China's Sinosoft again rejects shortseller report, shares rise

Sinosoft Technology

03/01/2017 06:32

HONG KONG, Jan 3 (Reuters) - Sinosoft Technology Group Ltd 
 1297.HK , in which Alibaba Group Holding  BABA.N  has a 13.32 
percent stake, on Tuesday dismissed as groundless the 
allegations by a Chinese short-seller that the Hong Kong-listed 
company had inflated its revenues.  
    Shares of Sinosoft, which has a market value of HK$3 billion 
 ($387 million), jumped as much as 5 percent after the company 
said the allegations - made in a second report by Zhongkui 
Research - contained "various misrepresentations". The gains 
outstripped a 0.8 percent rise in the Hang Seng Index  .HSI . 
    Little-known short-seller Zhongkui Research first issued a 
report on Sinosoft on Dec. 28, accusing the supplier of 
application software products and solutions of grossly 
exaggerating its revenues and profits.  
    Calling Sinosoft "a serial fraudster at large", the report 
said the firm had fabricated its financials when it was listed 
in London and continued to do so after it listed in Hong Kong. 
    Sinosoft suspended trading in its shares on the same day the 
report was released. On Dec. 29, it issued a statement saying 
the allegations were groundless, but its shares still plunged to 
a 17-month low.  urn:newsml:reuters.com:*:nL4N1EO1BL 
    Zhongkui Research issued another report on Dec. 29 
containing further allegations of fraud. 
    The second report "has made further allegations which again 
are groundless and contains various misrepresentations, 
malicious and false allegations and obvious factual errors of 
the group", Sinosoft said in its latest statement.  
    The report was the latest from an independent researcher 
questioning corporate practices at a Chinese company. 
 urn:newsml:reuters.com:*:nL4N1DV4DG  
    Alibaba, Sinosoft's second-largest shareholder, declined to 
comment on the short-seller report when contacted by Reuters.  
    Zhongkui Research's website, which carried the report, says 
it is "a highly experienced group of analysts intent on 
uncovering and exposing fraudulent companies globally". 
 ($1 = 7.7569 Hong Kong dollars) 
 
 (Reporting By Anne Marie Roantree; Editing by Himani Sarkar) 
 ((annemarie.roantree@thomsonreuters.com; +852 97387151; Reuters 
Messaging: annemarie.roantree.thomsonreuters.com@reuters.net)) 
 
Keywords: SINOSOFT SHORTSELLER/