What should a company do when targeted by short-selling firms preparing to launch an attack?

When a company is targeted by short-selling firms, it’s akin to an individual being besieged by rumors—spreading falsehoods takes little effort, but refuting them demands immense energy. Accusing a company of financial fraud is easy; proving the absence of such misconduct, however, is extremely difficult. The most effective immediate measure is to apply for a trading suspension, shielding the company from stock price volatility and preventing some investors from suffering massive financial losses. Second, issue a clarification announcement. Short-selling firms typically list several allegations when launching an attack; the company need only address each point directly and systematically. When issuing such announcements, always stick strictly to facts—preferably substantiated with hard data and tax records. Avoid obfuscating or confusing concepts, as doing so will only drag the company deeper into trouble. Netizens may think: “They must have been caught red-handed—their refusal to respond head-on proves it!” If the announcement gives the impression that the company is deliberately evading reality, the battle is already lost—and regaining momentum becomes exceedingly difficult. Third, launch a counteroffensive. Invite influential media outlets and prominent online opinion leaders (KOLs) to visit the company and publicly rebut the short-sellers’ allegations based on their firsthand observations. Where feasible, consider initiating a reverse short against the short-selling firm itself—unearthing its own questionable practices to demonstrate that it is not an objective, impartial entity, but rather a profit-driven actor. Public opinion countermeasures must generate maximum impact in the shortest possible time—turning the short-selling firm into the collective target of public scrutiny. Fourth, engage a third-party independent institution to conduct an investigation. When under attack, no matter how vigorously the company defends itself, skepticism remains: observers naturally assume the company will defend its own interests. To silence all doubts definitively, the company should retain a reputable, independent third-party institution to carry out a thorough investigation—and let its authoritative findings quell all rumors and speculation. Fifth, file a countersuit against the short-selling firm. Short-selling reports cannot be issued arbitrarily; once published, they become evidence capable of materially affecting capital market stock prices. The targeted company therefore has full grounds to sue the short-selling firm in court—transforming passive defense into proactive legal action, instilling fear in the attacker. Simultaneously, amplify media coverage of the lawsuit—this further strengthens the company’s strategic initiative. Sixth, resume trading and initiate a share repurchase program. Once the company regains the upper hand, it may apply to lift the trading suspension. To stabilize and boost the stock price, the company—or its founder—can announce a share repurchase, ideally at a premium, thereby demonstrating unwavering commitment to protecting investor interests. Many companies, reluctant to bear the cost of repurchasing shares themselves, instead encourage employees to buy shares—and even guarantee minimum returns over a specified holding period, promising to cover any shortfall if losses occur.

Zhizheng Co., Ltd.: A leading semiconductor materials company—a scarce asset worth cherishing.

Moreover, Tongfu Microelectronics—the A-share leader in semiconductor packaging and testing—will hold a 4.2% equity stake in the company, becoming a strategic shareholder. In fact, Tongfu Microelectronics ranks among the top five customers of Advanced Packaging Materials International Limited. Source: Wind; Report on Major Asset Swap, Issuance of Shares and Cash Payment for Assets Acquisition, and Concurrent Fundraising for Supporting Purposes, along with Related Party Transactions ASMPT’s entry as a strategic shareholder will optimize the listed company’s equity structure and corporate governance framework. This marks the first instance in China’s A-share market where an international semiconductor industry leader has become a strategic shareholder of a domestic listed company—powerfully advancing international cooperation in the semiconductor sector and guiding more high-quality foreign capital toward long-term investment in China’s A-share capital markets. 3. Reasonable Valuation—Bright Prospects Ahead Let’s now examine the core acquisition price. Directly reviewing the income statement: from 2022 through the first nine months of 2024, Advanced Packaging Materials International Limited reported revenues of RMB 3.13 billion, RMB 2.21 billion, and RMB 1.8 billion, respectively; net profits attributable to shareholders were RMB 315 million, RMB 20 million, and RMB 37 million, respectively. At first glance, revenue declined in 2023, and net profit fluctuated significantly. As of September 30, 2024, the company’s net assets attributable to shareholders stood at RMB 2.966 billion, with total assets amounting to RMB 3.95 billion. Source: Wind; Report on Major Asset Swap, Issuance of Shares and Cash Payment for Assets Acquisition, and Concurrent Fundraising for Supporting Purposes, along with Related Party Transactions Regular readers of my articles know well that the semiconductor industry faced widespread downturns in 2023—not quite catastrophic, but certainly marked by broad-based declines in both revenue and profit across the board. Thus, the company’s 2023 performance decline aligns closely with broader industry trends. Starting in 2024, the semiconductor industry has entered a recovery phase, making new highs in net profit highly probable going forward. Additionally, Advanced Packaging Materials International Limited faces unique circumstances: since operating independently in 2020, the company has sought to resolve long-standing capacity constraints and better seize market opportunities. Accordingly, it began constructing a new factory in Chuzhou in 2021, with phased commissioning and capitalization commencing in 2022. Capitalizing fixed assets during an industry downturn often leads to losses: the Chuzhou factory incurred losses of RMB 103 million, RMB 90 million, and RMB 65 million in 2022, 2023, and the first nine months of 2024, respectively. After excluding the impacts of share-based payments, PPA-related depreciation and amortization arising from prior acquisitions, non-recurring gains/losses, and losses from the newly built Chuzhou factory, the adjusted net profits attributable to shareholders were RMB 467 million, RMB 179 million, and RMB 140 million for 2022, 2023, and the first nine months of 2024, respectively. Based on the 2022 adjusted net profit of RMB 467 million, the RMB 3.5 billion acquisition price implies a PE ratio of just 7.5x—a genuinely fair and reasonable valuation. From a price-to-book (PB) perspective: as of September 30, 2024, the company’s net assets attributable to shareholders totaled RMB 2.966 billion; the RMB 3.5 billion acquisition price translates to a PB ratio of only 1.18x—truly a fair valuation for a scarce, core semiconductor materials asset. Notably, the valuation of Advanced Packaging Materials International Limited employed the market approach—an especially appropriate methodology for cyclical industries like semiconductors. Had the valuation relied instead on simplistic, far-future earnings projections, the transaction would likely have fallen into the classic trap of high valuation → high goodwill → subsequent goodwill impairment. By adopting the market approach, long-term investors are spared the looming ‘Sword of Damocles’ posed by excessive goodwill.

Solstice Advanced Materials Shares Shorted: Short Interest Down 48.3% in September

Sep 29, 2026

Solstice Advanced Materials reported a 48.3% decrease in short interest in September while beating quarterly EPS estimates. Institutional investors increased positions as analysts maintain a "Moderate Buy" rating.

MarketBeat

2026-07-14

Ferguson Wellman Capital Management Inc. Reduces Stake in Solstice Advanced Materials

2026-07-24

HSBC Holdings PLC Purchases 28,711 Shares of Solstice Advanced Materials

2026-07-31

Solstice Advanced Materials (SOLS) Stock Still Looks Pricey Despite Its 35% Slump

2026-07-31

RBC Cuts Price Target on Solstice Advanced Materials to $82 From $102, Keeps Outperform Rating

2026-07-31

Why Solstice Advanced Materials (SOLS) Stock Is Up Today