(News Bulletin 247) – The specialist in electronic labels is once again the subject of an attack by Gotham City Reasarch. But for the market, the accusations made against SES-imagotag are not solid enough, and the title is on the rise on the Paris Stock Exchange.

Both SES-imagotag investors and the market were feverishly awaiting the publication of the second part of Gotham City Research’s report on the electronic tag specialist. The first attack of the short seller had led to a fall of nearly 60% of the French group on June 22, on the Paris Stock Exchange.

In a long 54-page document entitled “The fish rots from the head”, Gotham City Research formulates new accusations against the French group. The short seller who sets himself up as a vigilante of the financial markets, carried out “a more in-depth examination” of the management and the board of directors of the company. This management audit “reveals misconduct and conflicts of interest that seem as serious, if not more so, than the accounting irregularities that we had identified”, abounds Gotham City Research.

Leaders who are “problematic”

To illustrate his point, he says he “discovered that members of the management of SES-imagotag secretly own the property in Austria, where the R&D center” of the electronic label specialist is based. “SESL is the tenant and the members of the management are the owners”, adds Gotham City which specifies that the transactions related to this real estate “are between undisclosed related parties”.

“These leaders are not the only ones to pose a problem” for Gotham City Research, which questions the independence of the members of the board of directors of SES-imagotag.

“Two of the three members of the audit committee do not appear to be independent, as they hold very large stakes in the shares of SES-imagotag through an illiquid common vehicle called SESIM”, which owns 10% of the French group. . For the short seller, the “financial well-being of these “independent” members of the board of directors is strongly linked to the value of the shares of SES-imagotag”, which for Gotham City, “compromises their independence and judgment “.

A wet firecracker

Gotham City Research also reaffirms that it has pointed to “accounting irregularities” and that “SES-Imagotag’s financial reports, including its cash balances, are suspect and/or materially incorrect, and that annual reports for recent years should be restated”. .

But this time, the second salvo from Gotham City has the effect of a wet firecracker on the Paris Stock Exchange. Investors are ignoring these new attacks, which they deem not very credible. SES-imagotag signs the biggest increase in the SBF 120 index, and jumps 27% to 114.40 euros, around 10:45 am, after a peak at +41%.

Maxence Dhoury, an analyst at Portzamparc, told Reuters that, “at first glance, the second report did not seem as severe as the previous one”, explaining the sharp rise in the stock on Friday.

Friday’s stock market reaction therefore contrasts with the bamboo hit on SES-imagotag caused by the first attack on Gotham City on June 22. The group had then collapsed by nearly 60% on the stock market, when it resumed trading the day after the release of the vitriolic research note from the short seller. The latter accused SES-Imagotag of having published “misleading, incorrect and deficient” financial reports between 2020 and 2022, in connection with its main shareholder, the Chinese BOE Technology.

Management then immediately stepped up and published several responses to the allegations made by Gotham City Research. Last week, the group had once again counter-attacked based on a certificate produced by its auditors, Deloitte and KPMG, concerning the accounting of sales to BOE.

Thumbing its nose at Gotham City Research and its accusations aimed at “destabilizing” it, the company took the initiative at the end of June to anticipate its usual schedule to announce the orientation of its activity for the first half of the year. The group thus expects to achieve a “historic” half-year, with growth in consolidated turnover of approximately +30% in line with its annual forecasts.

Earlier this week, the electronic label specialist announced several commercial successes in the United States, including the signing of a contract with one of the largest American chains of convenience stores.

These multiple communications aim to restore the reputation of SES-imagotag which had then been seriously tarnished by the accusations of Gotham City Research. The title has recovered more than 60% since its black session of June 23, but remember that it was evolving not far from 170 euros on the Paris Stock Exchange before the attack on Gotham City Research.