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The share price of Asian Citrus Holdings Ltd (LSE:ACHL) fell in morning trading today following an unfavourable news article about the company published today in the Hong Kong based magazine “Next”. The price per share had fallen just over 8%, or 3.38 pence per share with over 5.4 million shares traded by 1:30pm GMT. The company issued a statement this morning strongly refuting the factual accuracy of the “Next” article. The company’s statement specifically addressed and clarified the cited inaccuracies.
The Controversy
Agrimoney reported that the magazine “questioned the accuracy of the . . . company’s statements on land ownership, fruit production and . . . plantation valuation” and Bloomberg Business Week cited the magazine as reporting that Asian Citrus had misrepresented the actual number of trees on one of its plantations. According to Agrimoney, the “Next” article was written following a visit by reporters to the company’s Xinfeng plantation last month. It is likely that the magazine was following up on fraud allegations recently brought against companies such as Chaoda Modern Agriculture, which is a major shareholder in Asian Citrus. The company began responding to the inauspicious reporting, publishing an article entitled “Asian Citrus Responses to Media Enquiry on its Plantations and Products” in EIN News on February 21 2012. It also added an extensive FAQ section relative to the operations of the company on its corporate website.
Corporate Response
The company responded in detail to each alleged inaccuracy of the “Next” article. However, in summary, it stated that is has “very efficient and comprehensive internal control systems”relative to the operations and their financial reporting, whilst stating that the numbers that they have published in their annual and interim reports is accurate and correct. The company restated the size of its three plantations, the legal compliance of their leases, and their reported annual output of oranges (216,892 tonnes at the end of June 30th 2011).
Additional Perspective
Seymour Pierce analyst Sue Munden cited the decline in share price as “more the result of retail investors, since the institutions in Hong Kong have discussed all these issues thoroughly with management, and we (Seymour Pierce) believe that they are comfortable with the level of corporate governance.” Seymour Pierce restated Asian Citrus shares as a “Buy”.
Company Spotlight
Asian Citrus is a vertically integrated citrus agricultural production company, operating plantations upon which the company cultivates and grows oranges for the Chinese market, selling them as fruit as well as utilising them in the production of juices, concentrates, and other related products.
References
↑ Agrimoney
↑ Chinese Stock Information
↑ EIN News Portugal
