Cement partners' winning ways

Italcementi Group, an Italian-listed cement company, has faith in West China Cement despite a US short-seller's report alleging fraud at the mainland cement producer, said Ma Weiping, Italcementi's chief representative in West China Cement.

In August, Glaucus Research, a US short-seller, published a report alleging inflated profits, fraud and suspicious acquisitions of mainland cement plants by West China Cement, which has denied the allegations.

"We already did lots of due diligence on West China Cement, so we felt the short-seller's report is not factual," said Ma at a gathering with journalists. "Thus, it has not shaken our confidence in West China Cement."

Just before the Glaucus report, Italcementi, the world's fifth-largest cement company, became the Hong Kong-listed firm's third-largest shareholder on June 28 with a 6.25 per cent stake. Under this deal, Italcementi's executive, Ma, was appointed a non-executive director of West China Cement.

"I don't think West China Cement has serious corporate governance problems. There are some errors in Glaucus' report," said Daiwa Securities analyst Felix Lam.

He said Glaucus' allegations regarding West China Cement's selling prices were inaccurate and its comparison of prices between Shaanxi province, where West China Cement sells most of its product, and other provinces was unfair.