Sanan Optoelectronics, China’s biggest maker of chips for light-emitting diodes, tumbled by the 10 per cent daily limit in Shanghai trading on Wednesday, wiping out 15 billion yuan (US$2.22 billion) in market value over the past month amid mounting scepticism about the company’s accounting authenticity. The stock slid 1.16 yuan to 10.44 yuan in Wednesday trading, its lowest close since February 2015. The decline has taken its loss in 2019 to 7.7 per cent, compared with a 3.1 per cent gain on the benchmark Shanghai Composite Index. Traders are getting more sensitive to listed companies’ accounting practices after the recent bond default by Kande Xin Composite Material Group brought the issue into the limelight. The Shenzhen-listed maker of laminating films said this week that it defaulted on the payment of 1.5 billion yuan of short-term bills. The company said in its third-quarter report released in late October that it had 15 billion yuan in cash. The stock sank 4.8 per cent to 6.15 yuan on Wednesday, capping a four-day loss totalling 22 per cent. At the centre of the storm surrounding Sanan are concerns over the accounting abnormality of its controlling shareholder. In a shorter-term bill prospectus revealed by Fujian Sanan Group, its advance payment to customers totalled 8.6 billion yuan, far exceeding its combined net assets of 7.12 billion yuan. Some findings also showed some of the companies to which Funjian Sanan made advance payment, either were not registered in the nation’s taxation system or were small ones with few employees. The Post made two calls to Li Xuetan, Sanan’s board secretary, both of which went unanswered. “Investors are afraid that they would step on some landmines,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai. “We haven’t spotted any problem from the listed company’s financial statement. But its accounting numbers are usually much better than the industry’s average. That is something beyond our knowledge that the sentiment of the LED industry is actually going down.” More than 82 million shares of Sanan changed hands on Wednesday, or 2.3 times its 180 day average, according to data compiled by Bloomberg. China International Capital Corp lowered its rating on the stocks to neutral last month and slashed the target price by 40 per cent to 12 yuan, citing waning demand from the property market, autos and consumer electronics, decreasing government subsidies and the China-US trade friction. Third-quarter profit for major global LED manufacturers dropped 21 per cent from a year earlier, according to the investment bank. Sanan reported a 14 per cent decline in third-quarter profit and before that, it had posted year-on-year earnings increases every quarter since 2016.