Zoomlion Says It’s Checking Data After Report on SalesJasmine Wang
Zoomlion Heavy Industry Science & Technology Co., China’s second-largest maker of construction equipment, denied that it falsified sales as alleged in a news report published May 27.
That article saying sales were improperly accounted for was “distorted” and “misleading,” Zoomlion said in a Shenzhen stock exchange filing yesterday. KPMG and one other auditor signed off on the company’s 2012 financial report, the Changsha, China-based company said in the statement.
Trading of Zoomlion shares in Shenzhen and Hong Kong has been halted since Sina.com published the online article by the Xin Kuai Bao newspaper May 27. The halt is the second time this year that the company has done so following reports questioning its sales data.
“Similar unsigned accusations have popped out one after another, making it very difficult for the company to resolve at one go,” said Kenny Tang, general manager of AMTD Financial Planning Ltd., an advisory company in Hong Kong.
In a separate statement to the Hong Kong stock exchange yesterday, Zoomlion called the article’s allegations “false, groundless and misleading,” and said it had applied to resume trading in Hong Kong today.
In January, Zoomlion halted share trading in Hong Kong after Ming Pao Daily cited an unsigned letter accusing the company of exaggerating sales. The equipment maker has denied the allegations.
Chinese companies’ finances have drawn increased scrutiny after short seller Carson Block’s Muddy Waters LLC uncovered irregularities including those at now-bankrupt Sino-Forest Corp. in 2011.
Zoomlion’s Hong Kong-traded stock fell 0.9 percent to HK$7.92 on May 27 and has slumped 31 percent this year. The shares in Shenzhen last traded unchanged at HK$7.29 on May 24 and have dropped 21 percent in 2013.
Zoomlion, 16.2 percent owned by the government of Hunan province, makes equipment including concrete pumps, cranes and excavators. The company will probably get financial support from the provincial government if needed, AMTD’s Tang said.
The construction-equipment maker and bigger Sany Heavy Industry Co. face a drop in orders as China’s slowing economic growth and government curbs on the property market sap demand. Zoomlion’s first-quarter profit plummeted 72 percent, the company said last month.
Following the Ming Pao report in January, Chairman Zhan Chunxin said sales increased last year after the company offered new products and hired more people.
China’s economic growth unexpectedly slowed to 7.7 percent in the first quarter, while remaining above the government’s full-year target of 7.5 percent. Data this month on fixed-asset investment and factory production missed forecasts and gauges of manufacturing and service industries declined. The economy expanded 7.8 percent in 2012, the slowest pace in 13 years.