UpdateLuggage giant Samsonite accused of ‘questionable accounting practises’

Shares in Hong Kong-listed branded luggage maker Samsonite International plummeted by more than 11 per cent in early trading in Hong Kong on Thursday, after being accused of “questionable accounting practises” and “poor corporate governance”, in a report by newly formed activist short-seller, Blue Orca Capital.

Trading in the shares was halted at 11.18am.

“We suspect Samsonite has concealed slowing growth through debt-fuelled acquisitions and that it has massaged earnings and inflated margins through highly questionable purchase price accounting,” Blue Orca said.

“Samsonite should trade at a discount to its peers because of corporate governance concerns regarding its audit profile,” it added, and questioned transactions between the company and Indian entities controlled by its CEO Ramesh Tainwala and his family.

“We call on Samsonite’s board of directors, and in particular the audit committee, to appoint an independent audit firm to scrutinise all transactions involving its South Asian joint venture, the company’s treatment of inventory, its purchase price accounting and disclosed and undisclosed connections between Samsonite and its CEO.

“Ultimately, we believe that Samsonite is simply carrying too much baggage to trade at such a high premium,” said Texas-based Blue Orca.