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Rongsheng stock sinks to new low
By Richard Fu |
July 31, 2012, Tuesday
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Print Edition
Print Edition
SHARES of China Rongsheng Heavy Industries Group Holdings tumbled to a record low yesterday after a separate company controlled by its billionaire chairman was being investigated by the US securities regulator for insider trading.
The US Securities and Exchange Commission on Friday filed a complaint against Hong Kong-based Well Advantage, controlled by Rongsheng Chairman Zhang Zhirong, and other traders, alleging they bought shares in US-listed Canadian oil producer Nexen Inc based on confidential information just days before a US$15.1 billion bid by China-based CNOOC for Nexen was announced.
Rongsheng, China's top private-sector shipbuilder, plunged as much as 19.3 percent to HK$1.13 (14.6 US cents) yesterday before closing at HK$1.17. Its IPO price was HK$8 in November 2010.
Rongsheng said its business won't be affected as Zhang, its chairman and a non-executive director, doesn't have any executive role in the company.
"The day-to-day business activities and operation of the group is and will continue to be carried out by the management team, of which Mr Zhang is not a member," it said.
Yesterday's tumble also came after the company issued a warning that first half earnings are expected to "decrease significantly," citing a slump in orders and prices for new ships.
Barclays said in a note Rongsheng presents significant company-specific risk as the news about Zhang comes on the back of other operational and credibility issues.
Rongsheng is in a strategic partnership with CNOOC. CNOOC was a cornerstone investor in Rongsheng's 2010 IPO. CNOOC declined to comment.
The US Securities and Exchange Commission on Friday filed a complaint against Hong Kong-based Well Advantage, controlled by Rongsheng Chairman Zhang Zhirong, and other traders, alleging they bought shares in US-listed Canadian oil producer Nexen Inc based on confidential information just days before a US$15.1 billion bid by China-based CNOOC for Nexen was announced.
Rongsheng, China's top private-sector shipbuilder, plunged as much as 19.3 percent to HK$1.13 (14.6 US cents) yesterday before closing at HK$1.17. Its IPO price was HK$8 in November 2010.
Rongsheng said its business won't be affected as Zhang, its chairman and a non-executive director, doesn't have any executive role in the company.
"The day-to-day business activities and operation of the group is and will continue to be carried out by the management team, of which Mr Zhang is not a member," it said.
Yesterday's tumble also came after the company issued a warning that first half earnings are expected to "decrease significantly," citing a slump in orders and prices for new ships.
Barclays said in a note Rongsheng presents significant company-specific risk as the news about Zhang comes on the back of other operational and credibility issues.
Rongsheng is in a strategic partnership with CNOOC. CNOOC was a cornerstone investor in Rongsheng's 2010 IPO. CNOOC declined to comment.
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