Wuxi Best gives a detailed breakdown of its cash flow. In 2013, the total cash outflow for “purchasing fixed assets, intangible assets, and other long term assets” was $74M RMB, which is about $87M HKD. For the first six months in 2014, the total cash outflow for “purchasing fixed assets, intangible assets, and other long term assets” was $42M RMB,
or about $50M HKD. Unfortunately Wuxi Best did not give cash outflow numbers for the second half of 2014, but we can still see that $137M HKD (87+50) is quite different from the $614M claimed by CW Group.
Another data point, Wuxi Best indicated in its filings that the total “construction and projects in progress” at the end of June 2014 was $9.4M HKD.
We can see the same problem by looking at Wuxi Best’s balance sheet. Wuxi Best disclosed that at 12/31/2012, 12/31/2013, and 06/30/2014 the book value for its machines and equipment were $170M, $165M, and $160M, all in RMB. Nowhere can we find the $614M worth of sales from CW Group.
Wuxi Best also disclosed a detailed plant expansion schedule. Its plant No.1 was built in 2002, plant No. 2 was completed in 2011. Wuxi Best started building plant No. 3 in summer of 2014 and complete it on May
28th, 2015. The total investment for plant No. 3 was $354M HKD and at least part of this $354M was spent on basic constructions and equipment from other vendors than CW Group.
All in all, we simply can’t find CW Group’s $614M worth of sales in Wuxi Best’s financials.
We talked to a few contacts in Wuxi Best, it turned out that Wuxi Best designed and build the new factory on its own and did not outsource to third party. The contacts we talked to haven't even heard of CW Group.