Thursday, 24 May 2018

Samsonite International accused of 'massaging profits'



Shares in Samsonite International have tumbled after an investor claimed the world's largest luggage maker had questionable accounting practices and poor corporate governance.

 
Blue Orca Capital said the owner of brands including Tumi and American Tourister had concealed slowing growth.


It also accused the firm of massaging profits and inflating margins.


Samsonite said the allegations were "one-sided and misleading" and its conclusions were incorrect.


The company said it would provide additional information in due course and "reserves its right to
take legal action against Blue Orca Capital and/or those responsible" for the 48-page report.
Timothy Parker, chairman of Samsonite, said the report "contained the opinions of a short seller whose interests may not be aligned with those of shareholders in general, and that it may be intended specifically to undermine confidence in the company and its management, and to harm its reputation".


"We intend to draw a line under this matter as quickly as possible, and move on to focus on ... the future growth of our business".


Short selling involves investors borrowing an asset, such as shares, from another investor and then selling that asset hoping the price will fall.


The aim is to buy back the asset at a lower price and return it to its owner, pocketing the difference.


Shares fell about 12% in Hong Kong before being suspended following a request from Samsonite. The stock is expected to start trading again on Friday.


Blue Orca said Samsonite was worth HK$17.59 a share - 43% below its last traded price of HK$30.70. The average analyst target price is about HK$38.


"Samsonite is a mid-level brand masquerading as a premium luxury player," Blue Orca said.


"Samsonite is more sensibly compared to a peer group of mid-tier brands."




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