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Shares in China Huishan Dairy Holdings face wipe-out after they fell by 85% on the Hong Kong Stock Exchange, wiping €3.81bn off the value of the company.
Speculation that the company’s largest shareholder misappropriated 3bn yuan (€404.m) to invest in Shenyang real estate has been denied by Huishan’s chairman and chief executive officer Yang Kai.
Huishan is an integrated dairy company which owns 81 dairy farms and around 95,000 milking cows as well as milk processing facilities.
Carson Block from Muddy Waters Capital LLC said last December that it was shorting Huishan Dairy in the conviction the company was worth “close to zero.”
At that time Huishan Dairy said the allegations in the report were groundless and contained misrepresentations.
The report also alleged that the company made an unannounced transfer of a subsidiary that owned at least four cow farms to an undisclosed related party and Muddy Waters concluded that chairman Yang controls the subsidiary and farms.
Stable before
Before Friday’s plunge, Huishan had been one of the more stable stocks in Hong Kong. It fluctuated in a narrow range and never moved by more than 5.1% on a closing basis in a single trading day during that period.
Champ Harvest Ltd, a company controlled by Yang Kai, owns about 73% of the shares in Huishan.
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