Chinese baby milk maker endorsed by film star Zhang Ziyi suspends shares after just seven days’ trading as report urges investors to steer clear
- A report by GMT Research advised investors to avoid the stock because the company hadn’t paid a dividend in the five years before IPO
- China Feihe rejected the report’s findings as ‘groundless’ and said it plans to distribute to shareholders at least 30 per cent of its net profit each year after the listing
China Feihe, the mainland’s largest domestic maker of baby milk formula, suspended trading of its shares before the market opened on Friday, a day after an independent research firm urged investors to avoid the stock as it may become the target of short-sellers.
A report by Hong Kong-based GMT Research on Thursday warned investors that the company hadn’t paid a dividend in the five years prior to IPO despite being highly profitable, something it described as a “fraud-like trait”.
China Feihe, which had only been trading in the Hong Kong stock market for seven days, refuted the claims in a statement uploaded to the Hong Kong stock exchange on Friday evening.
“[T]he allegations against the company in the report are groundless or untrue statements,” it said.
The company did not distribute any dividends for several years “in order to facilitate the group’s business development and fund management”, it said.
China Feihe plans to distribute to shareholders at least 30 per cent of its net profit each year after the listing, according to the statement. Furthermore, the sponsors of its IPO as well as independent auditors Ernst & Young had conducted independent due diligence on the group’s financial and business conditions, it said.
