Engineering firm Wison's shares tumble on bribery and fraud charges

Shares of Wison Engineering Services plunged 58 per cent to 83 HK cents yesterday, a record closing low, after the company confirmed it and its chairman were facing bribery and fraud charges on the mainland.

The stock slid to as low as 81 HK cents at one stage after trading resumed following a 14-month suspension. It was priced at HK$2.79 at its initial public offering in December 2012.

Controlling shareholder and chairman Hua Bangsong has been assisting mainland authorities in their investigation of alleged bribery in the company.

"The company wouldn't say where the chairman is right now, whether he's been freed or is still detained," CLSA's head of Asian oil and gas research Simon Powell said in a note to investors after an analyst teleconference call with management.

"[It will probably] eventually be taken over by some deep-pocketed state-owned enterprise, with the chairman likely selling some or all of his shares to strategic shareholders and exiting the company."

Analysts said the weakness in Wison's shares reflected uncertainty about the company's financial health, the shrinkage in the size of a major overseas order, the delay in completion of a domestic order due to deferral of a financing plan and damage to its reputation from the charges.