Tainted pork may hit group plan
By Lydia Chen |
March 19, 2011, Saturday
|
Print Edition
Print Edition
THE scandal in which an illegal additive was found in some of Shuanghui Group's pork products is likely to sink the company's reorganization plan.
The suspension in the trading of shares of the group's Shenzhen-listed subsidiary Henan Shuanghui Investment and Development Co has also caused hefty losses for many mutual funds. The trading has been suspended since Wednesday following a plunge by the daily limit of 10 percent on Tuesday.
According to the group's reorganization plan announced in November, the parent will inject 33.94 billion yuan (US$5.16 billion) worth of assets into the listed subsidiary, including all the group's assets relating to the business of pig purchase, slaughter, meat processing and product sales. The reorganization means another affiliate Jiyuan Shuanghui Food Co, at the center of the scandal, could be part of the listed firm seeking public funds if it is included in the plan.
But an ongoing investigation initiated by local governments and the Ministry of Commerce could delay or possibly scupper the whole plan if the probe expands to other food subsidiaries under the Shuanghui Group, China's largest meat processor, analysts said.
There is no news on when trading in Henan Shuanghui will resume.
On Tuesday alone, 56 mutual funds which have been piling on the stock since the fourth quarter of last year suffered a combined loss of nearly 1.27 billion yuan, according to Sina.com.
The stock was strongly recommended by many analysts before the scandal broke out as the industry leader was tipped to see rapid profit growth from the country's soaring inflation.
Analysts at Huatai Securities have advised investors not to buy the stock as the incident has already tarnished the brand's reputation.
Operations at both Shuanghui Group and the listed firm could be halted if the investigation expands, the Economic Information Daily quoted an unnamed lawyer as saying.
The suspension in the trading of shares of the group's Shenzhen-listed subsidiary Henan Shuanghui Investment and Development Co has also caused hefty losses for many mutual funds. The trading has been suspended since Wednesday following a plunge by the daily limit of 10 percent on Tuesday.
According to the group's reorganization plan announced in November, the parent will inject 33.94 billion yuan (US$5.16 billion) worth of assets into the listed subsidiary, including all the group's assets relating to the business of pig purchase, slaughter, meat processing and product sales. The reorganization means another affiliate Jiyuan Shuanghui Food Co, at the center of the scandal, could be part of the listed firm seeking public funds if it is included in the plan.
But an ongoing investigation initiated by local governments and the Ministry of Commerce could delay or possibly scupper the whole plan if the probe expands to other food subsidiaries under the Shuanghui Group, China's largest meat processor, analysts said.
There is no news on when trading in Henan Shuanghui will resume.
On Tuesday alone, 56 mutual funds which have been piling on the stock since the fourth quarter of last year suffered a combined loss of nearly 1.27 billion yuan, according to Sina.com.
The stock was strongly recommended by many analysts before the scandal broke out as the industry leader was tipped to see rapid profit growth from the country's soaring inflation.
Analysts at Huatai Securities have advised investors not to buy the stock as the incident has already tarnished the brand's reputation.
Operations at both Shuanghui Group and the listed firm could be halted if the investigation expands, the Economic Information Daily quoted an unnamed lawyer as saying.
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