Hopson tumbles on report of probe against chairman

PUBLISHED : Saturday, 21 February, 2009, 12:00am
UPDATED : Saturday, 21 February, 2009, 12:00am

Hopson Development Holdings shares plunged as much as 50.62 per cent yesterday after a report that its chairman, Chu Mang-yee, was implicated in the criminal investigation of Wong Kwong-yu, the former chairman of Gome Electrical Appliances Holding.

In a sign that the high-profile economic crime case against Wong may be widening, Apple Daily reported that Mr Chu was under investigation by law enforcement agencies in Dongguan as he was suspected of being involved in the Wong probe.

Both Mr Chu and Wong grew up in Guangdong province and knew each other well, the newspaper said.

Wong, who has been under investigation for financial crimes since November last year, is reportedly facing charges of manipulating the prices of shares in two companies. He resigned as chairman and director of Gome on January 19.

Hopson shares plummeted to as low as HK$2.38. They then rebounded to close with a loss of 27.39 per cent at HK$3.50 after the company issued a statement that 'the contents of the article have no basis in fact'. Hopson officials were unavailable for further comment.

Mr Chu is the latest person to be dragged into the investigation of Wong, the founder of the country's largest electrical goods retailer.

Wong's wife, Du Juan, his brother, Wong Chung-yam, and Xu Zhongmin, the chairman of Centergate Technologies (Holdings), are all reportedly being investigated. Others include Zheng Shaodong, an assistant minister of public security and director of the ministry's Economic Criminal Investigation Bureau, and his deputy, Xiang Huaizhu.

Mr Chu until now has maintained a relatively low profile, rarely seen at public events or media interviews.

According to mainland media reports, Mr Chu started his career as a sub-contractor in the 1980s. He diversified his business to mainland real estate with the formation of Hopson in 1992 and listed the company on the Hong Kong stock exchange six years later.

The company is now a property conglomerate with interests in residential and commercial real estate, hotels and tourist and holiday businesses. It has a market capitalisation of HK$5.15 billion.

Last year, Mr Chu was ranked 785th on Forbes' list of world billionaires with a net worth of US$1.5 billion. He was ranked the 10th richest man by Hurun Report in 2008.

Analysts said his company followed Mr Chu's low-profile style, with some criticising it as lacking transparency.

Fitch Ratings analyst Michael Wu said the company withdrew a rating on the developer in October last year, citing a 'lack of communication' with the firm.

In January, Moody's Investors Service downgraded Hopson's corporate family rating to B1 from Ba3. It also downgraded its senior unsecured bond rating to B2 from B1.

The downgrades reflected the agency's expectation that Hopson's business and liquidity risks would increase as a result of its aggressive expansion.

Fact file

Chu Mang-yee

Age: 49

Hopson Development Holdings chairman

Former government bureaucrat

A member of the China People?s Political Liaison Committee

Ranked 785th on Forbes list of world billionaires in 2008 with a net worth of
US$1.5 billion

Ranked the mainland?s 10th richest man in 2008 by the Hurun Report

Guangzhou-based Hopson Development was formed in 1992

It listed in Hong Kong in 1998

The company is now a property conglomerate with interests in residential and commercial property, hotels as well as tourist and holiday businesses

Source: Bloomberg