SenseTime develops artificial intelligence software and was listed in HK in December 2021. Grizzly Research alleged that SenseTime had been inflating revenues using round tripping and possible fake receivables, the company has undisclosed related parties, has an unattractive product and suffers from significant cash burn. In our view, SenseTime’s very high receivables and impairment charges are problematic. Best case, they indicate poor terms of trade; and worst case, they suggest some form of revenue inflation. However, we don’t believe accounting allegations made by Grizzly are supported by its research. There has been no change of auditor, nor director resignations and allegations of fraud are unproven.

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