- Chinese furniture maker recoup losses after denying allegations in Blue Orca research notes issued on Thursday
Kasen International Holdings rebounded as much as 600 per cent in Hong Kong after the Chinese furniture maker and developer refuted the allegations in a critical report issued by a US short seller on Thursday.
The shares surged to as high as HK$3.20 on Friday as trading resumed on Friday, before closing at HK$2.63 for a 472 per cent gain. The stock had slumped 90 per cent after the attack, wiping HK$6 billion (US$766.9 million) off its market value when halted a day earlier.
The Zhejiang province-based company refuted all the five allegations in the critical report released by short seller Blue Orca Capital, including the sale of good-quality assets to the chairman's daughters at below market prices and its land investment in Cambodia.
Kasen, which described the report as "untrue and misleading," said the company sold the assets linked to leather and furniture manufacturing in 2016 because the business was no longer appealing to investors due to a weakening yuan and rising operating costs, according to an exchange filing. The price was based on audited historical income results and values of relevant land and buildings, it added.
Kasen plunges 90 per cent in Hong Kong trading after critical report by short-seller
Its purchases of land in Cambodia for a water park are well under way, Kasen said. Its joint venture in the Southeast Asian nation has also agreed to buy 265,700 square meters (2.85 million square feet) in the project, of which 261,900 square meters has been transferred. Certificates for the remaining pieces are being processed, it said.
Blue Orca has a history of targeting Chinese companies listed overseas. Its targets have included baby milk formula producer Ausnutria Dairy and sportswear maker Anta Sports Product, both of which fell after its reports questioned their accounting and corporate governance.
Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.
