Chinese firm KE Holdings rejects short-seller Muddy Waters' report

Dec 17 (Reuters) - KE Holdings (BEKE) on Friday rejected a report by U.S. short-seller Muddy Waters that had questioned the Chinese housing broker's transaction volumes as well as its store and agent counts.

The report is "without merit and contains numerous errors of fact, unsubstantiated statements, and misleading speculations and interpretations", KE Holdings (BEKE) said in a statement.

Shares of KE Holdings (BEKE) extended their losses, falling 1.85% in pre-market trade. They tumbled as much as 11% on Thursday following the short-seller's report https://d.muddywatersresearch.com/content/uploads/2021/12/MW_BEKE_12162021.pdf.

Muddy Waters, which has taken a short position in the stock, wrote in its research report that the company had inflated its new home sales and commission revenue, listed ghost stores as "active" on its platform and overstated the value of some of its acquired assets.

According to the short seller, the company inflated its new home sales GTV (Gross Transaction Value) by over 126% and its commission revenues by about 77-96%, while operating far fewer brokerages than its platform count shows.

In response, KE Holdings (BEKE) said Muddy Waters' methodology to capture the number of transactions was wrong and the calculation of GTV and revenue was incomplete.

The company also said its independent audit committee would conduct an internal review of the key allegations contained in the report. (Reporting by Aishwarya Nair in Bengaluru; Editing by Anil D'Silva)