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Hong Kong’s top well-known stock picker is on the attack once more, criticizing the debts of one of the metropolis’s top performers this 12 months.
Kingdee International Software Group Co. Dropped 14 percent at the near Monday as the worst performer at the Hang Seng Composite Index after David Webb published a vital record calling it a “bubble stock.” Webb no longer specified whether or not he had a quick role within the stocks, nor did he think they need to be well worth.
The business enterprise “has depended on sector-particular tax breaks, authorities offer, property investment gains and questionable transactions with related parties to ebook any profit in any respect,” Webb wrote in a publish tweeted throughout the town’s one-hour lunch wreck. An external representative for Kingdee said management is confident about its destiny and considers its method an achievement.
Webb, a former Barclays Plc banker, based a well-accompanied internet site decades ago that offers away his research on Hong Kong’s publicly traded companies. He frequently advises readers to live clear of certain firms because of corporate governance troubles — and is regularly right. Stocks on his “now not to personal” lists have lost $16 billion in their fee, considering that he warned against buying them.
Kingdee had rallied fifty-three percent this 12 months through Friday’s close to close to a document excessive, trading at a whopping 60 times projected earnings. Its annual document ultimate week changed into welcomed by analysts, many of whom raised their charge targets on the inventory after Kingdee said sales from cloud services surged nearly 50 percent.
“Investors are taking this excuse to lock in the profit as the valuation of Kingdee is at the stressful level,” said Kingsway Group Services Ltd.’s Steven Nie, one of every of most effective analysts tracked by using Bloomberg who recommends selling the inventory. “There have been situation about its cloud business after it decided to accumulate the cloud section from its discern, as it doesn’t make cash.”
Citigroup Inc. Analysts are sticking to their bullish stance on the inventory although it has been “risky,” in keeping with a Monday note that addressed Webb’s put up. That’s after the brokerage hosted investor meetings with Kindle control.