New | China’s Boer Power hits back at media report of inflating profits

Boer Power Holdings has hit back at a mainland Chinese media report that accused the maker of electricity distribution equipment and supplier of related software of inflating its profit by almost five times.

The net profit of the Jiangsu-based firm could not have exceeded 80 million yuan last year, compared with the 458.9 million yuan it reported, said business magazine Capital Week in a July 31 report.

“The report contains certain allegations or comments on the company which are factually erroneous, inaccurate or misleading,” Boer said in a stock exchange filing late on Friday.

The report’s approach in comparing the gross profit margin of Boer with its rivals was “overly simplistic and highly likely to mislead investors”, it said, since its products and solutions were different from those of its rivals and hence “like-for-like comparisons” could not be made.

The Capital Week report alleged that Boer’s gross profit margins - exceeding 35 per cent since its Hong Kong listing in late 2010 - was “majorly inflated”. 

It cited Shenzhen-listed and Guangdong-based rival Zongyeda Electric’s 18 per cent gross margin for the same business since 2007 as the reason for believing Boer’s margins were doubtful. It also quoted four unnamed Boer regional sales managers as saying the gross margin of its electrical distribution business was "certainly" lower than 20 per cent.