Asian Citrus shares plunged 14% in London, and 18% in Hong Kong, after the orange grower became the latest Chinese company targeted by allegations of incorrect accounting.

Hong Kong-based Next magazine- which has been at the forefront of the drive to expose fraud among listed Chinese groups – questioned the accuracy of the fruit and juice company's statements on land ownership, fruit production and guidance on plantation valuation.

The claims, which followed a visit to Asian Citrus's Xinfeng plantation last month, initially sent the group's shares sharply lower.

Accounting at Chinese groups is a sensitive topic in financial markets following fraud allegations which have triggered steep losses, and the suspension of trading in shares such as timber group Sino-Forest and Chaoda Modern Agriculture - a major Asian Citrus shareholder.

'Not factually accurate'

However, Asian Citrus's Hong Kong shares recovered some ground to close down 12.6% at HK$4.24, while the London-listed stock trimmed its losses below 8%, after the group denied Next's claims.

"The content of the [Next] article are not factually accurate," the group said, noting that its land leases had been officially registered and confirmed, and defending its reported output and sales figures.

"The group has very efficient and comprehensive internal control systems to measure and audit its plantations' production and corresponding revenue," the company said.

A fall-off in the change in grove valuations this year reflected the end of a plantation programme at Xinfeng, where no more orange saplings were being upgraded into trees.

'Strong rebuttal'

The group was supported in its "strong rebuttal" by Seymour Pierce analyst Sue Munden, who restated a "buy" rating on Asian Citrus shares.

The drop in the stock "is more the result of retail investors since the institutions in Hong Kong have discussed all these issues thoroughly with management, and we believe they are comfortable with the level of corporate governance," she said.

Asian Citrus shares closed 9.0% down at 38p in London.

Separately, shockwaves from the collapse in Sino-Forest shares returned to Paulson & Co, which lost an estimated $460m on its holding in the timber group, when the hedge fund was sued by a former investor alleging it had failed to undertake "proper initial due diligence" before buying shares.