Not happy resumption for firm
By Winny Wang |
April 20, 2011, Wednesday
|
Print Edition
Print Edition
HENAN Shuanghui Investment & Development Co slumped by the daily limit of 10 percent yesterday as shares resumed trading after a month-long suspension due to a food safety scandal.
The listed arm of China's biggest meat processor, Shuanghui Group, dropped 10 percent to 70.15 yuan (US$10.74) per share in Shenzhen yesterday.
"We estimated the scandal will cut Shuanghui's revenue by between 2 billion yuan and 4 billion yuan this year, equivalent to 4.4 percent and 8.9 percent," said Tong Xun, an analyst at Shenyin & Wanguo Securities Co.
"The suspension of Jiyuan Shuanghui Food is the major factor that will affect Shuanghui's income," Tong said.
Shuanghui's shares had been suspended from trading since March 16, one day after China Central Television reported the group's subsidiary in Jiyuan, Henan Province, used pork tainted with the fat-burning drug clenbuterol in its products.
Clenbuterol is a chemical fed to pigs to prevent them from accumulating fat. It is banned as an additive in pig feed in China because it can end up in the flesh of pigs and is poisonous to humans if eaten. Some breeders feed pigs the additive to produce leaner pork which can be sold at higher prices.
Shuanghui Investment said in a statement to the Shenzhen Stock Exchange on Monday that it spent 31 million yuan in March to recall and dispose meat products and it lost 1.34 billion yuan worth of sales last month.
Its first-quarter profit may reach between 265 million yuan and 270 million yuan, up 20 percent and 22.7 percent from a year earlier, according to the statement.
The company also said its asset restructuring plan will continue but the process depends on the investigation into the Jiyuan subsidiary, and Shuanghui will keep in close communication with the securities regulator.
Under the plan, the Shuanghui Group will inject 33.94 billion yuan worth of assets into the listed subsidiary, including all the group's assets relating to pig purchase, slaughter, meat processing and product sales.
The listed arm of China's biggest meat processor, Shuanghui Group, dropped 10 percent to 70.15 yuan (US$10.74) per share in Shenzhen yesterday.
"We estimated the scandal will cut Shuanghui's revenue by between 2 billion yuan and 4 billion yuan this year, equivalent to 4.4 percent and 8.9 percent," said Tong Xun, an analyst at Shenyin & Wanguo Securities Co.
"The suspension of Jiyuan Shuanghui Food is the major factor that will affect Shuanghui's income," Tong said.
Shuanghui's shares had been suspended from trading since March 16, one day after China Central Television reported the group's subsidiary in Jiyuan, Henan Province, used pork tainted with the fat-burning drug clenbuterol in its products.
Clenbuterol is a chemical fed to pigs to prevent them from accumulating fat. It is banned as an additive in pig feed in China because it can end up in the flesh of pigs and is poisonous to humans if eaten. Some breeders feed pigs the additive to produce leaner pork which can be sold at higher prices.
Shuanghui Investment said in a statement to the Shenzhen Stock Exchange on Monday that it spent 31 million yuan in March to recall and dispose meat products and it lost 1.34 billion yuan worth of sales last month.
Its first-quarter profit may reach between 265 million yuan and 270 million yuan, up 20 percent and 22.7 percent from a year earlier, according to the statement.
The company also said its asset restructuring plan will continue but the process depends on the investigation into the Jiyuan subsidiary, and Shuanghui will keep in close communication with the securities regulator.
Under the plan, the Shuanghui Group will inject 33.94 billion yuan worth of assets into the listed subsidiary, including all the group's assets relating to pig purchase, slaughter, meat processing and product sales.
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