Boshiwa nosedives after auditor resigns

Shares of children's wear company Boshiwa International were suspended from trading yesterday after the sudden resignation of its auditor sent its stock price plunging by more than one-third.

The Shanghai-based clothing maker and retailer told the Hong Kong stock exchange that its accounting firm, Deloitte Touche Tohmatsu, had resigned because it had not received some financial information it had sought.

'Explanations provided by the company's management are not to their [Deloitte's] satisfaction,' Boshiwa said, adding that it was disappointed by the auditor's decision.

The company said the departure would force it to delay publishing its annual results and that it was considering appointing a special investigation committee to review the matter.

Boshiwa's share price plunged 35 per cent to close at a 52-week low of HK$1.68 yesterday, the sharpest drop since the company listed.

A Deloitte spokesperson declined to comment on its resignation. Analysts had been sceptical about the company's balance sheet.

Boshiwa had announced aggressive plans to increase retail space by 50 per cent last year to snap up share in a fast-growing 200 billion yuan (HK$236 billion) market. At the time, it was operating 90,000 square metres of retail space in about 1,000 outlets in more than 130 mainland cities.