Investors in Chinese mask maker lose thousands
A Chinese company whose Australian shares doubled ahead of announcing plans to make millions of face masks is now suspended from the stock exchange after auditors said they could not rule out fraud.
Shares in supplements and traditional medicine business Eagle Health Holdings (EHH) vaulted from 11c on February 13 this year to 21.5c on March 6, when it revealed it had purchased machines to make masks and had its first order for 3.2 million of them.
More investors piled in after Sydney-based Oli Capital labelled EHH a "buy" in a report it published on March 9.
"EHH is expected to be a 'safe haven' for Australian investors," Oli's report, originally written in Mandarin, said.
The Daily Telegraph can reveal Oli was not authorised to provide personal financial advice on stocks and that EHH had been paying it just a year earlier. Three weeks after Oli's endorsement EHH stock was officially suspended at 14c after auditors refused to sign off on its accounts and it hasn't traded since.
The Telegraph has confirmed EHH paid Oli about $3000 per month in 2018 and early 2019 for "investor relationship services".
But Oli insists it did nothing wrong and was not being paid by EHH at the time of its "buy" call. "No one paid us for doing the EHH report," Oli CEO Luo Qi said. "We make very clear disclosures in every report that it is our opinion but that readers should take it as non-personal financial advice."
WeChat group member Yihao Fu of Perth, said he invested $17,000 in the company.
He is down 30 per cent and concerned he will end up with nothing. He said he now felt misled by the company because he wasn't told of the past relationship between Oli and EHH. No charges have been laid against the companies or any individuals.
The auditors have since said they still can't get independent access to the bank records of EHH's China business.
"We cannot be satisfied there is no prospect of fraudulent activity," the auditors said, although "we have no evidence of actual fraudulent conduct."
Originally published as Investors in Chinese mask maker lose thousands