(Yicai Global) July 18 -- Shares of Han's Laser Technology Industry Group slumped in the wake of a report that claimed funds earmarked for the Chinese company's European research center were in fact illicitly diverted into a five-star hotel development.
The laser equipment maker's stock price [SHE:002008] slid 9.11 percent today to close at CNY28.55 (USD4.15), despite earlier denying the allegations made by a research company.
Tiger Vision Financial Research questioned the authenticity of Han's Laser's European R&D center in a report on July 16, suspecting that the money allocated for the project may have been embezzled, the Securities Times reported today.
Han's Laser announced plans for an R&D center in Switzerland in 2011. The budget has now spiraled to CNY1.1 billion (USD160 million) from an initial forecast of CNY50 million (USD7.3 million) after eight years, exceeding 10 percent of its net assets. Only 64 percent of it had been built as of the end of last year, and Han's Laser did not disclose this information to regulators.
Meanwhile, Han's Laser Chairman Gao Yunfeng invested SEK100 million (USD10.7 million) to build a luxury hotel in Sweden, construction on which is set to wrap up this year.
"The European research and development center is an independent project of the listed company that has no relationship with the project invested in by major shareholders, and there is no misappropriation of funds," the Shenzhen-based company said in a July 12 statement on interactive stock data platform Eastmoney.
The R&D project is in the hands of Han's laser's wholly owned European unit and the investment has been raised six times from 2012 to 2019, which is in line with the guidelines for information disclosure, according to the board secretary's office.
The company's first-half net profit fell as much as 65 percent to between CNY357 million and CNY407 million in the first half from a year earlier, it said in a preliminary earnings report on July 13. Profit was about CNY1 billion in the first half of last year. It blamed slowing orders from US tech colossus Apple as a key cause.
Editor: Ben Armour