Aug 30, 2013

    Minzhong's business 'misunderstood'

    CHINA Minzhong Food Corp said a report by short-seller Glaucus Research Group that questioned its accounts misunderstood the food processor's business and it delayed the release of its financial results until last evening.

    Minzhong, which this week lost half of its market value after Glaucus published the report, is preparing a detailed response that will show its financials are sound and address specific issues raised by the short-seller, the company said.

    Its shares will remain suspended until the end of the trading day today.

    "Most of the issues raised by Glaucus with regard to the financials of the company were nothing new and arose out of a complete lack of understanding of the company's business model, as well as the operating environment in China," Minzhong said yesterday in a statement to the Singapore Exchange (SGX).

    The company is seeking to allay concerns as more Chinese companies trading in Hong Kong, Singapore and New York become targets of short-sellers.

    Minzhong is among 143 China-based firms listed on Singapore's stock market, according to the latest data from SGX.

    The full-year financial report was delayed from yesterday morning to "facilitate the verification and confirmation of certain issues referred to in the report", Minzhong said in the statement.

    Glaucus' report said that the Putian, China-based company had been "significantly deceiving" regulators and investors, sending the stock 48 per cent lower and wiping off S$318 million in market value in less than two hours on Monday before trading was suspended.

    Minzhong shares were halted at 53 Singapore cents, after tumbling the most since the company's listing in April 2010.

    Ms Kelly Teoh, a Singapore-based market strategist at IG Markets, said: "The main issue here is that it is unable to refute the claims in a very clear and strong manner, which investors are expecting.

    "That reflects the quality of management. For the time being, I don't think it is giving investors any confidence at all in the company's stock."

    Minzhong's biggest investor, Indofood Sukses Makmur - the parent of Indonesia's biggest instant-noodle maker - said earlier this week that it is comfortable with its investment.