(Yicai Global) Aug. 16 -- The stock price of Chinese milk powder maker Ausnutria Dairy walked back most of its lost ground today after suffering a 20.1 percent drop yesterday due to short-seller Blue Orca Capital's report that alleged that the Chinese company has made up more than one-half of its sales for many years.

Ausnutria's share price [HK: 1717] rose 14.1 percent today to HKD11.10 (USD1.40). The stock was suspended yesterday afternoon, after which it started trading again this morning.

Blue Orca valued Ausnutria's stock at HKD5.78, claiming that the Hong Kong-based firm has inflated its revenues by 52 percent in both 2016 and 2017. The Chinese firm has hidden labor costs, made illegal transactions to affiliates, and also misled consumers as its "goat milk" baby formula is, in fact, made of cow's milk, it added.

Ausnutria is preparing materials urgently and will clarify the short-selling report further as soon as possible, the firm's executive Wu Shaohong told Yicai Global. 

In the first half, Ausnutria's net profit grew 63.8 percent from the previous year to CNY434.9 million (USD61.8 million), its earnings report shows. The firm's operating income rose 21.9 percent to CNY3.1 billion (USD440.2 million).

The allegations contained factual errors and misleading statements and shareholders are advised to be cautious of the short-seller's intention to undermine confidence in the company and its management, the dairy firm said in a report published yesterday.

Editor: Emmi Laine