Investors dump Fu Ji despite revamp
Shares of mainland food supplier plunge on resumption of trading after revamp
Shares in Fu Ji Food and Catering Services, a supplier to the 2008 Beijing Olympics, plunged more than 90 per cent yesterday on resuming trading after a four-year trading halt since July 2009.
The Shanghai-based company, which went into provisional liquidation in October 2009, fell as much as 95.4 per cent in the morning. It ended the day down 93.5 per cent at HK$2.48, as market sentiment remained weak.
The company had announced net profit of 250.23 million yuan (HK$316 million) for the six months to September 2008, but did not inform investors when it lost big contracts later. In July 2009, Fu Ji Catering said its annual report would not be published and suspended its shares from trading.
In a filing to the Hong Kong stock exchange last Thursday, Fu Ji Catering said it had completed capital and management restructurings and that an auditor had certified it had sufficient working capital.
The Hang Seng Index yesterday closed 1.31 per cent lower after recovering from a sharp fall in earlier trading, with investors concerned about the mainland's economic growth prospects.
"The recent tightening in liquidity conditions, weaker business confidence and slowing growth have increased the risks of a hard landing of the economy," analysts at Barclays Capital said in a research note.
They also warned of the risks of significant capital outflows and increasing expectations of yuan depreciation that could trigger a "disorderly sell-off" in the mainland market.
Property and mainland banks fell heavily after a slew of mainland companies said they would report lower earnings during the results season.