(Yicai Global) Sept. 13 -- Shares in Telling Telecommunication Holding plummeted by the exchange-imposed limit today after the Shenzhen Stock Exchange questioned the tripling of the Chinese mobile phone distributor’s stock in the weeks before the firm announced it will acquire a new cellphone brand.

Telling’s share price [SHE:000829] closed down 10 percent at CNY24.21 (USD3.75). At the end of July it was worth CNY8.40.

The company is in the early stage of discussions about an acquisition deal and has not entered into a formal agreement yet, Telling said on Sept. 10, without disclosing any further details. Yet the firm’s market value has been swelling since the beginning of August and on Aug. 4 and Aug. 17 the company made two separate announcements to quell rising concerns, saying there were no major events in the pipeline that needed to be disclosed.

The Shenzhen bourse sent out a letter yesterday, querying whether Telling leaked information about the upcoming deal to help shareholder Beijing International Trust reduce its equity, whether it intended to speculate on its stock price, whether it has been engaged in insider trading and whether its two announcements in August were true, accurate and complete.

Speculation is rife as to what sort of business Beijing-based Telling might be planning to acquire, Shanghai Securities New reported today. Last year, the firm paid CNY500 million (USD77.5 million) for a stake in the company that bought out Huawei Technologies’ budget brand Honor. Some market players are saying it is planning further investment in Honor, others that it wants to acquire the Huawei Mate and Pro series and others that it will buy an overseas smartphone brand.

Telling logged CNY77 million (USD11.9 million) in profit in the first half on revenue of CNY37.6 billion. The mobile phone retailer had assets of CNY13.3 billion (USD2.1 billion) as of June 30.

Editor: Kim Taylor