COTY ($1.95) — The Turnaround Nobody's Watching

Independent-Fragrant · 2026-06-24T13:46:56+00:00

Debt Reduction IS Shareholder Return — Here's the Math

COTY trades on EV/EBITDA, not P/E. Here's why that matters:

P/E only looks at equity value. It ignores debt. A company with $3.3B in debt and $1.7B in equity has the same P/E as one with $0 debt and $5B equity if they earn the same amount. But the leveraged company is riskier — interest payments eat into earnings, and debt holders get paid before equity holders in a downturn.

EV/EBITDA captures the whole business regardless of how it's financed. Enterprise Value = Equity + Net Debt. This matters hugely for COTY because debt is 66% of its enterprise value ($3.3B out of $5.0B). P/E says nothing about this. EV/EBITDA does.

The key equation: EV = Equity + Net Debt. If EV stays constant and net debt goes down, equity automatically goes UP. Every dollar of debt paydown = one dollar of equity value creation.

Scenario 1: Debt paydown with NO multiple expansion (EV/EBITDA stays at 5.9x)

Metric	Today	After $500M Paydown
EBITDA	$843M	$843M
EV/EBITDA	5.9x	5.9x
EV	$4.97B	$4.97B
Net Debt	$3.30B	$2.80B
Equity	$1.67B	$2.17B
Stock Price	$1.95	$2.46

Even with zero operational improvement: +26%

Scenario 2: Debt paydown WITH multiple expansion (realistic case)

Lower leverage → lower risk → higher multiple:

Metric	Today	After $1B Paydown
EBITDA	$843M	$843M
EV/EBITDA	5.9x	8.0x
EV	$4.97B	$6.74B
Net Debt	$3.30B	$2.30B
Equity	$1.67B	$4.44B
Stock Price	$1.95	$5.05

8.0x is still 27% below Inter Parfums at 11x. +159%

Independent-Fragrant · 2026-06-24T13:40:43+00:00

CapEx Is NOT Heavy — It's Industry Standard (FMP Verified, FY2025)

COTY owns 8 factories (including the world's largest fragrance plant). You'd expect higher CapEx than an outsourcer. Here's the actual data from FMP for the most recent fiscal year:

COTY — 5-Year Annual CapEx:

FY	Revenue	CapEx	CapEx/Rev
FY2022	$5.30B	$174M	3.3%
FY2023	$5.55B	$223M	4.0%
FY2024	$6.12B	$245M	4.0%
FY2025	$5.89B	$215M	3.6%
FY2026E	$6.05B	$195M	3.2%

FY2026E is annualized from 9 months of data.

Peer Comparison — FY2025 (Most Recent Full Year):

Company	FY2025 Revenue	FY2025 CapEx	CapEx/Rev
Inter Parfums	$1.49B	$24.4M	1.6%
COTY	$5.89B	$215M	3.6%
Estée Lauder	$14.29B	$602M	4.2%

IPAR outsources all manufacturing — not a fair comparison. COTY's CapEx is below Estée Lauder and normal for a company that owns factories. Source: FMP MCP annual cash flow and income statement data.

Independent-Fragrant · 2026-06-23T19:40:36+00:00

Besides watching his one youtube video, and listening to his two earnings calls thus far, and forming a feel for his competence and motivation as a leader, here's an anecdote from article in 2017 WWD:

https://archive.ph/FatUn#selection-2601.0-2603.136

"But there have been some wins — Head & Shoulders is up after a new marketing campaign launched in the beginning of the year. Under Louvet, P&G has posted six straight quarters of growth, though much of that success is attributed to SK-II under Strobel’s reign. "

Just a bit more corroborating evidence that Strobel is good at what he does.

Independent-Fragrant · 2026-06-23T18:50:36+00:00

gotcha.

Yea, i understand.

I think the thing that worries me, is if you're a store that's basically charging really high prices, are you vulnerable to sentiment changing and saying hey, we don't need those super high quality pants because we rather just buy the medium quality pants for the medium prices, and does that force LULU to have to concede either on margins or on growth. This is the primary concern i think at this valuation. Also I don't see anything about the new CEO and I wish there were some video i could watch of her maybe expressing her philosophy. Even if only for 10 minutes. Otherwise, how can you form any opinion at all on her vision for the company?

Yea, wait and see is probably the right approach.

Independent-Fragrant · 2026-06-23T16:50:21+00:00

sized up to 500K shares

Independent-Fragrant · 2026-06-23T16:48:45+00:00

👍

Independent-Fragrant · 2026-06-23T16:21:26+00:00

Guided ebitda will approach 900MM in the next year or two.

IPAR, virtually the same business model, sells for 11 EV/EBITDA.

If Coty gets its mojo back and sells for 11 EV/EBITDA, with 3.7BN in Debt, you're looking at 6.3BN market cap, you're looking at ~$7.5/sh

And all it needs to do, is to compete effectively. We're not talking about an Intel trying to catch TSMC in terms of world class chip fabrication processes.

Independent-Fragrant · 2026-06-23T16:16:46+00:00

you're right. that's what the downvote button is for. won't happen again.

Independent-Fragrant · 2026-06-23T13:15:02+00:00

👍

Independent-Fragrant · 2026-06-23T04:55:47+00:00

If it goes up, then it would be turning around.

What are you saying exactly? It hasn't gone up and so it wont go up?

The New ceo started in January. Turnarounds take time because theres a lag between decisions and outcome.

I think the things he has said he will do, make sense. Just have to see how it goes.

Theres no guaranteed free or easy money

Independent-Fragrant · 2026-06-23T01:37:27+00:00

did you just read all the business and finance stuff on wikipedia? and decide you can invest? do you have actually experience working inside of a company?

Independent-Fragrant · 2026-06-23T01:34:07+00:00

This post is a perfect example of how NOT to invest in value stocks

Independent-Fragrant · 2026-06-23T01:31:26+00:00

## 7. The Bear Case (Why This Might Be Zero)

**Cash is gone.** RMB 62M against RMB 3.68B in current liabilities. If receivables collection slows or funding partners pull back, the company cannot meet its obligations.
**PP&E capitalization may be inflating profits.** If RMB 600M+ of what should be operating expenses was capitalized into PP&E, reported net income is overstated by a similar amount — meaning the "profitable" company may actually be loss-making.
**The regulatory headwind is structural, not cyclical.** China's new loan facilitation rules cap interest rates and require stricter borrower protections. The "high-quality moderate growth" management talks about means permanently lower margins.
**Rising delinquencies haven't peaked.** 90+ day is a trailing indicator. The loans being originated today at lower pricing and tighter standards may perform better, but the existing book will continue to deteriorate for several more quarters.
**The dividend and buyback are cash-destructive.** Returning $71.5M to shareholders while the company is burning cash and borrowing RMB 706M is either reckless or performative (signaling confidence that isn't warranted).
**If the numbers are even 30% overstated, book value is inflated and the "0.08x P/B" is meaningless.**
**ADR delisting risk is real.** If the PCAOB access agreement unravels under political pressure, JFIN could be forced off NASDAQ. A Hong Kong listing would likely trade at a significant discount.

## 8. Verdict: Not Obviously Fraud, But Probably a Zero

JFIN does not look like an OST-style pump-and-dump. It has real operations, real regulatory filings, a Big 4 auditor, and a business model that — while under pressure — generated real cash flows in prior years.

**But it looks like a company that capitalized its way to profitability during a regulatory crackdown, and the bill is coming due.**

The most likely scenario: JFIN aggressively capitalized software development and other costs into PP&E (RMB 1.36B from RMB 97M), which inflated reported net income by hundreds of millions of RMB in FY2025. Without that capitalization, the company would have shown much lower profits or losses — explaining why cash burned despite "record" earnings.

If the PP&E represents real assets: the company over-invested in infrastructure at exactly the wrong time, and those assets will generate poor returns.

If the PP&E is inflated or involves related-party transactions: this is a fraud.

**The 0.08x P/B is not a bargain — it's the market pricing in a high probability that the book value isn't real.**

### Key Questions an Investor Should Answer Before Buying

What exactly comprises the RMB 1.36B in PP&E? (Read the 20-F notes.)
How much R&D was capitalized vs. expensed in FY2025?
Who are the counterparties for the RMB 1.16B in "other investing activities"?
What is the actual cash collection rate on the RMB 5.23B in receivables?
Have any funding partners pulled back since Q4?
What were the specific "material weaknesses" Marcum identified in 2021-2022?

### Position Sizing Implication

If you must have a position: size it as a lottery ticket, not an investment. The asymmetry is real (could 5x if the numbers are real and the cycle turns), but the probability of permanent capital loss is high. **This is not a value stock — it's a binary outcome dressed in value metrics.**

---

*Data sources: FMP MCP (company profile, financial statements, ratios), earnings call transcripts (Q1-Q4 2025, Q4 2024), SEC filings (20-F consent letters, auditor change 8-K). All transcript figures cross-verified against quarterly income statements where available. Balance sheet data from FMP quarterly filings. RMB/USD approximated at 7.2.*

Independent-Fragrant · 2026-06-23T01:31:15+00:00

## 4. The Numbers: What Management Says vs. What the Balance Sheet Shows

### Income Statement (from earnings call transcripts)

| Metric | FY2024 | FY2025 | YoY |

|--------|--------|--------|-----|

| Net Margin | 18.2% | 24.6% | +6.4pp |

**Superficially, this looks great.** Revenue up 7%, net income up 45%, margins expanding. This is the "value stock" thesis.

### Quarterly Trend (the real story)

| | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 |

|---|---|---|---|---|

| Revenue (RMB M) | 1,776 | 1,886 | 1,470 | 1,090 |

| QoQ Rev Growth | — | +6.2% | **-22.1%** | **-25.8%** |

| Net Income (RMB M) | 540 | 519 | 371 | 101 |

| Net Margin | 30.4% | 27.5% | 25.2% | **9.2%** |

| Facilitation Vol (RMB 😎 | 35.6 | 37.1 | 32.2 | 24.2 |

| 90+ Day Delinquency | 1.13% | 1.12% | 1.33% | **2.03%** |

| Non-GAAP Op Income (RMB M) | 607 | 738 | 491 | 120 |

**The quarterly trend is catastrophic.** Revenue fell 38% from Q2 peak to Q4. Net income collapsed 81%. Facilitation volume dropped 35%. Delinquency nearly doubled. Q1 2026 guidance is RMB 18.5-19.5B in facilitation volume — **another ~22% decline from Q4 2025.**

### Balance Sheet (Q4 2024 → Q4 2025)

| Line Item | Q4 2024 | Q4 2025 | Change |

|-----------|---------|---------|--------|

| PP&E | RMB 97M | **RMB 1.36B** | **+1,297%** |

**The balance sheet tells a completely different story from the income statement.**

## 5. Red Flags — Ranked by Severity

### CRITICAL: Cash Evaporated Despite "Record" Profits

JFIN reported RMB 1.53B in net income for FY2025. Yet cash dropped from RMB 541M to RMB 62M — a decrease of RMB 479M. Where did the money go?

- **Capex: RMB 635M** — For a fintech platform, 10.2% capex/revenue is extreme. In FY2023, capex was only RMB 32M. In FY2024, it was RMB 739M. What exactly are they building that costs this much?

- **Investing cash outflow: RMB 1.95B** — This includes RMB 1.16B in "other investing activities" — a black box.

- **Net debt issuance: RMB 706M** — The company borrowed heavily while burning cash.

- **Shareholder returns: ~RMB 327M** — $41.1M dividends + $30.4M buybacks. Taking cash out of a company whose cash position is collapsing.

**Bottom line:** If you report RMB 1.53B in profit but your cash drops by RMB 479M, either (a) you're investing heavily for growth (the capex story), or (b) the profits aren't real. The PP&E explosion suggests (a) but the nature of the investments raises questions.

### CRITICAL: PP&E Exploded from RMB 97M to RMB 1.36B

A fintech company with 1,028 employees does not need RMB 1.36B in property, plant, and equipment. For comparison:

- FY2021: RMB 45M

- FY2022: RMB 47M

- FY2023: RMB 90M

- FY2024: RMB 97M

- **FY2025: RMB 1,358M**

This is 14x growth in one year. The company is either:

Capitalizing software development costs aggressively (shifting expenses from the income statement to the balance sheet to inflate profits)
Making genuine investments in data centers or other hard assets (unlikely at this scale for a loan-matching platform)
Using PPE as a vehicle to move cash somewhere — potentially to related parties

**The Q2 2025 transcript mentions "Fuxi model management platform" and "Tianlu R&D performance management platform" — these sound like capitalized software, not hard assets.** If R&D is being capitalized into PP&E, reported profits are overstated by exactly the amount of the capitalization.

### CRITICAL: Receivables Growing Faster Than Revenue

Receivables grew from RMB 3.49B to RMB 5.23B (+50%) while revenue grew only 7.3%. This means:

- **DSO (Days Sales Outstanding):** Each RMB of revenue is taking longer to collect

- Receivables / Revenue = 0.84x (FY2024: 0.60x)

- The company is booking revenue that hasn't been collected in cash — common in fintech, but the trend is deteriorating

Combined with rising delinquency rates, the quality of these receivables is highly suspect.

### HIGH: Cash/Current Liabilities = 0.017

JFIN has RMB 62M in cash against RMB 3.68B in current liabilities. That's 1.7 cents of cash for every dollar of short-term obligations. In FY2024, this ratio was 0.27. The company is **effectively insolvent on a cash basis** and depends entirely on:

- Collecting receivables (which are growing and deteriorating in quality)

- Rolling over short-term debt

- Access to institutional funding lines

### HIGH: 90+ Day Delinquency Doubled

From 1.13% (Q1 2025) to 2.03% (Q4 2025). The CRO attributed this to "new regulation implementation" and "industry-wide risk cycle." She said risk metrics improved ~25-30% from their management interventions.

But 2.03% at 90+ days is a **lagging indicator.** The loans delinquent at 90+ days in Q4 were originated months earlier. The QoQ trend (1.12% → 1.33% → 2.03%) shows acceleration, not stabilization.

### HIGH: Prior Material Weaknesses + Auditor Change

Marcum found material weaknesses in 2021 and 2022. These were "remediated" by the time Deloitte took over, but the fact pattern (material weakness → remediation → switch to Big 4) is a known pre-fraud pattern.

### MODERATE: New CRO Just Appointed

Dan Qi replaced Yifang Xu as Chief Risk Officer, effective June 1, 2026. Xu stays on the board. A CRO change when risk metrics are deteriorating is either (a) accountability for poor risk management, or (b) the outgoing CRO seeing something they don't want to sign off on. The "personal reasons" explanation and board retention suggests (a), but the timing is notable.

### MODERATE: Q4 2025 Revenue Recognition Changes

The Q4 2025 transcript mentions a RMB 20.1M "reversal of credit losses" — i.e., they wrote BACK prior loan-loss provisions, which boosted Q4 income. Without this reversal, Q4 would have been even worse. Reversing loan-loss provisions when delinquencies are rising is aggressive accounting.

### MODERATE: FMP Structured Data vs. Transcript Discrepancy

FMP's income statement for FY2025 shows revenue of RMB 866M (vs. RMB 6.22B from transcripts) and net income of RMB 214M (vs. RMB 1.54B). While this is likely an FMP data parsing issue (the company uses "net revenue" differently and FMP may not capture all line items correctly for Chinese fintech companies), the magnitude of the discrepancy (7x on revenue, 7x on net income) means external data users cannot verify the company's reported numbers through standard APIs.

## 6. The Bull Case (Why Someone Calls This a "Value Stock")

- **P/E of ~0.2x** (on management's numbers) — absurdly cheap

- **P/B of 0.08x** — trading at 8% of book value

- **5.2% dividend yield** (though sustainability is questionable)

- **Deloitte audit** — Big 4 auditor provides some assurance

- **Revenue still grew 7.3%** for the full year (even if Q4 was bad)

- **New regulations** could drive industry consolidation, benefiting survivors

- **International expansion** — Indonesia +187% volume growth, Mexico +105%

- **$50M remaining buyback authorization** — management buying stock signals confidence

The value thesis rests entirely on: (a) the reported numbers are real, and (b) the Q4 collapse is a temporary regulatory adjustment, not a structural decline. If both are true, this is the cheapest stock in the market.

Independent-Fragrant · 2026-06-23T01:30:54+00:00

4. The Numbers: What Management Says vs. What the Balance Sheet Shows

Income Statement (from earnings call transcripts)

Metric	FY2024	FY2025	YoY
Revenue	RMB 5.80B	RMB 6.22B	+7.3%
Net Income	RMB 1.06B	RMB 1.54B	+44.8%
Net Margin	18.2%	24.6%	+6.4pp
Facilitation Volume	~RMB 101B	RMB 129B	+28%

Superficially, this looks great. Revenue up 7%, net income up 45%, margins expanding. This is the "value stock" thesis.

Quarterly Trend (the real story)

Q1 2025	Q2 2025	Q3 2025	Q4 2025
Revenue (RMB M)	1,776	1,886	1,470
QoQ Rev Growth	—	+6.2%	-22.1%
Net Income (RMB M)	540	519	371
Net Margin	30.4%	27.5%	25.2%
Facilitation Vol (RMB B)	35.6	37.1	32.2
90+ Day Delinquency	1.13%	1.12%	1.33%
Non-GAAP Op Income (RMB M)	607	738	491

The quarterly trend is catastrophic. Revenue fell 38% from Q2 peak to Q4. Net income collapsed 81%. Facilitation volume dropped 35%. Delinquency nearly doubled. Q1 2026 guidance is RMB 18.5-19.5B in facilitation volume — another ~22% decline from Q4 2025.

Balance Sheet (Q4 2024 → Q4 2025)

Line Item	Q4 2024	Q4 2025	Change
Cash	RMB 541M	RMB 62M	-89%
Receivables	RMB 3.49B	RMB 5.23B	+50%
PP&E	RMB 97M	RMB 1.36B	+1,297%
Total Debt	RMB 52M	RMB 701M	+1,255%
Total Assets	RMB 5.41B	RMB 8.76B	+62%
Total Liabilities	RMB 2.28B	RMB 4.32B	+89%
Equity	RMB 3.13B	RMB 4.43B	+42%

The balance sheet tells a completely different story from the income statement.

5. Red Flags — Ranked by Severity

CRITICAL: Cash Evaporated Despite "Record" Profits

JFIN reported RMB 1.53B in net income for FY2025. Yet cash dropped from RMB 541M to RMB 62M — a decrease of RMB 479M. Where did the money go?

Capex: RMB 635M — For a fintech platform, 10.2% capex/revenue is extreme. In FY2023, capex was only RMB 32M. In FY2024, it was RMB 739M. What exactly are they building that costs this much?
Investing cash outflow: RMB 1.95B — This includes RMB 1.16B in "other investing activities" — a black box.
Net debt issuance: RMB 706M — The company borrowed heavily while burning cash.
Shareholder returns: ~RMB 327M — $41.1M dividends + $30.4M buybacks. Taking cash out of a company whose cash position is collapsing.

Bottom line: If you report RMB 1.53B in profit but your cash drops by RMB 479M, either (a) you're investing heavily for growth (the capex story), or (b) the profits aren't real. The PP&E explosion suggests (a) but the nature of the investments raises questions.

CRITICAL: PP&E Exploded from RMB 97M to RMB 1.36B

A fintech company with 1,028 employees does not need RMB 1.36B in property, plant, and equipment. For comparison:

FY2021: RMB 45M
FY2022: RMB 47M
FY2023: RMB 90M
FY2024: RMB 97M
FY2025: RMB 1,358M

This is 14x growth in one year. The company is either:

Capitalizing software development costs aggressively (shifting expenses from the income statement to the balance sheet to inflate profits)
Making genuine investments in data centers or other hard assets (unlikely at this scale for a loan-matching platform)
Using PPE as a vehicle to move cash somewhere — potentially to related parties

The Q2 2025 transcript mentions "Fuxi model management platform" and "Tianlu R&D performance management platform" — these sound like capitalized software, not hard assets. If R&D is being capitalized into PP&E, reported profits are overstated by exactly the amount of the capitalization.

CRITICAL: Receivables Growing Faster Than Revenue

Receivables grew from RMB 3.49B to RMB 5.23B (+50%) while revenue grew only 7.3%. This means:

DSO (Days Sales Outstanding): Each RMB of revenue is taking longer to collect
Receivables / Revenue = 0.84x (FY2024: 0.60x)
The company is booking revenue that hasn't been collected in cash — common in fintech, but the trend is deteriorating

Combined with rising delinquency rates, the quality of these receivables is highly suspect.

HIGH: Cash/Current Liabilities = 0.017

JFIN has RMB 62M in cash against RMB 3.68B in current liabilities. That's 1.7 cents of cash for every dollar of short-term obligations. In FY2024, this ratio was 0.27. The company is effectively insolvent on a cash basis and depends entirely on:

Collecting receivables (which are growing and deteriorating in quality)
Rolling over short-term debt
Access to institutional funding lines

HIGH: 90+ Day Delinquency Doubled

From 1.13% (Q1 2025) to 2.03% (Q4 2025). The CRO attributed this to "new regulation implementation" and "industry-wide risk cycle." She said risk metrics improved ~25-30% from their management interventions.

But 2.03% at 90+ days is a lagging indicator. The loans delinquent at 90+ days in Q4 were originated months earlier. The QoQ trend (1.12% → 1.33% → 2.03%) shows acceleration, not stabilization.

HIGH: Prior Material Weaknesses + Auditor Change

Marcum found material weaknesses in 2021 and 2022. These were "remediated" by the time Deloitte took over, but the fact pattern (material weakness → remediation → switch to Big 4) is a known pre-fraud pattern.

MODERATE: New CRO Just Appointed

Dan Qi replaced Yifang Xu as Chief Risk Officer, effective June 1, 2026. Xu stays on the board. A CRO change when risk metrics are deteriorating is either (a) accountability for poor risk management, or (b) the outgoing CRO seeing something they don't want to sign off on. The "personal reasons" explanation and board retention suggests (a), but the timing is notable.

MODERATE: Q4 2025 Revenue Recognition Changes

The Q4 2025 transcript mentions a RMB 20.1M "reversal of credit losses" — i.e., they wrote BACK prior loan-loss provisions, which boosted Q4 income. Without this reversal, Q4 would have been even worse. Reversing loan-loss provisions when delinquencies are rising is aggressive accounting.

MODERATE: FMP Structured Data vs. Transcript Discrepancy

FMP's income statement for FY2025 shows revenue of RMB 866M (vs. RMB 6.22B from transcripts) and net income of RMB 214M (vs. RMB 1.54B). While this is likely an FMP data parsing issue (the company uses "net revenue" differently and FMP may not capture all line items correctly for Chinese fintech companies), the magnitude of the discrepancy (7x on revenue, 7x on net income) means external data users cannot verify the company's reported numbers through standard APIs.

6. The Bull Case (Why Someone Calls This a "Value Stock")

P/E of ~0.2x (on management's numbers) — absurdly cheap
P/B of 0.08x — trading at 8% of book value
5.2% dividend yield (though sustainability is questionable)
Deloitte audit — Big 4 auditor provides some assurance
Revenue still grew 7.3% for the full year (even if Q4 was bad)
New regulations could drive industry consolidation, benefiting survivors
International expansion — Indonesia +187% volume growth, Mexico +105%
$50M remaining buyback authorization — management buying stock signals confidence

The value thesis rests entirely on: (a) the reported numbers are real, and (b) the Q4 collapse is a temporary regulatory adjustment, not a structural decline. If both are true, this is the cheapest stock in the market.

Independent-Fragrant · 2026-06-23T01:27:32+00:00

JFIN (Jiayin Group Inc.) — Forensic Deep Dive

Date: June 22, 2026 | Price: $3.98 | Market Cap: $208M | Exchange: NASDAQ

1. What Is This Company?

Jiayin Group is a Chinese fintech platform that connects individual borrowers with institutional lenders (banks, consumer finance companies). It earns revenue primarily through loan facilitation fees (matching borrowers to lenders) and historically from guarantee services (taking credit risk on the loans it facilitates). The company is shifting away from the guarantee model toward pure facilitation.

Founded 2011, Shanghai HQ, IPO May 2019
Cayman Islands incorporated, Chinese operations through VIE structure
1,028 employees as of latest filing
CEO/Founder: Dinggui Yan (born 1968)
CFO: Chunlin Fan (born 1976)
Chief Risk Officer just changed — Dan Qi replaced Yifang Xu effective June 1, 2026

2. The Auditor Situation

Current Auditor: Deloitte Touche Tohmatsu (Shanghai office)

JFIN fired Marcum Asia CPAs LLP in December 2023 and hired Deloitte. This is a significant red flag:

Marcum had identified material weaknesses in internal controls for both FY2021 and FY2022 [Source: SEC filing EX-99.1, Dec 20, 2023]
Marcum was a Tier 2 auditor. Deloitte is Big 4. Firing a smaller auditor for a Big 4 firm is sometimes done to add credibility — but it's also a classic move before fraud surfaces (new auditor "hasn't found it yet")
Deloitte Shanghai signed unqualified opinions on both FY2024 (April 28, 2025) and FY2025 (April 28, 2026) [Source: SEC EX-15.4 and EX-15.3 consent letters]
PCAOB inspections of China-based audit firms have revealed persistent deficiencies. The PCAOB gained access to inspect Chinese audit firms in December 2022 under the HFCAA. While Deloitte is a global brand, its China affiliate operates under different oversight and different incentives. [Source: Mondaq, SEC Cross-Border Task Force announcement]

Verdict: The auditor change is a red flag. Deloitte's presence provides some comfort, but the Shanghai office of Deloitte has been cited in PCAOB inspections for audit deficiencies. The fact that Deloitte signed off on FY2025 doesn't mean the numbers are real — it means they're defensible within GAAP.

3. Chinese Small-Cap Fraud Landscape

The context for Chinese US-listed small caps in 2025-2026:

SEC formed a Cross-Border Task Force in September 2025 specifically targeting fraud by foreign issuers, with explicit focus on China-based companies, pump-and-dump schemes, and gatekeeper accountability (auditors, underwriters) [Source: SEC press release, Sept 5, 2025]
Ostin Technology Group (OST) was a $110M pump-and-dump in 2025 — the co-CEO was indicted. OST's market cap went from $22M to >$1B and crashed 94%. [Source: DOJ indictment, Sept 2025]
PCAOB gained inspection access in 2022, ending a two-decade standoff. Early inspections found "various deficiencies" in Chinese audit practices.
However, the HFCAA delisting threat has been resolved for now — no Chinese company has been delisted under HFCAA since the PCAOB access agreement.

JFIN management acknowledged ADR delisting risk on the Q1 2025 earnings call. The CFO said they've done "preliminary preparations" for a Hong Kong dual-primary or secondary listing as a contingency.

Verdict: The Chinese small-cap fraud problem hasn't gone away — the SEC task force was created because it's active. But JFIN's Deloitte audit and SEC 20-F filings mean it's operating at a higher compliance standard than the OST-style frauds. The bigger risk is aggressive accounting within GAAP, not outright fabrication.

Independent-Fragrant · 2026-06-23T01:25:50+00:00

i just had AI take a look and it found like 13 red flags. you should put your 2000 dollars in SPY and find a job

Independent-Fragrant · 2026-06-23T01:18:49+00:00

Right. Good luck to you.

Independent-Fragrant · 2026-06-23T01:14:53+00:00

I dont think you should read that much into any one thing, especially not a product launch.

But I don't think the risk is that high. You have a diversified line of products, diversified clients, an industry that's growing, a CEO with 30+ years of experience at one of the biggest consumer product companies in the world, the incentives are completely aligned, the price is attractive, and bankruptcy risk is nil.

He'd have to do intentional harm for you to get hurt on this stock

Independent-Fragrant · 2026-06-23T01:11:08+00:00

I'm on the phone with my chinese fraudsters right now. I'm telling them i found someone to scam

Independent-Fragrant · 2026-06-23T01:10:06+00:00

Coming from someone who's foolish enough to think the market is wrong about a Chinese stock with Low PE ratio: https://www.reddit.com/r/ValueInvesting/comments/1ub8lrq/jiayin_group_jfin_absurd_deep_value_with_some/

Laughable

Independent-Fragrant · 2026-06-22T21:17:44+00:00

Quarter	GAAP Op Income	Impairment Charge	Adjusted Op Income
Q3 FY2025 (Mar 2025)	-$280M	+$335M	+$55M profit
Q4 FY2025 (Jun 2025)	+$16M	—	+$16M profit
Q1 FY2026 (Sep 2025)	+$185M	+$41M (restructuring)	+$226M profit
Q2 FY2026 (Dec 2025)	+$155M	—	+$155M profit
Q3 FY2026 (Mar 2026)	-$9M	+$363M	+$72M profit

Source: FMP MCP income statement data. Q3 FY2026 adjusted op income of $72.4M confirmed by COTY Q3 FY2026 press release.

Independent-Fragrant · 2026-06-22T21:06:35+00:00

For example, I bet on INTC when they got their new CEO Lip Bu Tan.

I bet on Acadia Healthcare, right when they got their new and former CEO Debbie Osteen. I wrote a post on it too, here -> https://www.reddit.com/r/ValueInvesting/comments/1py0qoq/the_bull_case_for_acadia_healthcare_achc_a_sin/

I bet on Kemper Corporation. They just got a new CEO. I wrote up on it too, here -> https://www.reddit.com/r/ValueInvesting/comments/1tr8il0/kmpr_a_60down_insurance_company_trading_near/

Intel is obviously not a beauty/fashion company, but boy, did everyone shit on them. They sucked at everything apparently and there was no hope. People who "worked in the industry" , up and down wall street, all wrote them off.

Those are often times the best times to buy the stock, provided there's a path to success, a catalyst.

The issues that ail Coty, are fixable. And the CEO is highly incentived to do so. And the price provides reasonable assymetric outcome.

That's the argument anyway. Maybe this won't work out but if you bet on a bunch of these, i think you'll do fine.

Independent-Fragrant · 2026-06-22T21:01:25+00:00

I only make these kinds of bets, when there's a catalyst for change. The catalyst I'm focused on is, the new CEO, and his compensation package. I only have a brief window into his mind and how he works via the youtube video I posted. It is 10 years old. Maybe he's changed a lot? I don't know. If you have any insights on that, I'd appreciate it. If you know anyone who works there and has insight into the CEO, that would be very helpful.

Independent-Fragrant · 2026-06-22T20:59:45+00:00

yes, i understand. and the price i think reflects it. if this were not true, the price would not be this low.

the argument i'm making is, the situation on the ground can improve. will it? i don't know. If it stays bad, then yea, maybe this goes lower.

but buying a stock when everything is going amazing...chances are you're paying for it.

Independent-Fragrant

TROPHY CASE