Zoomlion Bonds Fall, Stock Halted After Report on Sales
Zoomlion Heavy Industry Science and Technology Co., China’s second-largest construction equipment maker, halted stock trading and saw its bonds decline after a report on Sina.com accused it of falsifying sales.
Shares were suspended in Shenzhen and Hong Kong after the report, and trading will resume once the company issues a filing on the matter, Changsha-based Zoomlion said in a statement today. The report on Sina.com was by xkb.com, the website of Guangzhou-based Xin Kuai Bao Newspaper.
News reports questioning Zoomlion’s sales data are forcing the company to halt stock trading for a second time this year. 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.
“This has happened a few too many times in the past six months for it to be forgotten or swept under the rug,” Vik Chopra, a Hong Kong-based analyst at Sun Hung Kai Financial Ltd. wrote in an e-mail. “The company has to take drastic action.”
Hong Xiaoming, a vice president in charge of the finance department, said in a mobile-phone text message that the company will issue a clarification today. In January, Zoomlion halted trading on its shares (000157) in Hong Kong after Ming Pao Daily cited an unsigned letter that alleged the company’s sales were exaggerated. Zoomlion has repeatedly denied the allegations.
Zoomlion’s $600 million of 6.125 percent bonds due December 2022 slumped as much as 2.6 cents on the dollar to 94.9 cents today in Hong Kong, according to Bloomberg prices. The bonds were quoted at 95 cents as of 1 p.m., the lowest level since March 4 and heading for the biggest daily decline since Feb. 4, Bloomberg prices show. Its Hong Kong-traded stock has slumped 31 percent this year.
The construction-equipment maker and bigger rival Sany Heavy Industry Co. (600031) also 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.
Zoomlion makes equipment including concrete pumps, cranes and excavators. Chairman Zhan Chunxin said in January that sales increased last year after the company offered new products and hired more people.
China’s 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 earlier 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.
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