Sunny Optical tumbles on fraud allegation

Business | Reuters and Tracy HU 18 Jul 2018

Shares of Sunny Optical Technology (2382) once tumbled 6.76 percent in yesterday's trading after short seller GMT Research claimed spotting fraudulent-like traits in the smartphone lens maker's financial report.

GMT Research yesterday tweeted its concerns about Sunny Optical, including profit manipulation, fake cash flow and debt reconciliation. Responding to a netizen's question, GMT Research said it finds suspicious certain Sunny Optical practices as it "generates excess internal cash flows and then still raises external debt finance which is a bit odd."

"However, cash balances, receivables, etc are not overly large," GMT Research said.

Gotham City Research, another short seller, also targeted last year blue chip AAC Technologies (2018), questioning the latter's over 20 undisclosed related party suppliers owned by the AAC chief executive's family members or employees.

Meanwhile, Q Technology (1478) once tumbled 14 percent yesterday after major brokerage houses earlier downgraded the electronics components supplier as it issued a profit warning.

Q Technology has warned that it might incur an interim loss of 50 million yuan (HK$58.59 million), prompting Morgan Stanley and Nomura to downgrade the stock and lower their target prices for Q Tech.

Amid the trade war, the US ban on Chinese telecom equipment maker ZTE (0763) has wreaked havoc at wireless carriers in Europe and South Asia and forced operators worldwide to consider broadening their supply networks, Reuters said.

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