Kasen International Holdings (0496.HK)

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Chinese furniture maker Kasen plunges 90 per cent in Hong Kong trading after critical report by short-seller
* Trading in stock suspended on Thursday morning after Blue Orca issued report, wiping HK$6 billion off its market value
* Report contains “untrue and misleading” information, Kasen says in exchange filing in response to attack

Zhang Shidong  
Published: 4:28pm, 21 Nov, 2019

Shares of Chinese furniture and leather products maker Kasen International Holdings lost 90 per cent of their market value after short-seller Blue Orca Capital issued a research report critical of its operations and investment.

The shares slumped to 45.5 HK cents before trading was suspended around mid-day on Thursday, wiping out HK$6 billion from its market capitalisation as the report questioned its accounting and the sale of its assets in Cambodia involving its chairman Zhu Zhangjin and his family. The Zhejiang province-based company, which also develops properties, said the report contains “untrue and misleading” information” without elaborating, according to a stock exchange filing. Two phone calls by the South China Morning Post to the company went unanswered.

According to Blue Orca, Kasen sold its best assets cheaply to Zhu’s family members three years ago after understating its revenue and profit. Investigations by the short-seller show Kasen’s Cambodian projects to be vacant and undeveloped, it alleged.

Blue Orca pegged the fair value of Kasen stock at 67 HK cents, and simply uninvestable, according to the report.

Kasen’s shares had surged 250 per cent through Wednesday from the start of 2018 on strong residential home sales in China and its Cambodian projects. Property sales accounted for 75 per cent of its revenue last year.

Zhu has a 36.1 per cent stake in Kasen through direct and indirect holdings, according to its interim report. The company was reorganised from a factory that made leather products and went public in Hong Kong in 2005. Its first-half net income jumped 171 per cent to 243 million yuan (US$34.5 million) from a year earlier.

More details in https://www.scmp.com/business/china-busi...-hong-kong

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Kasen shares rebound 472 per cent after rejecting short-seller report on accounting
* Chinese furniture maker recoup losses after denying allegations in Blue Orca research notes issued on Thursday

Zhang Shidong  
Published: 2:36pm, 22 Nov, 2019
Updated: 5:19pm, 22 Nov, 2019

Kasen International Holdings rebounded as much as 600 per cent in Hong Kong after the Chinese furniture maker and developer refuted the allegations in a critical report issued by a US short seller on Thursday.

The shares surged to as high as HK$3.20 on Friday as trading resumed on Friday, before closing at HK$2.63 for a 472 per cent gain. The stock had slumped 90 per cent after the attack, wiping HK$6 billion (US$766.9 million) off its market value when halted a day earlier.

The Zhejiang province-based company refuted all the five allegations in the critical report released by short seller Blue Orca Capital, including the sale of good-quality assets to the chairman’s daughters at below market prices and its land investment in Cambodia.

Kasen, which described the report as “untrue and misleading,” said the company sold the assets linked to leather and furniture manufacturing in 2016 because the business was no longer appealing to investors due to a weakening yuan and rising operating costs, according to an exchange filing. The price was based on audited historical income results and values of relevant land and buildings, it added.

Its purchases of land in Cambodia for a water park are well under way, Kasen said. Its joint venture in the Southeast Asian nation has also agreed to buy 265,700 square meters (2.85 million square feet) in the project, of which 261,900 square meters has been transferred. Certificates for the remaining pieces are being processed, it said.

More details in https://www.scmp.com/business/china-busi...ort-seller