It appears that Hong Kong securities authority, the SFC, should amend its listing rules.
Why? An orange-plantation firm called "Asian Citrus": that's why. Asian Citrus has traded on the Alternative Investment Market of the London Stock Exchange since August 2005. The group's first orange plantation (which was acquired from a precursor entity) is 30.9 sq. kilometers in Hep County, Guangxi province. The second, which the group established, is 37.1 sq kil in Xinfeng county, Ganzhou, Jiangxi province. A third is under development, in Dao country, Human province.
But the recent excitement has nothing to do with the LSE and little to do with the actual business of growing and selling oranges. No ... Asian Citrus was listed on the Hong Kong Exchange last week, and promptly more than 85% of its initial value.
This happened because even before its listing, AC had split its shares 10-for-1. But in the summary section of its listing document, not only did it neglect to mention this fact, but it based its earnings-per-share figure on the number of shares outstanding before the stock split. So the ersatz earnings-per-share figure was ten times the one that an accurate document would have shown. The same shenanigans apply to the company's disclosure of its net tangible asset value.