The Problems With Deer Consumer Products

Alfred Little submits:

Introduction

In this detailed report, I show that Deer Consumer Products Inc., (NASDAQ: DEER), a producer of small kitchen appliances located in China, has substantially inflated both its sales and profit margins and failed to disclose direct competition from entities related to its chairman. Additionally, management recently announced two major land purchases at prices that are at least 50% above closely comparable sales that occurred in the same month on the same street. The timing, nature and lack of documentation and disclosure regarding these land purchases make it very likely DEER management misappropriated over $12 million in company funds. I have organized my findings into six sections as set forth below.

1. Management misappropriated over $12 million on two recent land purchases

2. High profit margins are impossible

3. Extensive 10-city, 60-store channel check confirms very weak domestic retail sales

4. Questionable revenue recognition inflates sales and accounts receivables

5.

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