Largest milk producer suspends share trading
China Mengniu Dairy, the mainland's largest milk producer, suspended trading of its shares yesterday as it awaits the results of government tests on all its products after a chemical blamed for infant deaths was found in its baby formula.
Mengniu was among 22 major dairy producers whose products tested positive for melamine, which is being blamed for the deaths of at least three babies and sickening more than 6,000 on the mainland.
The company would recall all related products, suspend its production and offer compensation to affected consumers, it said on its website.
A company spokeswoman said it had asked the General Administration of Quality Supervision, Inspection and Quarantine to test all its products - from liquid milk, yogurt and ice cream to milk formula - and the company said results would be released in a few days.
Shares in other listed dairy firms embroiled in the scandal slumped on shrinking demand and amid concerns the health scare could spread to other dairy products.
The share price of Nasdaq-listed Synutra International, a company in Qingdao that makes and sells milk formula under the brand Shengyuan, has fallen 67 per cent since last Wednesday.
The company had 8.6 per cent of the mainland milk formula market by retail value last year, data from Euromonitor International showed.
Shanghai-listed Inner Mongolia Yili Industrial Group and Bright Dairy and Food slumped 10 per cent, the daily limit before trading must stop.
Milk formula accounted for less than 1 per cent of Mengniu's total revenue last year.
Yili generated 18.67 per cent of its 11.45 billion yuan (HK$13.04 billion) first-half turnover from it.Melamine is believed to have been added to make the milk appear to have more protein.
The health scare also sent other food and beverage stocks falling.
Shares in Want Want China Holdings - Asia's largest rice-cracker maker, which also makes children's dairy drinks - slumped 16.7 per cent before closing down 9.09 per cent at HK$3.
