Shares of a small Chinese kitchen and home appliance producer, Deer Consumer Products, made headlines Friday after the company delayed its 2011 annual report.
In a filing, Deer Consumer (DEER) said it needed more time to assess its disclosure controls and its internal control over financial reporting. The stock was off 13 cents, or nearly 3.5% in mid-morning trading, to $3.49.
Shares had slipped 12% to $3.20 in pre-market trading; the stock was trading over $5 in January.
In related news, Deloitte resigned as auditor of Hong Kong-listed Boshiwa International Holdings, a childrens wear company, and the spate of accounting scandals among U.S.-listed Chinese companies last year may signal more auditor resignations as audit season comes to a close, Reuters reports.
Boshiwa shares (1698.Hong Kong) were halted; Citron Research has more to say on the subject.
Deer Consumer, based in Shenzen, China, has a market capitalization of $118 million, and in recent years has been among the heavily-promoted Chinese reverse mergers in the U.S.
Deer Consumer has taken legal action alleging defamation, and to seek information on an anonymous blogger, in light of negative allegations. In December 2011, it affirmed its full-year guidance and said it would pay its quarterly dividend despite “false market rumors” that caused a 17% decline in the shares to $4.06. Deer said it wasn’t aware of any problems at the time.
Barron’s warned of the hazards in the sector in an award-winning 2010 story, “Beware This Chinese Export,” Aug. 30, 2010 (subscription required). Many small companies based in China have gained U.S. listings by maneuvering into a dormant shell corporation registered for public trading, but some closed shop after short-seller research brought accounting fraud and other problems to light.
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