HONG KONG (dpa-AFX) - Shares of Hong Kong-listed Samsonite International S.A., the world's biggest luggage maker, tumbled almost 10 percent in Thursday's trading after a short seller issued a report saying that the company suffered from questionable accounting practices and poor corporate governance.
Blue Orca Capital LLC, a newly formed Texas-based activist investment fund, issued a report saying it suspects Samsonite of concealing slowing growth through debt-fueled acquisitions.
It also alleged that Samsonite used highly questionable purchase price accounting to massage earnings and inflated margin.
'Samsonite is a mid-level brand masquerading as a premium luxury player. Samsonite is more sensibly compared to a peer group of mid-tier brands,' Blue Orca said in its report.
Blue Orca added that Samsonite should be trading at HK$17.59 per share, 43 percent below its last traded price of HK$30.70 per share.
Blue Orca was launched earlier in May by Soren Aandahl, a co-founder of California-based short selling firm Glaucus Research.
Shares of Samsonite fell 9.8 percent on Thursday, marking its biggest one-day drop since June 2012. Trading in the company's shares were halted after the report was released.
Samsonite, which has a market capitalization of $5.6 billion, said in a statement that trading in its shares were suspended on Thursday at its request, 'pending the release of an announcement in respect of further clarification on a report containing allegations against the company.'
Samsonite's shares touched a record high of HK$38.60 per share in April amid market expectations of strong improvement in the luxury retail sector.
For the recent quarter ended March 31, Samsonite reported a nearly 19 percent increase in profit from the year-ago period to $43.9 million, while net sales rose 21 percent to $888.2 million.
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