China Huishan Dairy shares plunge as much as 91 per cent
Dairy company plunges in Hong Kong trade on Friday, one day after it held closed-door talks with 23 major local lenders
China Huishan Dairy Holdings, the country’s largest cattle farm operator, plunged as much as 91 per cent in Hong Kong during a dramatic sell-off on Friday, less than four months after short-seller Muddy Waters said the company was “worth close to zero” and a day after it was called into a meeting with local lenders.
The collapse in the share price, from HK$2.80 to HK$0.42 before a trading suspension at midday, means more than US$4.1 billion was wiped off its market value after 779,390 shares in the company changed hands within just four hours. That was the highest trading volume for any stock on the Hong Kong bourse on Friday.
On Thursday, representatives of Huishan were called into a meeting with 23 of its major local creditor banks, including ICBC, Bank of China, Bank of Communications and China Development Bank, according to a copy of a notice issued by the finance administration office of Liaoning province seen by the Post.
Officials from the Shenyang municipal government, the finance administration office, and the provincial banking regulator also attended the meeting.
“Huishan has been constantly raising capital via sale-leasebacks on its assets over the last year with little-known financial leasing companies, which suggests the company is quite desperate for cash,” said Robin Yuen, a consumer analyst with RHB Securities.
“The company says it is simply ‘rolling-over’ higher rate loans from before with the new lower rate loans, which is not entirely convincing.”