Lumena denies allegations of fraud

Industrial chemical maker China Lumena New Materials yesterday denied allegations of fraud contained in two recent reports.

Emerson Analytics issued a report on Tuesday that alleged Lumena had inflated its 2012 revenue by seven times, and it should have lost 372 million yuan (HK$467 million) in 2012 instead of reporting a net profit of 1.39 billion yuan.

Emerson's website describes it as "a group of seasoned equities analysts … determined to expose as much of the fraud in the Chinese stock market as we can".

On March 25, Glaucus Research, a US short-seller, issued a report accusing Lumena of making "numerous material misrepresentations" in its 2009 initial public offering prospectus and subsequent financial statements. Glaucus alleged Lumena's sales and profitability were 90 per cent less than the company reported.

In a statement posted on the website of the Hong Kong stock exchange yesterday, Lumena said the allegations by Glaucus and Emerson were "not based on any facts or are misrepresentations" and that it might take legal action against Glaucus.

Lumena said the release of its 2013 annual results had been delayed because its auditor, BDO, needed more time to finalise its accounts.