Investment Bank Securities Responded To Baosheng International'S Alleged Exaggeration Of Sales Data.

Sporting goods retailers

The International (Holdings) Limited (3813.HK) announced on Sunday night that the group found that it had found a number of incorrect sales records in the December 2016 when the internal review was made in the annual report, which may lead to sales pactions that did not happen before the end of 2016.

Baosheng also pointed out that the above "incorrect sales record" is not significant compared with the company's operating income level.

However, the board of directors held that the incident showed the weakness of the company's financial control. Chen Guolong, chief financial officer of the company, was found to have authorized the approval of the "incorrect sales record". Therefore, the board decided to terminate its employment immediately from January 6th. Besides that, the group chief executive Guangd (Hird) also submitted his resignation to the board of directors and was approved to take effect immediately in January 6th.

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The impact of the incident on Baosheng International (3813.HK) opened 33% on Monday and narrowed down. The deadline was 1.65 at HK $20.29%.

The incident and its parent company Yu Yuan (industry) Group Co., Ltd. (0551.HK) (stock price) dropped 6.88% at the end of the press release, at HK $27.05, the latter being the largest sports leisure footwear manufacturer in the world.

On Monday, investment bank brokerages responded to Baosheng International's allegations of exaggerating sales data and lowered the ratings and target prices of two companies.

Credit Suisse issued a research report which lowered the Yuyuan rating from neutral to big market. The bank believes that the valuation of Baosheng and Yuyuan will fall, and that the accounting accidents, poor management quality and credibility will be mainly affected, and the short-term operation will significantly affect Baosheng international operation and finance.

The bank pointed out that Yu Yuan's forecast of earnings per share in the next two years has dropped by 10% and 7% respectively, reflecting the decline in Baosheng international profits.

In its report, Credit Suisse will reduce its target price from HK $30.2 to HK $24 to HK $24.

Goldman Sachs also released a report on Monday that it will continue to follow closely the development of the matter. It is expected that DDT's report will be released before Baosheng International's annual performance is announced. Baosheng international has said earlier that it does not rule out share repurchase, so the bank maintains a buying rating for Bao Shengguo and maintains the target price of HK $3 unchanged.

Deutsche Bank said that in the short term, Baosheng international management pformation will make the company face major uncertainties. However, the company maintains a positive view of the company's fundamentals. It expects that the business will usher in a number of sustainable driving forces, including Nike, Nike and Adidas to ease its control, improve the effectiveness of the Adidas Adidas sector, and get a high profit margin business this year.

Deutsche Bank said Baosheng's response indicated that it was determined to resume its main partners.

And Adidas's confidence, and the main partners have been informed of the incident and respect for the company's decision, so the bank expects that the incident will not have a significant impact.

According to the world clothing shoes and hat net, Baosheng international has hired DDT Guan Huang Chen Fang accounting firm (hereinafter referred to as DDT) to fully verify the company's accounting records. If any progress is found in the verification process, the announcement will be made again, and it is not expected to affect the announcement of the annual report of the group.

The company also said it was looking for the right person to fill Chen Guolong and Guangd positions. Before finding the right person, the chief financial officer's related duties will be borne by other senior members of the company's accounting department, and the role and responsibilities of the CEO will be represented by the company's executive chairman and chairman Wu Bangzhi.

In the announcement, Baosheng international also said that the "incorrect sales record" incident and the resignation of two persons from Chen and Guan did not have any significant adverse effects on the company's daily business or financial position.

According to the world clothing and shoe net, in November 2016, Baosheng international comprehensive revenue rose 9.1% to 1 billion 221 million 900 thousand yuan per year, 1 billion 195 million yuan in the same period last year, and 11.2% to 14 billion 880 million 900 thousand yuan in the first 11 months.

Baosheng international parent Yuyuan group recovered in November, and its consolidated revenue rose to 3.8% US dollars to 729 million 200 thousand US dollars, reversing the 9 and October downtrend. In 1-11 months, Yuyuan group's consolidated revenue was US $7 billion 735 million 800 thousand.

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