After releasing some of the contents of the investigation report on 6606.HK 's financial fraud to the market many times before, overseas financial media CapitalWatch finally released the full text of the investigation report-- "investigation report on the falsification of Nofie Health Financial data" (hereinafter referred to as "short report").

Compared with the previous version, CapitalWatch's report is more detailed, fully stating the content of the investigation and supplementing the interview evidence it has obtained.

CapitalWatch said in the short-selling report that Nuohui Health realized the falsification of sales data through "one-party accounting, multi-party cycle", "income calculation of expired products" and "virtual return check".

The so-called "one-party backlog, multi-party cycle" means that Chang Weiqing, which Nuohui Health sold to dealers, did not really achieve sales, but a large backlog in dealers. In exchange, Nuohui Health will buy back Chang Weiqing from dealers through the guarantee company to make up for the latter's losses.

According to the report, the backlog and expiration of Chang Weiqing's products from 2020 to 2022 were 66 million yuan, 350 million yuan and 438 million yuan respectively.

"if Nuohui does not maintain the false financial data chain through the repurchase of the guarantor, its distributor will bear a loss of more than 900 million yuan in these years." The report says.

It is worth noting that Nuohui Health publicly said that there are no dealers in Chang Weiqing's sales, and the revenue is mainly confirmed by the quantity of inspection.

But according to data obtained from people in the industry in the short selling report, the proportion of direct sales is less than 10%.

"our understanding of Nuohui is quite deep in the industry, and we objectively judge that the financial data reported by him should be true, that is to say, the composition of real direct sales should be less than 1max 10. This is our view." Shorting the industry quoted in the report pointed out.

As for the claim that Nuohui's health arrival quantity confirmed the income, the short report said that there was a "virtual out of the warehouse, fictitious return check" situation.

The short report shows that there is a significant difference between the sales quantity and the actual shipment quantity in the agreement signed between Nofie Health and the distributor. For example, an agreement that may mark sales of 50, 000 people may actually ship only 2000, and the remaining 48000 may not actually be physically out of the warehouse, but will be treated as a "virtual out of the warehouse".

In the way of virtual out of the warehouse, dealers can fabricate the return test by sending products free of charge, and one-person samples are forged into multi-person samples, so as to speed up the recognition of income.

At the same time, the short report also provides a screenshot of Nuohui's healthy internal chat, confirmingThe existence of "virtual out of storage" situation.

In addition to the aforementioned methods, the counterfeiting methods mentioned in the short selling report also include "calculated income from expired products".

The emergence of expired products is related to the characteristics of Nuohui health business-in the process of practice, because Chang Weiqing's use method is fecal testing, most patients who go to medical institutions and physical examination institutions tend to be used at home, and the samples are sent to the laboratory to complete the test, so there are some patients who forget to use the kit, thus resulting in the product expired and did not complete the test.

In this regard, Nuohui Health said that only for this part of the expired products recognized consumables revenue, not service revenue.

The above short report said that a large number of Chang Weiqing who had a backlog in Nuohui Health Channel did not complete the test in the end, but confirmed the income with the consumables of expired products, but did not provide specific evidence. However, only through the calculation, the gross profit margin of consumables sales has been as high as 95%, which is higher than the gross profit margin of "consumables + testing services", thus questioning the financial fraud motivation of Nuohui health sales staff.

At the same time, the short report provides interviews with people in the industry.

"it's easier to understand. Do you think it's easy for me to go to the hospital every day to promote it, or is it easier for me to put it in a warehouse and make a little money? People always think of the easiest way, if my boss gives me a way to make money, saying that you just put the goods in the warehouse and put them somewhere in the channel, and then you can get 200000 (salary) a year, then I will do the same, right? " People in the industry who shorted the report pointed out.

As the short report does not provide more substantive evidence, it remains uncertain whether Nofai Health has falsified the "calculated income of expired products".

The core process of the whole short selling report still lies in the sales data of Chang Weiqing obtained from its visit to 18 key public hospitals in various prefectures and cities, 217 top 200 private hospitals in the country and high-end private hospitals in first-tier cities.

The survey found that among the 217 hospitals surveyed in the first half of 2023, 7 hospitals actually sold Chang Weiqing, and the actual sales volume was only about 122 people, which is obviously different from Chang Weiqing's 428700 confirmed volume and 491 million yuan income data in the same period.

Nuohui Health has not announced the specific name of the medical institution that sold Chang Weiqing, so it is still uncertain whether the survey data are consistent with the actual situation.

However, the full version of the short report released, did not have a negative impact on Novoc Health, Sept. 5 intraday share price rose as high as 4.16%.