Chinese sportswear firms reject allegations of improper accounting

China Dongxiang (Group) Co

15/06/2018 05:37

HONG KONG, June 15 (Reuters) - ANTA Sports Products Ltd
 2020.HK  and three other Chinese sportswear firms have hit back
at a research report that has questioned their accounting
practices, saying the allegations were groundless.
    ANTA shares have lost 5 percent since a June 12 report by
Hong Kong-based GMT Research, issued to its subscribers, said
that ANTA's operating margins were so high that it was either
the world's best-run sportswear firm or its accounting practices
were questionable. A copy of the report was obtained by Reuters.
    GMT, an Asia-focused accounting research firm, says on its
website that its goal is to use financial statements to judge
whether a company is overstating or understating its profits
through the exploitation of accounting standards. 
    ANTA, China's biggest sportswear firm by market value, said
the report contained certain factual errors, misleading
statements and unfounded speculation that may lead to unusual
moves in its stock.
    "The board vigorously denies the speculations contained in
the report and considers them to be inaccurate and misleading,"
Chairman Ding Shizhong said in a statement late on Thursday,
adding the company reserved the right to take legal action.
    Xtep International Holdings Ltd  1368.HK  and 361 Degrees
International Ltd  1361.HK , whose operating margins were also
questioned, also issued statements saying the GMT report was
incorrect and misleading.
    "The board considers that the report contained certain
factual errors, misleading statements and unfounded
speculations," Xtep Chairman Ding Shui Po said. "No accounting
fraud has ever been committed."
    Xtep shares have lost 2.5 percent since the report, while
361 Degrees has eased 1.2 percent.
    GMT also questioned accounting practices at China Dongxiang
(Group) Co Ltd  3818.HK . The company said in a statement that
the report contained unfounded allegations regarding its
financial performance, in particular regarding its inventory
management and cash flow.
    Dongxiang's stock has lost 1.3 percent since the report.
    
      
  

 (Reporting by Donny Kwok, Anne Marie Roantree and Jennifer
Hughes; Editing by Edwina Gibbs)
 ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters
Messaging: donny.kwok.reuters.com@reuters.net))