Muddy Water Replies To China MediaExpress (CCME), Reiterates Strong Sell

Tyler Durden's picture

The war of words between Muddy Waters and alleged Chinese fraud company, China MediaExpress Holdings escalates as the company that exposed RINO for the fraud it is, issues its latest update on the situation. Bottom line: "We reiterate our Strong Sell rating on CCME, and stand by our
conclusion that CCME management is significantly inflating its revenue
and earnings in order to generate management earn-outs and inflate the
stock price so insiders can sell."

Muddy Waters, LLC has reviewed the report on China MediaExpress Holdings Inc. (NASDAQ: CCME) issued today by Ping Luo (of Global Hunter Securities), as well as the February 7, 2011 open letter from CCME chairman Zheng Cheng (http://www.ccme.tv/eng/ir/ceo_letter.pdf).  The report and letter are responses to our February 3, 2011 report, CCME: Taking the Short Bus to Profits.

Ms. Luo and Mr. Cheng’s documents contain gross misstatements of facts that are material to the investment case in favor of CCME.  Muddy Waters, LLC intends to respond to these misstatements with evidence of the inaccuracies within a reasonable time period. 

We reiterate our Strong Sell rating on CCME, and stand by our conclusion that CCME management is significantly inflating its revenue and earnings in order to generate management earn-outs and inflate the stock price so insiders can sell.

We intend to shortly contact CCME’s auditor, Deloitte & Touche LLP, and the enforcement division of the Securities and Exchange Commission with documentation of our work, including evidence that directly contradicts statements in the aforementioned documents.  Such evidence will include transcripts of meetings and telephone conversations between Muddy Waters, LLC and individuals with authoritative knowledge of the matters in contention. 

The first report in the MW-CCME saga can be found here.