Chinese sportswear firms reject allegations of improper
accounting
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[June 15, 2018]
HONG KONG (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.
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The logo of Anta Sports is seen on its product during a news
conference announcing the company's annual results in Hong Kong,
China February 27, 2018. REUTERS/Bobby Yip

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)
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