Hong Kong-based GMT Research has issued a report questioning airline AirAsia Bhd‘s accounting practices, accusing it of using transactions with associate companies to boost its earnings, according to a copy obtained by Reuters.
The report was issued on June 10 to GMT’s subscribers and since then shares in the low-cost carrier have lost 14 percent or 812 million ringgit ($215 million) in market value.
“We are in discussions with the company about our concerns,” GMT’s founder Gillem Tulloch said in a statement on the research house’s website.
An official for AirAsia did not immediately respond to a Reuters request for comment.
Maybank analyst Mohshin Aziz said in a note to clients on Friday that while the airline’s shares had been hit by an independent report accusing it of accounting anomalies, he was maintaining his “buy” call on the stock.
“We believe AirAsia’s accounts are transparent,” Mohshin said in the note. “The auditors have approved the latest 2014 accounts without any qualification.”
A spokeswoman for PwC, the company’s auditor, declined to comment, citing client confidentiality.
For full Reuters’ report read HERE.
GMT Research provides independent insight into markets, sectors and companies throughout Asia. Our unique method of mining a comprehensive collection of corporate financial statements for key data allows us to evaluate the financial health of a company, sectors and the market at large. We also investigate the application of accounting standards by companies and sectors, shedding light on the quality of reported profits. Please read HERE.
It is hoped that En Mohsin Aziz’s confidence was not misplaced otherwise the image of Maybank will be adversely affected.
In view of the seriousness of the GMT Research report on AirAsia’s accounting practices, the Security Commission and KL Stock Exchange (Bursa Kuala Lumpur) are duty bound to carry out an in-depth investigations into the serious allegations by GMT Research with regards to the “AirAsia accounting practices that were using transactions with associate companies to boost its earnings“. Such investigations are very necessary to instil confidence of the investing public to invest in our capital market.