Bleecker Street Research
Long/short equity, special situations

China HGS Real Estate: Potentially A Chinese House Of Cards

China HGS Real Estate (NASDAQ:HGSH) is a real estate development company in China. The company has focused on the development of high-rise, sub high-rises, and residential buildings in Chinese Tier III and Tier IV cities. In 2011 the company received the National Grade-I real estate development qualification, the highest level of qualification granted by the Ministry of Housing. HGSH has a litany of red flags and questionable connections. Despite these issues, the stock is up over 2000% over the past year.

Corporate Structure

China HGS Real Estate has a relatively complicated corporate structure. Here is the breakdown. It does not actually have any operations in China, it is in fact a Florida corporation. It conducts its business through...

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