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Lihua shares drop 22% on short-seller's report

 

Shares of Lihua International (LIWA.NASDAQ), a Chinese copper wire maker, plunged as much as 22% in US markets after a short-seller released a report alleging that Lihua has “illogical financial results,” Bloomberg reported. The drop pushed Lihua’s market value to US$180.8 million from US$202.7 million on Monday, making its year-to-date retreat 46%. According to Absaroka Capital Management, a Wyoming-based hedge fund, Lihua deals with Danyang Huaying Resource Recycling – a company that COO Wang Yaying has a majority stake in. The report also claims the Jiangsu-based company engaged in “excessive stock promotion,” and that shares should be valued at US$3. Lihua is the latest US-traded Chinese company under scrutiny, after firms like China MediaExpress Holdings (CCME.NASDAQ) disclosed financial irregularities or auditor resignations this year – raising alarm bells over the possibility of widespread fraud. 

 

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