a report on Zhongpin HOGS, a reverse-merger Chinese pork company. In the report, GeoTeam alleges that the company has overstated its income and has deceptive financial filings. GeoTeam writes, "Over 6 years HOGS' revenue has increased 20 fold (2,000%) to nearly $1 billion in 2010 from $42 million in 2004. During that time, store count has only roughly doubled." GeoTeam also cites a negative report by China Economic Review. In its own negative report, CER writes, "Zhongpin claims it purchases 1.1 million hogs from large breeding farms in Henan annually, but the farms say only 81k, 93% less than Zhongpin's reported figure." GeoTeam also raised the question on the Zhongpin's financing. "[On November 9, 2010] HOGS discloses in its 10-Q for the period ended September 30, 2010 that existing funds 'will be sufficient to finance…investments…of $105.8 million over the next 12 months…within one month, HOGS filed a $250 million shelf filing (over 1/3 of market cap at the time), and disclosed that Selling Stockholders may sell as many as 9.5 million shares," GeoTeam notes. Zhongpin is currently trading at $8.54, down almost 2% on the session. Read more here.