Short seller targets AAC

HONG KONG/NEW YORK: Shares of AAC Technologies Holdings Inc sank in Hong Kong after short seller Gotham City Research questioned the Apple Inc supplier’s accounting.

The stock dropped 11 per cent to HK$98.70 (RM55.15) at the midday trading break, heading for its biggest retreat since 2010.

Gotham, founded by New Yorkbased Daniel Yu, questioned AAC’s profit margins and alleged that the company engaged in undisclosed transactions with related parties that weren’t listed in Apple’s supplier list.

“We’re intrigued by it because its margins are higher, smoother than some of the best companies in the world,” said Yu.

Some analysts questioned Gotham’s conclusions.

BOC International Holdings Ltd’s Tony Zhang, who has a “buy” rating on the stock, called the report “groundless” and said many Apple suppliers enjoyed high profit margins. His critique was echoed by Sanford C. Bernstein & Co’s David Dai. “There is no hard evidence there, only speculation.”

AAC is scheduled to report results for the three months ended March today. Bloomberg