1) Zhongmin Baihui Retail Group's stock price rallied over 270% in one year upon listing, but does not react to market forces or the company's financial performance, raising investor caution. 2) The company provides weak disclosures of key retail metrics and had a temporary revenue spike from an asset transfer with questionable terms. 3) The corporate structure involves a lease agreement that effectively pays the CEO, Deputy CEO and a director, questioning corporate governance.

1. 13th April 2015
Zhongmin Baihui Retail Group Ltd
Overvalued S-Chip Chinese Retailer with Potentially Cornered Stock,
Weak Performance, Sub-par Corporate Governance and
Questionable Related Party Transactions
INVESTOR CAUTION
All information obtained from public sources. No information disclosed constitutes an investment view and none of the
authors have interests in the said security

2. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Zhongmin Baihui Retail Group Ltd (“ZMBH”)
100%
Zhongmin
Baihui
Develop-
ment Pte
Ltd
100%
Zhongmin
Baihui
(Quanzhou)
Commercial
Manage-
ment Co Ltd
100%
Xiamen Shi
Zhongmin
Baihui
Commercial
Co Ltd
100%
Zhongmin
Baihui
(Nanjing)
Commercial
Co Ltd
Quanzhou
ZMBH
Private
Sister Co
Zhongmin Baihui
Retail Group Ltd.
Group Structure
Pure Play Retail Specialist with Department Stores and Supermarkets in Attractive Venues
68% Direct Sales
14% Concessionaire comms
6% Rental Income
4% Managed Rental
6% Advertisement Fees
1% Management Fees
Revenue and Net Income FY2014
RMB
946m
Revenue RMB 31.8m
Net Income
13
Department
Stores
9 Owned
4 Managed
Xiamen Wucun
• Located at a major transportation
hub
• Estimated traffic of over ~100,000
people a day
Lee Swee Keng Chen Kaitong
Chairman CEO
2
*includes other income

3. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Investor Caution: Overvalued S-Chip Chinese Retailer
3
Stock Price
too good to
be true
Weak disclosures
and erratic financial
performance
Questionable
corporate
governance
INVESTOR
CAUTION
1 2 3
• Stock price rallied over
270% in 1 year upon listing
• Stock price does not react
to market swings, industry
forces or fundamental
performance
• Lack of disclosure of key
retail metrics
• Temporary revenue spike
with asset transfer
• Sales contribution of new
stores seem unreasonable
• Asset transfer from ‘Sister
company’, Quanzhou ZMBH
at overpriced terms
• Lease agreement which
effectively pays CEO,
Deputy CEO and director

4. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Stock Price Too Good to Be True
Weak disclosures
and erratic financial
performance
Questionable
corporate
governance
4
• Lack of disclosure of key
retail metrics
• Temporary revenue spike
with asset transfer
• Sales contribution of new
stores seem unreasonable
• Asset transfer from ‘Sister
company’, Quanzhou ZMBH
at overpriced terms
• Lease agreement which
effectively pays CEO,
Deputy CEO and director
Stock Price
too good to
be true
• Stock price rallied over
270% in 1 year upon listing
• Stock price does not react
to market swings, industry
forces or fundamental
performance
1 2 3
INVESTOR
CAUTION

5. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Stock Price Too Good to Be True
5
Stock Price Increased over 6 times IPO price in 4 months after listing, sparking SGX Trading Query
First IPO in 2011, but
made little notice due
to IPO by placement
Stock price spiked 6x
in 4 months post listing
Business Times posted
article noticing price
movement, stock price
corrected downwards
SGX commenced
query. No news of
further query after
company replied
saying it was unaware
6x

6. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Business Times Article Questions Stock Price Movement
6
While the Group responded to BT article and Trading Query, there has been no Further News Since
First IPO in 2011, but
made little notice due
to IPO by placement
Stock price spiked 6x
in 4 months post listing
Business Times posted
article noticing price
movement, stock price
corrected downwards
SGX commenced
query. No news of
further query after
company replied
saying it was unaware
Business Times Article Response to Business Times Article
R Sivanithy from BT wrote an article citing
two possibilities for stock’s performance:
1. ZMBH was going to be a takeover target,
which is highly unlikely since it just IPO
2. IPO shares were all placed out to a very
small group of investors who are cornering
the stock together
Further warned that the stock could have the
same fate as other stocks like Mid-Continent
or Leong Hin, which were proven to be
cornered and punished accordingly
Company issued statement stating that
article ‘might possibly explain’ the trading
activity
Released shareholding spread indicating
increase in shareholders. Weak argument as
increase was seen in small shareholders
arguably buying from larger shareholders

7. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
SGX Conducts Query on Company Trading Activity
7
While the Group responded to BT article and Trading Query, there has been no Further News Since
SGX Query on Trading Activity Response to SGX Query
The Company was tasked to answer:
1. Are you aware of any information not
previously announced concerning you (the
issuer), your subsidiaries or associated
companies which, if known, might explain the
trading?
- If yes, the information must be announced
immediately.
2. Are you aware of any other possible
explanation for the trading?
3. Can you confirm your compliance with the
listing rules and, in particular, listing rule
703?
To which the company replied:
1. The Company is not aware of any information not
previously announced concerning itself (the Issuer)
and its subsidiary, which, if known, might explain the
trading
2. The Company wishes to state that an article titled
“Zhongmin Baihui – Real or False Demand”
published in The Business Time on 25 May 2011
might possibly explain the trading activity on 25 May
2011. Save as disclosed above, the Company is not
aware of any other possible explanation for the
trading.
3. The Company confirms that, to the best of its
knowledge, it is in compliance with the listing rules
and, in particular, listing rule 703.
First IPO in 2011, but
made little notice due
to IPO by placement
Stock price spiked 6x
in 4 months post listing
Business Times posted
article noticing price
movement, stock price
corrected downwards
SGX commenced
query. No news of
further query after
company replied
saying it was unaware

8. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
‘Gravity-Defying’ Stock Price
8
Stock Price Climbs Steadily; Undeterred by Market Swings, Industry Forces or Earnings Announcements
0
200
400
600
800
19-Jan-11 19-Jan-12 19-Jan-13 19-Jan-14 19-Jan-15
ZMBH STI Index
0
200
400
600
800
1000
19-Jan-11 19-Jan-12 19-Jan-13 19-Jan-14 19-Jan-15
ZMBH Parkson Retail New World Sun Art Golden Eagle Intime Retail
-10.00%
0.00%
10.00%
20.00%
(10.0)
0
10.0
Net Income Profit margin
Price Performance against STI
Price Performance against peers
ZMBH net income and margins
(Rebased to 100)
(Rebased to 100)
(NI)
(Profit margin)

9. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Shareholding Momentum of ZMBH
9
86.2% of TSO Held by Insiders with Little Institutional Shareholding; IPO Subscribers Sold Positions
*Blue highlights indicate institutional shareholders
Post-IPO ---->
Holders Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15
Lee, Sw ee Keng (Executive Chairman) 49.90 49.90 49.90 49.90 49.90 49.90 49.90 49.90 49.90 39.79 39.79 39.79 39.79 42.14 43.24 43.24 44.24 44.24
Chen, Kaitong (Chief Executive Officer) 46.57 46.57 46.57 46.57 46.57 46.57 46.57 46.57 46.57 40.47 40.47 40.47 40.47 40.47 41.47 41.47 42.02 42.02
Su, Caiye (Non-Exec Non- Indep Director) 23.28 23.28 23.28 23.28 23.28 23.28 23.28 23.28 23.28 20.03 20.03 25.31 26.78 26.78 26.78 26.78 26.78 25.28
Lim, Kok Tong - 19.07 19.07 19.07 19.07 19.07 19.07 19.07 19.07 19.07 19.07 19.07 19.07 18.67 21.59 21.59 21.59 21.59
Low , Chui Heng (Exec Director) 21.87 21.87 21.87 21.87 21.87 21.87 21.87 21.87 21.87 18.62 18.62 18.62 19.62 19.62 16.62 16.62 13.12 13.12
Su, Jianli (Deputy CEO) 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63 5.63
CIMB-Principal Asset Management Bhd - 7.23 7.23 7.23 7.23 - - - - 2.46 2.46 2.46 2.46 3.53 3.53 3.53 3.53 3.53
Wee, Choo Chuan - - - - - - - - - 1.00 1.00 1.00 1.00 1.53 1.53 1.53 1.53 1.53
Cai, Yuedong - - - - - - - - - - - - - 1.00 1.00 1.00 1.00 1.00
Lim, Soo Seng - - - - - - - - - - - - - 1.00 1.00 1.00 1.00 1.00
Lam, Chun Lim - 3.00 3.00 3.00 3.00 1.26 1.26 1.26 1.26 0.75 0.75 0.75 0.75 0.99 0.99 0.99 0.99 0.99
Lim, Eng Hock - - - - - - - - - - - - - 0.96 0.96 0.96 0.96 0.96
Wong, Kao Lek - - - - - - - - - - - - - 0.94 0.94 0.94 0.94 0.94
DBS Group Holdings Limited, Asset Management Arm- - - - - - - - - - - - - 0.85 0.85 0.85 0.85 0.85
Nee, Lung-Yuan - - - - - 0.83 0.83 0.83 0.83 0.83 0.83 0.83 0.83 0.83 0.83 0.83 0.83 0.83
Lim, Tiong Kheng - 0.78 0.78 0.78 0.78 0.64 0.64 0.64 0.64 - - - - - - - - -
Goh, Yeo Hw a - 1.20 1.20 1.20 1.20 - - - - - - - - - - - - -
Liow , Lip Kee - 0.38 0.38 0.38 0.38 - - - - - - - - - - - - -
Low , Thiam Chuan - 0.64 0.64 0.64 0.64 0.74 0.74 0.74 0.74 0.74 0.74 0.74 0.74 - - - - -
Ng, Gek Heok - 0.33 0.33 0.33 0.33 - - - - - - - - - - - - -
Shi, Jianghe - 0.95 0.95 0.95 0.95 0.58 0.58 0.58 0.58 - - - - - - - - -
Weng, Wenw ei - 0.60 0.60 0.60 0.60 - - - - - - - - - - - - -
Yap, Wee Yeow - 1.00 1.00 1.00 1.00 1.17 1.17 1.17 1.17 0.75 0.75 0.75 0.75 - - - - -
Low , Lian Tee - 0.50 0.50 0.50 0.50 0.57 0.57 0.57 0.57 - - - - - - - - -
Low , Lian Yeok - 0.70 0.70 0.70 0.70 0.87 0.87 0.87 0.87 0.92 0.92 0.92 0.92 - - - - -
Teoh, Chin Hong - 0.44 0.44 0.44 0.44 - - - - - - - - - - - - -
Lion Global Investors Limited - 0.47 0.47 0.47 0.47 - - - - - - - - - - - - -
OSK International Asset Management Sdn Bhd - - - - - 1.53 1.53 1.53 1.53 0.95 0.95 0.95 0.95 - - - - -
1
2
Subscribers at IPO
• Shareholders accounted for ~8% TSO at IPO
• Sold down their holdings in less than 2 years,
walked away with a profit of at least 270%
• Made possible by CIMB broker, Lim Kok Tong?
2
Current Shareholders
• Insiders hold 86.2% of total shares outstanding
• Only 2 institutional shareholders: DBS and CIMB
• 14% free float but stock is still too resilient?
1

10. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Low Average Daily Trading Volume
10
30-Day Avg Trading Volume Never Exceeded 1% of TSO Even at Height of Trading during Price Spike
Even with free float at 14% of total shares outstanding, stocks in this segment are likely held by
related investors who hardly trade. Minimal trading of the remaining volume is able to imbue the
stock price with a resilience to continue climbing further
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
0
0.5
1
1.5
2
2.5
Price (LHS) 30D Avg Trading Vol as % of TSO (RHS)
30-Day Average Trading Volume as % of TSO
Low trading volume
needed to sustain price
(Price) (30 ADTV as %TSO)

11. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Weak Disclosures and Erratic Financial Performance
Questionable
corporate
governance
11
• Asset transfer from ‘Sister
company’, Quanzhou ZMBH
at overpriced terms
• Lease agreement which
effectively pays CEO,
Deputy CEO and director
Stock Price
too good to
be true
• Stock price rallied over
270% in 1 year upon listing
• Stock price does not react
to market swings, industry
forces or fundamental
performance
1
INVESTOR
CAUTION
Weak disclosures
and erratic financial
performance
• Lack of disclosure of key
retail metrics
• Temporary revenue spike
with asset transfer
• Sales contribution of new
stores seem unreasonable
2 3

12. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Poor Financial Performance reflects Weak Execution
ZMBH’s performance are below peers for both department stores and supermarket
peers. As a small player, there is low optimism that the company can survive in the retail
industry which is in structural decline due to e-commerce
8.9%
18.3%
14.1%
17.5%
14.7%
22.2%
0%
5%
10%
15%
20%
25%
ZMBH
Golden
Eagle
Intime
Retail
Parkson
Retail
New
World
SunArt
(% of gross revenue)
17.4%
Peers gross margin comparison
Relatively low gross margin compared to
peers…
-14
-390
-301
-435
-24
-500
-450
-400
-350
-300
-250
-200
-150
-100
-50
0
ZMBH
Golden
Eagle
Intime
Retail
Parkson
Retail
New
World
SunArt
(days)
-375
Peers cash conversion cycle
…with weak cash conversion cycle showing
weak bargaining power over supplier
N/A
12

13. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Poor Financial Performance reflects Weak Execution
Mediocre results in the past does not give hope for the future
Declining net income since IPO in 2011…
-7
16
11
10
32
-10
-5
0
5
10
15
20
25
30
35
2010 2011 2012 2013 2014
(RMB m)
IPO
ZMBH Net Income
…with poor strategy resulting in store closures
In January 2015, announced
closure of Xiamen
Zhongshan, located on one
of Xiamen’s busiest streets
Closure of Xiamen Zhongshan
Nanjing Nanzhan has been
delivering persistent losses
Closure of Nanjing Nanzhan
13
However,
3x
Profit spike

14. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Boost in Revenues and Net Income, Margin Declines
14
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
(50.0)
0
50.0
100.0
150.0
200.0
250.0
300.0
Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14
Revenue (LHS) NI (LHS) Profit margin (RHS)
(RMBm)
Revenue Tripled, Bringing Profit back into Positive Territory; though Margins Lower than before
While revenue tripled due to 2
new stores and 2 transferred-
in stores …
… profit margin declined, with
management citing gestation
period of new stores to put
drag on profits
(Profit Margin)

15. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Improbable Sales psf contribution from New Stores
15
For Revenue to have Tripled, Stores had to Contribute an average of RMB 1,011 psf in 2013
High growth spike
168
366
241
350
852
727
523 481
642322
451
343
403
481
458
386
343
510
490
817
584
753
1,333
1,184
909
824
1,152
-
500.0
1,000.0
1,500.0
31-Dec-
10
31-Dec-
11
31-Dec-
12
31-Mar-
13
30-Jun-
13
30-Sep-
13
31-Dec-
13
Existing
(3)
New (4)
PSF SGD
sales growth by category
Direct sales RMB psf Concessionary sales psf
Split between
new and old assets
due to asset transfer
Contribution:
2013 average
sales psf:
RMB 1,011
For revenue to have tripled, stores
had to contribute an average of
RMB 1,011 PSF
By backward induction, existing
stores need to generate RMB 824
psf and new stores RMB 1,152 psf
Sales psf seem improbable as the
largest stores Xiamen Wucun,
currently only generates RMB 1,000
Sales psf
by segment (RMB) ZMBH current
top-performing
store:
Xiamen Wucun
generates
RMB
~1,000
psf

16. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Huge-off Balance Sheet Operating Leases
16
Lease Agreements when Capitalized, Portrays Riskier Leverage Ratios
in RMBm
Year
Lease
expenses
% Lease of
SG&A
Total Lease
commitments
2009 3.9 83% 384.6
2010 29.5 63% 363.9
2011 41.3 60% 476.1
2012 56.5 49% 872.0
2013 86.4 38% 1,165.7
2014 117.5 45% 1,140.9
Adjusted Leverage
Ratio
Current Leverage
Ratio
11.4xN.ANo long term debt
Leases Capitalized
Minimum lease payments capitalized at
3% cost of debt amounting to RMB 1.2b
of lease obligation
ZMBH’s adjusted leverage ratio of 11.4x is too high compared to the peer average of only 2.2x.
This highlights additional cash flow commitments and default risk of ZMBH

17. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Questionable Corporate Governance
17
Stock Price
too good to
be true
• Stock price rallied over
270% in 1 year upon listing
• Stock price does not react
to market swings, industry
forces or fundamental
performance
1
Weak disclosures
and erratic financial
performance
• Lack of disclosure of key
retail metrics
• Temporary revenue spike
with asset transfer
• Sales contribution of new
stores seem unreasonable
2
Questionable
corporate
governance
• Asset transfer from ‘Sister
company’, Quanzhou ZMBH
at overpriced terms
• Lease agreement which
effectively pays CEO,
Deputy CEO and director
3
INVESTOR
CAUTION

18. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
ZMBH’s ‘Sister Company’ Raises a Couple of Red Flags
18
Management agreements
and asset transfer
1
Group structure allows
potential conflicts of
interests to happen
!
Lease agreement
2
Storage and delivery
3
Zhongmin Baihui Retail
Group Ltd - “ZMBH”
100%
Hui’an
Hongyi
49%
Sis
Co.
Zhongmin Baihui
(Quanzhou)
Commercial Mgmt Co
Ltd - “QZM”
Management
Agreements
& Asset
Transfers
1
2
Lease
Agreement
Xiamen Shi Zhongmin
Baihui Commercial Co
Ltd - “X”
30%
Citi-Base Commerce
Logistics (Xiamen) Co
Ltd
100%
Quanzhou ZMBH
“QZMBH”
All Other Shareholders Chinese Board of Directors
100%38.5%61.5%
3
Storage &
Delivery

19. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
ZMBH’s ‘Sister Company’ Raises a Couple of Red Flags
19
Quanzhou Zhongmin Baihui Shopping Co. Ltd (“QZMBH”) owned by CEO, Deputy CEO and Director
Name Position in ZMBH
Shareholding
in ZMBH
Shareholding
in QZMBH
Lee Swee Keng Executive Chairman 22.5% -
Chen Kaitong CEO 21.4% 61.7%
Su Jianli Deputy CEO and exec director 12.9% 30.9%
Su Caiye Non-exec Director 2.9% 7.5%
Lim Kok Tong - 11.0% -
Low Chui Heng Executive Director 6.7% -
Wee Choo Chuan - 1.0% -
% TSO of shareholders owning >1% 78.4% -
% TSO of QZMBH directors 37.2% 100.0%
Chen Kaitong
CEO
Su Jianli
Deputy CEO
Su Caiye
Non-Exec
Director
QZMBHDirectors
37.2%ownership in
list co. ZMBH
100%ownership in
sister co. QZMBH
Management
agreements
and asset
transfer
Lease
agreement for
Hui’an Hongyi
1
2
QZMBH directors hold 37.2% interest in ZMBH and are able to influence decision that could be
advantageous to them where it concerns QZMBH

20. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Attempt to Refute Potential Conflict of Interest
20
Statement in Prospectus Explaining the Potential Conflict of Interest: Cites Geographical Differences
Feeble attempt at refuting the potential conflict of interest by stating the geographical differences
of ZMBH and QZMBH’s stores. It is akin to saying Coca Cola is not Coca Cola because one is
found in America while the other in Hong Kong

21. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
1. Questionable Asset Transfer from QZMBH to ZMBH
21
Problem #1 Transaction Consideration: Pre-determined amount with Doubts on Independent Valuer
• Transfer of 2 fully operational, revenue-generating stores from QZMBH to ZMBH
• Quanzhou Quanxiu and Quanzhou Tumen
Transaction
consideration of “up to
RMB 10m” was first
stated in announcement
Stated use of an
independent valuation to
value rent and tenancy
AGM and EGM followed.
No public announcement
on independent valuation
Effects of transaction
seen in next AR. Only
brief mention of
valuation done
Deal announcement:
Statement to engage
independent valuer to assess
fair market value
Annual Report 2013:
Footnote to Intangible Assets
asserting that an independent
valuer was engaged
So was there even
an independent
valuer?
1

22. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
1. Questionable Asset Transfer from QZMBH to ZMBH
22
Problem #1 Transaction Consideration: RMB 9.0m Consisting a Total of RMB 7.8m of Intangible Assets
• Transfer of 2 fully operational, revenue-generating stores from QZMBH to ZMBH
• Quanzhou Quanxiu and Quanzhou Tumen
• amounts to more than half of consideration
• Company justifies goodwill by citing long
established vicinity of stores
• Seems more like an item to ‘markup to RMB
10m’ to effectively pay QZMBH directors
4.9m
goodwill
• Determined by ‘independent valuer’4.0m
lease
contract
• Implied valuation multiple:
7.5x Price-to-Book
1.2m
PP&E
Chronological order in which transaction consideration was made seems suspicious as an ‘up to
RMB 10m” amount was pre-determined. Also, if QZMBH directors acted in best interests for ZMBH,
this transaction would be kept lean with little intangible assets. Could be paying themselves
1

23. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
1. Questionable Asset Transfer from QZMBH to ZMBH
23
Problem #2 Profit Contribution: Stores Financials Raise Questions on Future Viability
• Transfer of 2 fully operational, revenue-generating stores from QZMBH to ZMBH
• Quanzhou Quanxiu and Quanzhou Tumen
The ease of arranging such an asset transfer to ZMBH could suggest an equal possibility for ZMBH
to transfer loss-making assets to QZMBH to potentially boost financial performance and cover up
losses in the event of a downturn
Management estimates of store profit is
RMB 5m. At ZMBH’s 1% profit margin,
each store generates RMB 500m.
Translates to an improbable asset turnover
of 417x of RMB 1.2m of PP&E
Store transfers helped boost FY2014 profit
by 3 times. This raises the question if
ZMBH can sustain growth on it’s own
1

24. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
1. Questionable Asset Transfer from QZMBH to ZMBH
24
Problem #3: Asiasons as an Underwriter
• Transfer of 2 fully operational, revenue-generating stores from QZMBH to ZMBH
• Quanzhou Quanxiu and Quanzhou Tumen
Additional warning sign was that the independent financial advisor for the asset transfers is
Asiasons Capital, the company that was caught up in the penny stock scandal along with Liongold
and Blumont, leaving the professionalism of their advice in doubt
1

25. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
2. Lease Agreements with Hui’an Hongyi benefitting QZMBH
25
• ZMBH from Hui’an Hongy, which is 49% owned QZMBH
• Quanzhou Hui’an Huixing Store
• Related party lease agreement between ZMBH and Hui’an Hongyi owned by QZMBH and Fujian
Hongyi Real Estate Group
• This lease transaction is problematic as Hui’an is 49% owned by QZMBH
• Each lease payment of RMB 10m effectively pays RMB 4.9m of back to the Directors of QZMBH
Hui’an Hongyi is ZMBH’s lessor and is 49% owned by Quanzhou ZMBH
2

26. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
3. Joint Venture Logistics Centre with Citi-Base
26
• Prospectus outlined a plan to setup a logistics centre to store seasonal merchandise and deliver
merchandise to ZMBH’s department store
• Setting up a related logistics centre allows ZMBH to potentially shift inventory and transfer
expenses to the JV yet recognize profit earned from the sale of the good as can be witnessed
from the steady increase in the Logistics Centre’s assets
• Adjusting for these assets reverts ZMBH’s inventory turnover to its initial turnover before the
setup of the logistics centre, suggesting assets are indeed shifted to the logistics centre
Logistics Centre Summary Financials 2011 2012 2013 2014
Total Assets 15.11 28.06 55.94 82.54
% growth 86% 99% 48%
Total Liabilities (0.002) (0.006) (0.017) (0.007)
Revenue - - - -
Other comprehensive income (0.5) (1.9) (1.7) (1.7)
Inventory Turnover 2010 2011 2012 2013 2014
Group Inventory 11.4 22.5 48.3 136.7 116.3
% growth 98% 115% 183% -15%
Direct sales 39.04 136.02 163.59 671.15 645.47
Inventory turnover 3.44 6.05 3.39 4.91 5.55
inventory incl Citi-Base Inventory - 37.61 76.36 192.64 198.84
Adj Inventory turnover - 3.62 2.14 3.48 3.25
3.44
6.05
3.39
4.91
5.55
3.44 3.62
2.14
3.48 3.25
2010 2011 2012 2013 2014
Inventory turnover Adj Inventory turnover
Logistics Centre
setup in 2011
Problem #2 Profit Contribution: Stores Financials do not Reflect in Group Figures
Inventory Turnover upon adjusting for JV assets
3

27. Insight:
• Revenue increase was not due to ‘a slew of new
stores’ but 4 stores of which 2 were new and 2
were transferred-in from Quanzhou ZMBH.
• There was no mention Quanzhou ZMBH in the
article.
Insight:
• Mr. Lim Kok Tong own 11% of TSO and seems to
play a significant role. Besides being a
shareholder in ZMBH, it was disclosed in the
prospectus that Mr. Lim also holds shares in a
related party companies to ZMBH, Singapore
Hancai and the former Quanxin (S) Pte Ltd
• While there is no proof of a direct link, Mr. Lim Kok
Tong may have assisted in engaging CIMB to
underwrite and place ZMBH’s shares. As a
stockbroker, Mr. Lim would have connections
through whom he can raise money from and
assist in the placement of ZMBH’s shares
Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Additional Insights from Media Sources
27
Interview with The Edge Singapore on 18 February 2015
Under the section titled “Strong Growth”, the
article stated that the revenue which
increased 207% was due to a slew of new
store openings and cutting 1,000 jobs.
Under the section titled “An unusual S-Chip”,
it was revealed that one of the substantial
shareholders Mr. Lim Kok Tong, is a
stockbroker at CIMB who helped restructure
the company in 2009 and bought over the
shares of another Singaporean shareholder
who wanted to sell his positions.

28. Company
Overview
Stock Price
Too Good to be True
Weak Disclosures
& Erratic Performance
Questionable
Corporate Structure
Conclusion
Conclusion
28
Stock Price
too good to
be true
Weak disclosures and
erratic financial
performance
Questionable
corporate governance
INVESTOR CAUTION
1 2 3
• Stock price rallied over 270% in
1 year upon listing
• Stock price does not react to
market swings, industry forces
or fundamental performance
• Lack of disclosure of key retail
metrics
• Temporary revenue spike with
asset transfer
• Sales contribution of new stores
seem unreasonable
• Asset transfer from ‘Sister
company’, Quanzhou ZMBH at
overpriced terms
• Lease agreement which
effectively pays CEO, Deputy
CEO and director
If the Group only raised RMB
9m, why access the capital
markets to IPO in the first
place?
To triple their book value of
equity by cornering the shares
and selling off? Some IPO
investors have done that
In the meantime while looking
for an opportune moment to
monetize their shares,
management is potentially
tunneling to QZMBH

29. Appendix 1
Appendix 1: Supplemental Case Study 1: Mid-Continent
29
Mid-Continent Equipment Group – July 1998
Listing on SESDAQ @ $0.15 p/shr
Total shares issued 18,000,000
Placement tranche 16,200,000
Employee tranche 1,300,000
Public tranche 500,000
Mr. Tan Hong Pheng
& Mr. Gwee Yow Pin
knew that there were 5
private placees holding
over 80% and will not
sell their shares
Cornered
stock
by buying
most or all of
the available
stock on the
market
$0.15
$0.85
after 8
trading
days
• Trading Suspended by
SES
• OCBC buys jdhback
shares from minority
shareholders at $0.59
Mid-Continent Equipment Group launched an IPO on July 1998, placing 18 million shares at 15 cents
each. Set up in 1978, the Company is owned by managing director Mr Ong Eng Kee and mainboard-
listed Ipco International. The public tranche which issued 500,000 shares to the public, was over-
subscribed 19 times. Knowing that more than 80% of the shares were subscribed by shareholders
who will not sell, Mr Tan Hong Pheng and Mr Gwee Yow Pin purchased almost or all stocks available
in the market, causing the stock price to rally to 85 cents in 8 trading days. A trading suspension was
imposed by the Singapore Exchange. The IPO manager, OCBC Bank repurchased shares from
minority shareholders at 59 cents per share. Even as Mr. Tan and Mr. Gwee tried to appeal, they were
fined $30,000 (instead of the maximum of $50,000 and 7 years in jail) for conspiring to create a
misleading appearance in the market

30. Appendix 1
Appendix 1: Supplemental Case Study 2: Links Island
30
Links Island: February 2000
Links Island listed on 28 February 2000 with 190 million shares on issue, offered at 28 cents. At its
IPO, Links Island had 6,588 public shareholders and a free float of more than 23%. Following the
IPO, the counter traded within a range of 20.5 to 35 cents, closing at 33 cents on 19 June 2000,
reflecting an 18% increase over the IPO price in four months. On 20 June 2000, Links Island shares
gained 6 cents to close at 39 cents and continued to rise to a peak of $1.43 on 3 August 2000, closing
at $1.14 on that day. The counter closed at $1.29 on 14 August 2000, a surge of 231% from its
closing price of 39 cents on 20 June 2000.
Before the suspension of trading on 16 August 2000, the counter traded at $1.10 and the free float of
Links Island shares had declined to less than 8% of the total number of shares outstanding. The SGX
investigation also revealed large off-market married deals and co-ordinated buying or selling of Links
Island shares at the same time. Such co-ordinated purchases accounted for a significant portion of
the market volume on certain days. Upon investigation, SGX announced that its investigations had
revealed that a corner situation had arisen in Links shares. In accordance with the SGX Rules, the
SGX Settlement Committee decided that all outstanding market trades in Links shares done during
14 - 16 Aug 2000 will be settled by way of cash instead of delivery, at the fair settlement price of
$1.21.

31. Appendix 1
Appendix 1: Supplemental Case Study 3: Leong Hin
31
Enviro-Hub Holdings Ltd (former Leong Hin Holdings Ltd): 2002 – 2003
Leong Hin Holdings Ltd is a construction company was listed on the main board of the Singapore
Exchange Limited on 5 October 1998 at an IPO price of $0.23. Mr. Chan Chwee Yong Bernard, the
Managing Director and Mr. Chan Peng Kheng (his brother) was the Executive Chairman of Leong
Hin.
As at November 1999, both brothers held 8,853,225 million of Leong Hin shares each in their names
and another 38 million shares were each held by two companies owned by them with their respective
spouses. Out of the 8,853,225 million Leong Hin shares held in their individual names, Mr. Bernard
Chan pledged 8 million shares to various financial institutions for margin trading while Mr. Chan’ Peng
Kheng pledged 4 million shares. Out of the shares held by the investment companies, 14 million were
pledged to various financial institutions for credit facilities and 15 million shares for the 2 personnel
respectively. The brothers had a co-conspirator Ang Tian Kiat, who subscribed to $1 million shares
during the initial public offering of the shares.
0
100
200
300
400
500
0
0.2
0.4
0.6
0.8
Millions

32. Appendix 1
Appendix 1: Supplemental Case Study 3: Leong Hin (cont’d)
32
Enviro-Hub Holdings Ltd (former Leong Hin Holdings Ltd): 2002 – 2003 (cont’d)
Between 1 June 2000 and 22 April 2003, it was found that the Chan brothers together with Ang
conspired to create a false appearance with respect to the market for Leong Hin shares by
dominating the market in those shares in the stock market. Some 74 accounts in the names of Ang
and seven other nominees with eight stock-broking firms were used in the trading which helped
create a false appearance of active trading. Bernard had the consent of two of the account holders to
use their accounts for the trades.
Leong Hin shares were bought and sold on almost every trading day to kick up the share price. These
sales and purchases were ‘wash sales’, i.e. share transactions in which there was no change in the
beneficial ownership. Out of 725 tradable days, the accounts were used to make 80% of purchases
on 472 days and 80% of sales on 473 days and 30% purchases on 697 days and 30% per cent sales
on 701 days. There were also days when the trades in the shares amongst the controlled accounts
accounted for the entire market demand and supply.
The price of Leong Hin shares rose from $0.455 on 1 June 2000 to $0.765 on 22 April 2003
outperforming the STI and the sector index for construction equities during this entire period. When
the scheme came to an end, the share price plunged about 75% from $0.765 to close at $0.195 on 23
April 2003. It has been admitted that the orders for the Leong Hin trades in the accounts were given
by Mr. Ang and Mr. Bernard Chan. It has also been admitted that all the trades conducted were
financed by both accused persons. Mr. Bernard Chan was sentenced to a $20,000 fine and one
month imprisonment while his brother Mr. Chan Peng Kheng were sentenced to 6 months
imprisonment.

33. Appendix 2
Appendix 2: Investment in Subsidiaries
33
Investment in Subsidiaries
in RMB '000s 2009 2010 2011 2012 2013 2014
Investment in subsidiaries 11,278.1 30,005.1 55,702.5 71,628.6 80,023.1 80,023.1
Proportion of Ownership Interest Implied Capital
Name and Country 2009 2010 2011 2012 2013 2014 Invested
Xiamen Shi Zhongmin Baihui Commercial Co. Ltd
(PRC)
100% 100% 100% 100% 100% 100% 30,005.1
Zhongmin Baihui Development Pte Ltd
(Singapore) - -
100% 100% 100% 100% 20,811.8
Zhongmin Baihui (Nanjing) Commercial Co., Ltd
(PRC)
- - 100% 100% 100% 100% 20,811.8
Zhongmin Baihui (Quanzhou) Commercial Co., Ltd
(PRC)
- - - - 100% 100% 8,394.6
Looks okay.

34. Appendix 3
Appendix 3: Amount due from Subsidiaries
34
Amount due from Subsidiaries
Amount due from Subsidiaries
Reported at a Company level and consolidated into Group financials figures
in RMB 2010 2011 2012 2013 2014
Amount due from subsidiaries (non-trade) - 68,439 90,842 131,220 126,370
Amount due from Subsidiaries
Reported at a Group level <-- IPO <-- Asset Transfer
2009 2010 2011 2012 2013 2014
Amount due from related parties trade 898,675 45,960 - 15,998 662,532
Amount due from related parties non-trade 7,909,930 25,159 - - 405,895 3,052,702
Amount due to related parties trade 315,283 74,973 540,128 1,357,249 853,885
Amount due to related parties non-trade 23,862,780 11,616,075 111,435 - 9,117,602 6,474,886
Asset Transfer
Amt due to rp cos of acq (cur) 5,769,554 938,553
Amt due to rp cos of acq (non-cur) 2,117,000 0
Asset Transfer Agreement 7,886,554 938,553
1 2
Amount due to related parties
decreased at IPO probably to settle
accounts in good order before listing.
Related parties would have gained some
at this point
1
Amount increases in 2013
due to asset transfer agreement
requiring ZMBH to pay considerations to
QZMBH over next 2 years
2
Must be closely
monitored

35. Appendix 4
Appendix 4: Use of IPO Proceeds
35
Use of IPO Proceeds
Seems to be in good order
• Company frequently updates
and discloses the use of IPO
proceeds
• Only change in use of IPO
proceeds recorded was to
establish the Nanjing store. The
store has been unsuccessful
though
• IPO proceeds of SGD 9m will
not be the main source of funds
if company intends to do
anything fraudulent
• IPO proceeds have since been
fully utilized