Muddy Waters have published a short report on TAL Education Group (TAL Education), calling it a “real business” with fake financials. They say the company has been fraudulently overstating its profits since at least FY 2016. Muddy Waters believes the fraud pervades the core Peiyou business and is migrating into TAL Education’s online businesses.

You can download the report via their website. Note that this is only Part I in a series of reports to come. In this report, they cover two sets of fraudulent transactions that they estimate inflated TAL Education’s FY 2016 through FY 2018 pre-tax profits by up to US$153.2m, or 28.4%.