West China Says Business Healthy After Short-Seller Note

West China Cement Ltd. (2233) said its business was “healthy” after short-seller Glaucus Research Group questioned its corporate governance and financial statements.

“I don’t know why the company was targeted,” Chairman Zhang Jimin told reporters in Hong Kong today. “Our business is healthy and the outlook is robust.” Zhang owns about 40 percent of the Xi’an-based company, according data compiled by Bloomberg.

The cement-maker fell 1.5 percent in Hong Kong trading today after the report by Glaucus, which seeks to profit from declines in companies’ stock. Moody’s Investors Service had last year included West China among a list of Chinese companies with risky business practices.

“The market has some concern about this company,” said Michelle Leung, a Hong Kong-based BOC International Holdings Ltd. analyst. Still, this isn’t new and not all of the points cited by Glaucus were valid, she said.

The cement-maker closed at HK$1.28 after earlier dropping as much as 16 percent to HK$1.09. The stock, which was halted yesterday, has fallen 55 percent since the Moody’s report last year.

E-mail messages to Glaucus weren’t answered and no contact number is listed on the website of the company, which identifies itself as a California-based research group that also engages in short-selling. The website says its research director is Matthew Wiechert, and that he has a background in investment banking.

Sino-Forest Corp., a Chinese tree grower, sought bankruptcy protection in Canada in March after being accused of overstating assets by short-seller Carson Block’s Muddy Waters LLC.

To contact Bloomberg News staff for this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net; Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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