Huishan Dairy shares fall 90pc in sudden sell-off
HONG KONG: Shares in China Huishan Dairy Holdings plunged more than 90 per cent yesterday, wiping off around US$4 billion (RM17.7 billion) of its market value before trade was halted.
It was not immediately clear what triggered the slide.
In December, United States firm Muddy Waters questioned the firm’s profits and said it had inflated spending on its cattle farms to artificially raise capital expenditure figures.
Muddy Waters said at the time it believed the Chinese dairy firm to be worth “close to zero” because it had misrepresented its self-sufficiency on alfalfa used as feed for cattle, was over-leveraged and overstated its spending.
China Huishan had said the allegations were groundless.
Yesterday, the firm’s trading volume soared to 779 million shares with the bulk of the selloff occurring in the last 20 minutes of trade before midday.
The shares fell to HK$0.25 (14 sen) before rising to HK$0.42 when the trade was halted.
China Huishan chairman Yang Kai controls the company through Champ Harvest, which owns 72 per cent of the firm.
Champ Harvest has a HK$2.4 billion banking facility with Ping An Bank, which is secured by stock held by the controlling shareholder. Reuters