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  • Oct 31, 2014
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Zoomlion shares tumble on claims over sales

PUBLISHED : Thursday, 10 January, 2013, 12:00am
UPDATED : Thursday, 10 January, 2013, 4:21am

Zoomlion Heavy Industry Science and Technology, the country's second-biggest construction equipment maker, fell the most in eight months in Hong Kong yesterday after a newspaper said an anonymous letter questioned its sales.

Zoomlion fell 6.4 per cent to close at HK$11.04, the biggest decline since May 7 last year. Its Shenzhen-traded shares dropped 3.2 per cent to 8.90 yuan (HK$11.08).

The company said on Tuesday it did not exaggerate earnings and that allegations about its financial information were "false, groundless and misleading".

Construction equipment makers face a glut on the mainland, and companies' finances are under heightened scrutiny after short seller Muddy Waters uncovered irregularities including those at now-bankrupt Sino-Forest.

"No one really knows who this letter is from," said Vik Chopra, an analyst at Sun Hung Kai Financial Research.

"People may be thinking the stock has gone up quite a bit for a while - let's take profit, sit back and see how the whole thing plays out."

The Hong Kong-traded stock's 14-day relative strength index, measuring how rapidly prices have advanced or dropped during a time period, was at 63 on Tuesday and hit 74 three weeks ago. Readings above 70 indicate a price may be poised to fall, according to some traders.

Zoomlion statements to the Shenzhen and Hong Kong stock exchanges were in response to the report about the letter in the Ming Pao Daily, which said the note was also sent to the company and the Securities and Futures Commission.

The maker of cranes and concrete pumps said its sales follow Chinese accounting rules and that its financial report for the six months ended June was prepared in compliance with international accounting standards. Zoomlion, based in Changsha, halted trading in its stock on Tuesday.

"The market will not see the full-year audited report until March, so meanwhile, there will be concerns on whether the SFC would launch an investigation on the back of those allegations," said He Saiyi, an analyst at Macquarie Capital Securities.

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