SHANGHAI (BLOOMBERG) - Shares of China's largest dairy farm operator, Hong Kong-listed China Huishan Dairy Holdings Co, were suspended on Friday (Dec 16) after short seller Carson Block's Muddy Waters Capital said the company is "worth close to zero" and questioned its profitability in a report.

The company's shares slid as much as 4.3 per cent to HK$2.69 on Friday, the lowest in 15 months, before being suspended in Hong Kong. Huishan's market value post-suspension is HK$37.1 billion. China Huishan officials said they couldn't immediately comment on the report.

The Muddy Waters report alleged that China Huishan had been overstating its spending on its cow farms by as much as 1.6 billion yuan to "support the company's income statement."

The report also alleged that the company made an unannounced transfer of a subsidiary that owned at least four cow farms to an undisclosed related party and Muddy Waters concluded that Chairman Yang Kai controls the subsidiary and farms.

Those findings came from several months of research including visits to 35 farms and five production facilities, drone flyovers of China Huishan sites and interviews with alfafa suppliers, said Muddy Waters. Muddy Waters said it has shorted Huishan's stock.

To raise money for a share buyback, the company sold a quarter of its cow herd - some 50,000 animals - to a leasing company in May and then rented them back.