China Hongqiao fights short-seller Emerson’s allegations of ‘profit inflation’
The world’s biggest aluminium smelter is forced to defend itself for the second time in three months
Shares of China Hongqiao, the world’s largest aluminium smelter, slumped as much as 6.9 per cent after it issued a statement denying allegations made by short-seller Emerson Analytics that it has inflated its profit.
“The directors of the company are of the view that the allegations and information contained in the allegation report are biasedly-selected, materially misleading, untrue and unfounded,” Hongqiao said in a filing to Hong Kong’s bourse late on Monday.
Its stock resumed trading today and fell as low as HK$6.6 at the market opening before closing 0.7 per cent lower at HK$7.1.
It tumbled 8.3 per cent on March 1 when the report was published, before trading was halted.
Short-seller Emerson alleged in a research report published a week ago that Hongqiao’s “real profitability” was at least 51 per cent below levels it reported for the nine years from 2007 to 2015, and should be worth only HK$3.1 a share.
In the 46-page report, it claimed the Shandong province-based firm had under-reported its true cost of self-generated power by 11.7 billion yuan and received “subsidies” from an undisclosed related party to the tune of 1.8 billion yuan between 2010 and 2015.