TTI plunges 7pc as short seller renews attack

Techtronic Industries (0669) dropped as much as 7 percent to a three-month low after the Hong Kong-based power tool maker was attacked by a short-seller report again, which accused the firm of defrauding Home Depot on a massive scale for at least four years.

TTI denied the accusations in the report issued by Jehoshaphat Research and said the short seller intended to undermine shareholders' confidence in TTI and benefit from the share price fall.

The power-tool maker also said the information in the report is grossly inaccurate and misleading and disclosed that the total revenue from the Techtronic Industries Factory Outlet Store network accounted for less than US$100 million (HK$780 million) - representing less than 1 percent of the company's sales of over US$13 billion in the same period.

According to Jehoshaphat's report, TTI labelled its products as "defective." But the products were in perfect condition and were only available at TTI's largest client Home Depot, the report added. TTI sold the products at outlet stores, which meant the largest US home improvement retailer could have missed out billion of dollars in sales. And if TTI stopped using such practices, its operating income would drop by one-third, said the short seller.

This is Jehoshaphat's second short-selling report against TTI. In February, the agency accused TTI of inflating its profits "dramatically" for over a decade by manipulating accounting and saw up to an 80 percent downside for the stock, slumping its shares by as much as 19 percent.

Shares of TTI closed at HK$70.45 apiece yesterday, 4.73 percent lower than the previous close.

TTI, founded in Hong Kong in 1985, produces equipment such as drills, lawnmowers and vacuum cleaners under brands including Milwaukee, AEG, Ryobi and Homelite.