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China's Anta Sports under scrutiny over alleged accounting, governance issues


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China's Anta Sports under scrutiny over alleged accounting, governance issues

Anta Sports Products Ltd. has come under attack by short seller Soren Aandahl, who targeted the Chinese athletic wear maker for accounting and corporate governance irregularities, Bloomberg News reported May 30.

The founder of Blue Orca Capital reportedly was speaking at the 2019 Sohn Conference in Hong Kong on May 30 when he predicted Anta's stock to fall by as much as 34%.

Meanwhile, The Standard reported that Aandahl had alleged that Anta overstated the retail revenue of Fila China in 2018 by 41%.

Anta holds an 85% stake in Full Prospect Ltd. — which owns and manages the Fila trademarks in Hong Kong, Macao and China — through its Motive Force Sports Products Ltd. subsidiary. Fila Korea Ltd., owner of the global footwear and apparel business of Italian brand Fila, holds the remaining 15%.

The apparel maker's revolving door of finance heads also came under scrutiny from The Standard. Aandahl reportedly said the company's valuation should be the subject of corporate governance discount as Anta's CFO has changed three times over the last three years.

In a statement filed May 31 to the Hong Kong stock exchange, Anta assured shareholders by refuting speculations made by Aandahl, calling them "inaccurate and misleading."

"The board considers that the report contained certain factual errors, misleading statements and unfounded speculations," the company said. Anta also warned that it may take legal action against Blue Orca.

Blue Orca did not immediately respond to S&P Global Market Intelligence's email seeking comment.

The Hong Kong-listed company said in another filing that it had sold 0.59% of Anta's issued share capital to a connected individual for HK$49.11 per share. Gross and net proceeds from the transaction are estimated to be approximately HK$778 million, which will be used for working capital and general corporate purposes.

Anta Sports has a market capitalization of US$16.54 billion, according to the latest S&P Global Market Intelligence data. Its stock was trading up 3.94% on midday May 31, after closing 5.5% lower to HK$46.95 on May 30.