Yesterday morning, short sellers Glaucus Research Group published a report on China Mingzhong Food Corporation, one of the S-chips that is listed on SGX.
The report alleged widespread fraud in China Mingzhong including fabricated sales, fake suppliers, attempted cover-up and an inflated capital expenditure. The report can be downloaded here:
If the allegations in the research report are true, the company would have managed to pull a big wool pulled over the eyes of their investors and auditors.
After the report was released by Glaucus Research, the share price of China Mingzhong dived almost 50%, and the company immediately called for a suspension of their shares.
At 9pm last night, China Mongzhong came up with this press release:
It has been brought to the attention of China Minzhong Food Corporation Limited that Glaucus Research Group has released a report regarding certain affairs of the Company. The Report has caused a substantial decrease in the share price of the Company this morning and Glaucus has openly stated that Glaucus and those acting in concert with it are short sellers who will profit from the decline of the Company’s stock price.
The Company is in the process of reviewing the Report and will provide its response shortly. The Company will take all necessary steps to defend its reputation and will not hesitate to take legal action against those who put up and disseminate false or misleading statements without due regard to their truth and for the purpose of inducing others to deal in securities.
In the meantime, the Company has halted the trading of its stock and reserves all rights against the aforesaid parties.
Business Times has written a premium article on this saga too:
It remains to be seen how all this will pan out but for many investors of S-Chips, this is deja-vu all over again. Quite a number of S-chips have already been suspended or delisted due to one reason or another.