The CFO of Hong Kong-listed swimwear maker Hosa (HK:2200) has left the company after the company was accused by short seller Bonitas Research last month of inflating revenues by 217%.
Lui Wai Ming, the ex-CFO, an executive director, and a member of the risk management committee of the company resigned so that he could devote more time on his other business commitments, according to Hosa’s HKEX filing. His last day was July 31, 2018, said the statement.
Lui joined the company in Aug 2015. According to Bonitas, the firm fabricated revenues of RMB 685 million and RMB 894 million in 2016 and 2017 respectively.
At the same time, Yau Chi Ming— an independent non-executive director of Hosa, chairman of the audit committee and members of the nomination committee and remuneration committee of the firm also resigned.
Hosa’s stock price plunged 87% on June 29, as banks were overselling the management’s shares, while Bonitas was also shorting the shares.
Hosa denied Bonitas's accusation, saying in a HKEX filing that the short seller's allegation is without basis, incorrect, and misleading.
“We think it's now too late for investors to recoup their investment, as the Shi brothers—the executive directors— have already been able to siphon off capital raised into their own pockets via share pledges, undisclosed related party transactions, and stock dividends,” said Bonitas. “We noted that on July 5, 2018, Hosa announced it’d delay payment of its dividend, which raised the concern that there is very little cash for investors to recoup from Hosa during this unwinding process.”
“The intrinsic value of Hosa's equities is HK$ 0.00, as the firm is debt-laden, has little cash, and operates a business much smaller than reported in its filings,” Bonitas noted.