July 9, 2019 / 3:25 AM / 5 months ago

China's ANTA Sports rejects Muddy Waters allegation as 'incorrect'

FILE PHOTO: Anta Sports Products Limited Chairman and CEO Ding Shizhong attends a news conference announcing the company's annual results in Hong Kong, China February 27, 2018. REUTERS/Bobby Yip

HONG KONG (Reuters) - ANTA Sports Products Ltd (2020.HK) on Tuesday rejected an allegation by U.S. shortseller Muddy Waters that the Chinese sports brand had manipulated financial information.

“The company vigorously denies the allegation and considers it to be incorrect and misleading,” ANTA chairman Ding Shizhong said in a filing to the Hong Kong stock exchange.

Muddy Waters accused ANTA of using “secretly controlled Tier 1 distributors to fraudulently boost its margins”.

ANTA’s filing said “Each of the group’s distributors has its own management team who make independent business decisions, and has its own financial and human resources management functions independent from that of the group, with no control over one another.”

Muddy Waters did not respond immediately to an emailed request for comment on ANTA’s filing.

On Monday, after Muddy Waters issued a report on ANTA, shares of China’s largest home-grown sports brand by market value fell as much as 8.7% to a three-week low.

Trading in ANTA shares was suspended on Monday afternoon, at the company’s request.

On Tuesday morning, trading resumed. At 0300 GMT, ANTA shares were down 0.9%.

Another short-seller, Blue Orca Capital, had cast doubt on ANTA’s revenue in a presentation in May that ANTA dismissed as “inaccurate and misleading”.

Reporting by Donny Kwok; Editing by Richard Borsuk

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