|Short-seller Glaucus suggests Prince Frog sales figures are a fairy tale
Shares in main board listed Prince Frog International (1259) took a turn for the worse today following revelations by California-based short-seller Glaucus Research, which put a “strong sell'' recommendation on the stock, alleging that the maker of children's mosturizers and shampoo had inflated sales data.
(pictured, Li Zhenhui, Prince Frog International chairman)
Prince Frog shares dived 26 per cent to HK$4.66 before trading was suspended at 11:43am today. The company has yet to issue a statement responding to the claims.
Citing Nielsen retail sales data, Chinese government survey on consumer brand awareness, public tax records, and Sate Adiministraton for Industry and Commerce filings, Glaucus said Prince Frog actual sales are less than 25 percent of the figures reported by the company.
According to Glaucus, there are other clues in the company's financials to indicate that Prince Frog is more frog than prince.
Reported sales grew seven times faster than industry. Prince Frog's reported sales grew 700 percent from 2007 to 2012, a period where the industry reportedly grew only 100 percent. Glaucus said this appeared to be ``too good to be true.''
Glaucus also doubted Prince Frog's inventory turnover rate of 25 days in 2012, which was at least twice as fast as the inventory turn rate of its peers (70 days for Shanghai Jiahua, 61 days for Procter & Gamble, and 67 days for Pigeon Corp).--The Standard