China Companies
image

Corruption in China

China’s Fosun tries to calm investor worries, saying its business is normal and chairman in touch with investors and lenders

PUBLISHED : Sunday, 13 December, 2015, 8:36pm
UPDATED : Sunday, 13 December, 2015, 8:36pm

Fosun International tried to boost sagging investor confidence in the outlook of the group’s business, saying its operations are normal and sound after announcing chairman Guo Guangchang was assisting Chinese judicial authorities in an investigation.

In a conference call with investors on Sunday, chief executive Liang Xinjun said the company was in communication with lenders, investors and ratings agencies.

“(Guo ) is now in Shanghai. He is assisting judicial authorities with an investigation,” said Liang, adding that the investigation was “more related to personal” matters , rather than having anything to do with Fosun’s business.

Speculation had been swirling over the fate of Guo after he went missing from noon on Thursday.

Liang said Guo was able to take part in major decisions involving the company through various channels such as teleconferencing.

Liang emphasised that the company’s operations remained normal, adding that the company was not “in crisis” and their financial situation was very healthy.

In an attempt to strengthen investor confidence, Liang said Fosun would consider buying back shares or increasing holdings of the company’s stock if the share price gyrated sharply.

“All of my own assets are in Fosun. I will not sell my Fosun shares,” Liang told investors during the conference.

The concerns over Fosun began on Thursday when mainland media reported the Group was not able to contact Guo, dubbed China’s Warren Buffett, prompting intense speculation over his apparent disappearance.

It was not until late Friday night that Fosun Group released a statement saying that Guo was “assisting the authorities with an investigation.”

Guo controls four companies listed on mainland China and four others listed offshore, including Hong Kong-listed Fosun International, the group’s investment arm.

Its mainland listed unit Shanghai Fosun Pharmaceutical issued a filing in the Shanghai Stock Exchange on Sunday that the incident involving Guo did not have any material adverse effect on the financial or business groups of the conglomerate. The firm is also listed in Hong Kong.

Liang said Fosun International was financially healthy and the company’s operation will not be affected by the incident over Guo.

“For those who buy shares of Fosun, they do not only like Guo, they also like me and president Wang (Wang Qunbin, executive director and president of Fosun International). They also approve of Fosun’s strategy,” said Liang.

The company was not run by one person, but a whole team, said Liang, emphasising that the corporate structure of the group was sound.

As of June 30, Fosun said it had cash of 37 billion yuan, asset available for sale valued over 60 billion yuan and an insurance float of 150 billion yuan, said Liang. Fosun’s gearing was down to 50.7 per cent.

Management did not answer the question whether Guo will attend the group’s global work meeting on Monday.

Shares of Fosun International and Shanghai Fosun Pharmaceutical will resume trading on Monday in Hong Kong.

business-article-page