Flushing out

28 November 2016 By Katrina Hamlin Follow @KatrinaHamlin

Short-seller Glaucus alleges fraud at sewage specialist CT Environmental, the second scandal in the industry this year. It is a dirty business but investors will hold their noses: with greener policies and urbanization pressures, China’s wastewater sector is anything but the pits.

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Trading in shares of Hong Kong-listed CT Environmental Group (CT) have been suspended since Nov. 23.

Short-seller Glaucus Research published a report earlier on the day criticizing the wastewater treatment company's accounting practices, prompting a 12.6 percent fall in the shares.

Glaucus says it has found a significant disparity between CT’s reported water treatment volumes, and official government data.

The research firm estimated CT's revenues were at least 30 percent less than reported and valued its shares at HK$0.38, 82 percent below the closing price on Nov. 22.

CT declined to comment on Glaucus’ report to Breakingviews. The company has yet to issue an official response.

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