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AAC Technologies takes second hit

Business | Reuters and Carrie Chen May 19, 2017
Shares of AAC Technologies (2018) plunged by as much as 11 percent before being suspended yesterday, after short- seller Gotham City Research published its second report in about a week accusing the Apple Inc supplier of "dubious accounting."

The short-seller, which has a short position in AAC, yesterday cited examples of what it said were over 20 related party suppliers owned or managed by the AAC chief executive's family members or employees.

Gotham City has accused AAC of not disclosing such deals in order to overstate its profits.

Asked for comment on the Gotham City report, an AAC representative said the company was preparing a statement.

Last week, AAC chairman Koh Boon Hwee vigorously denied Gotham City's findings, saying they were inaccurate and misleading.

AAC's stock was suspended yesterday afternoon after trading as low as HK$81.25. The Hong Kong Stock Exchange did not give a reason for the suspension.

AAC's stock has fallen 26 percent since Gotham City's first report came out on May 11.

Shenzhen-based AAC produces miniaturized acoustic components, including speaker boxes, speakers, receivers and microphones. Apple is one of its main clients.

The group was founded in 1993 by current chief executive Benjamin Pan Zhengming and his wife Ingrid Wu Chunyuan, a non-executive director, who together own 40.34 percent of AAC, according to its annual report.

AAC last week posted a 72 percent profit jump to 1.06 billion yuan (HK$1.19 billion) for the first three months of the year on 66 percent revenue growth.

Earlier when the first short-sell report was published, AAC executive director Richard Mok Joe-kuen said the company's profit margin over the past 10 years was fully supported by audit reports.

Meanwhile, trading in the shares of Changgang Dunxin Enterprise (2229) was halted yesterday by the Securities and Futures Commission.

The commission has accused Changgang Dunxin of having materially false, incomplete or misleading information in its announcements relating to its shares and bond placements. The SFC made the same allegation relating to the company's annual results for 2015 which it filed with the local bourse operator.

In January this year, trading in Changgang Dunxin's shares was suspended due to questionable trading that was uncovered when its chairman, Zheng Dunmu, pledged his shares.



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