Shares of SMC, Nidec tumble after short sellers question accounting, valuation

SMC

13/12/2016 04:41

TOKYO, Dec 13 (Reuters) - Shares of Japanese factory 
equipment maker SMC Corp  6273.T  and electric motor maker Nidec 
Corp  6594.T  tumbled on Tuesday after two short-selling 
research firms questioned the stocks' valuations and said they 
were set to slide.  
    SMC dived as much as 11 percent to a more than four-month 
low of 26,355 yen in morning trade after Well Investments 
Research, registered in the British Virgin Islands, said that 
SMC "has 'fake' cash and dramatically overvalued inventory on 
its balance sheet as a result of inflated margins if not other 
undisclosed losses." [http://www.wellinvestmentsresearch.com/en/smc1/ 
] 
    Well Investments also said that it rates the stock a strong 
sell with maximum downside of 85 percent. 
    SMC, which has a 2 trillion market value, denied the report 
and released a statement saying that it follows an appropriate 
accounting method and has a completely different understanding 
from the short-seller's view.  urn:newsml:reuters.com:*:nTSXM6f5d1  
    Nidec, which has a 3 trillion market value, fell as much as 
5.9 percent to 9,301 yen, near a two-month low, after U.S.-based 
Muddy Waters LLC criticised that the company, saying it has 
missed short-, medium- and long-term earnings projections. [http://www.muddywatersresearch.com/research/6594-jp/mw-is-short-nidec/ 
] 
    Nidec could not be reached for comment. 
    The criticisms of SMC and Nidec come as short-sellers, who 
made their names and fortunes wiping billions off Chinese and 
Southeast Asian companies, have been setting their sights on 
Japan in recent months after a series of accounting scandals 
amplified concerns about weak corporate governance there. 
 urn:newsml:reuters.com:*:nL3N1AX2M7    
    In late July, Glaucus Research Group took aim at Itochu 
Corp's  8001.T  accounting practices, triggering a slide in its 
shares and sparking angry denials from the Japanese trading 
house. In August, U.S.-based short-selling firm Citron Research 
attacked Cyberdyne Inc  7779.T  in its report saying that its 
stock price is set to fall sharply.  urn:newsml:reuters.com:*:nL3N1AX2RK  urn:newsml:reuters.com:*:nL4N1AP13D 
    Well Investments also criticized trading house Marubeni Corp 
 8002.T  earlier this year. 
 
 (Reporting by Ayai Tomisawa; Editing by Shri Navaratnam) 
 ((ayai.tomisawa@thomsonreuters.com; 81-3-6441-1875; Reuters 
Messaging: ayai.tomisawa.thomsonreuters.com@reuters.net)) 
 
Keywords: JAPAN SMC/SHORTSELLER