Hong Kong’s SFC orders bleeding Chinese health drinks maker Real to suspend trading
The company, once accused of cooking its books, has posted a 2017 net loss of US$13m
The Securities and Futures Commission has ordered Chinese health drinks maker Real Nutriceutical Group to suspend its stocks from trading in Hong Kong on Wednesday morning, according to a Hong Kong stock exchange notice.
A SFC spokesman declined to comment on the order. The notice only stated that the Hong Kong regulator has directed the exchange to suspend all dealings in Real’s shares under Rule 8(1) of the Securities and Futures (Stock Market Listing) Rules, a regulation to protect investors’ interests and market integrity.
The SFC had rarely issued such orders, but began to do so over several occasions since early last year to crack down on “scam shares” and malpractices.
Real announced in March that it suffered a net loss of 86.7 million yuan (US$13.1 million) in 2017 on decreased sales of its drinks products in China. Its shares closed at 20 HK cents on Tuesday.
US-based short seller Glaucus Research had previously accused the company of cooking its books in 2015, reporting conflicting revenue numbers in its filings to China’s Ministry of Commerce (Mofcom) and those to the Hong Kong stock exchange. A combined revenue of 839 million yuan for two subsidiaries generating 90 per cent of its total revenue between 2011 and 2013 reported to Mofcom was 84 per cent less than what was filed to the Hong Kong bourse, Glaucus alleged.
As a result, Real’s shares were suspended from trading for two months and only resumed after issuing a rebuttal that called the short seller’s claims “erroneous and misleading”.