Hong Kong-based power tools maker Techtronic Industries Co. threatened legal action after a short-seller questioned its accounting methods last week, leading to a $4 billion loss in its market value in a single day.
(Bloomberg) — Hong Kong-based power tools maker Techtronic Industries Co. threatened legal action after a short-seller questioned its accounting methods last week, leading to a $4 billion loss in its market value in a single day.
In a filing to the Hong Kong Stock Exchange on Wednesday, Techtronic said it vigorously denies all the allegations in the Feb. 22 report by Jehoshaphat Research and that it reserved the right to take legal action. Techtronic is due to report 2022 results later in the day.
The 11-page filing had a point-by-point rebuttal to allegations that included “manipulated accounting” and “late or missed payments to suppliers.”
Jehoshaphat, which describes itself as a “veteran” short-seller, is anonymously operated and has mainly shorted US-listed companies, including Array Technologies Inc., Ameresco Inc. and Progyny Inc. There’s no address or phone number on its website. Its report on Techtronic contained an email address, but the company didn’t immediately respond to requests for comment via that avenue.
Techtronic’s shares slumped 19% on Feb. 23 in the wake of the report, their biggest loss in more than 14 years. They’ve rebounded about 6% since.
Analysts don’t seem to be swayed by the short-seller allegations — 18 out of 19 tracked by Bloomberg have a buy recommendation on the stock, while the other rates it hold.
UOB Kay Hian (Hong Kong) Ltd. analyst Johnny Yum said there “is very limited risk of fraud” in Techtronic’s accounting statements and that the short-seller claims were “definitely exaggerated.” The market is more concerned about the company’s outlook, including destocking inventory in the US and Europe, as well as headcount cuts, he wrote in a note.
–With assistance from John Cheng.
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