Apple supplier AAC denies short-seller’s accusation of ‘dubious accounting’ as shares plunge
AAC Technologies Holdings denied allegations of “dubious accounting practices” made by a leading short-seller that sent shares in the Apple supplier into free-fall.
Gotham City Research, which is well recognised among hedge fund managers, said the acoustic parts maker used more than 20 undisclosed related parties to overstate its profits and to evade Apple’s labour standards. Gotham City is among the top five short-sellers worldwide in terms of campaign returns, well ahead of Muddy Waters, according to a recent rankings chart.
In response to the accusations AAC shares plunged 10.5 per cent on Thursday to HK$99.4. It was the biggest fall since May 2010, and followed a record high of HK$114.2 at the end of April.
AAC was the fourth-worst performer as the benchmark Hang Seng Index rose 0.4 per cent to reach 25,125.55, the highest closing level since July 2015.
“The Board vigorously denies the allegations in the report and considers the information contained therein to be inaccurate and misleading,” said Koh Boon Hwee, chairman of AAC, in a filing to the Hong Kong Stock Exchange.
While AAC hasn’t requested a stock trading suspension, it said it was seeking legal advice on the matter.
The Shenzhen-based firm makes miniaturised acoustic components including speakers, receivers and microphones that are used in smartphones and tablets. Apple is one of its main clients.
AAC in March reported a net profit of 4.03 billion yuan for 2016, up 30 per cent from the previous year. It had a net profit margin of 26 per cent.
The group was founded in 1993 by current CEO Benjamin Zhengmin Pan and his wife Ingrid Chunyuan Wu, a non-executive director.