Stocks News
- Hangxiao Steel Structure suspected of disclosing huge Angolan contracts to staff
Date: 30-Mar-2007 Sources: (Xinhua Online)
A Chinese construction company being investigated by stock regulators for insider trading told staff about huge African contracts three days before the official disclosure to the Shanghai Stock Exchange, an insider told Xinhua.
The official with Zhejiang Hangxiao Steel Structure, who spoke on condition of anonymity, said that board chairman Shan Yinmu addressed the firm's annual conference on Feb. 12, saying company sales were expected to surge to 12 billion yuan (1.55 billion U.S. dollars) if it succeeded in signing huge overseas contracts.
The company reported sales revenue of 1.22 billion yuan and net income of 19 million yuan in the first three quarters of 2006.
On Feb. 15, the company said in a statement to the Shanghai Stock Exchange that it was in talks on a 30 million yuan overseas deal.
The company's stock price has more than doubled since Feb. 12 -- going from 4.24 yuan to 10.75 yuan, hitting the daily maximum rise of 10 percent 10 times in a month.
Analysts said the earlier announcement to its own staff violated China's rules on listed firms' information disclosure, which prescribes simultaneous announcements to all investors.
The Shanghai Stock Exchange has urged the company to offer an explanation about the case as soon as possible.
The China Securities Regulatory Commission is investigating Hangxiao for suspected stock price manipulations with bogus contracts and vowed harsh punishment for those who broke the law.
The company defended in Monday's statement its handling of the announcement of contracts for work in Angola worth 34.4 billion yuan (4.45 billion U.S. dollars) after suspicions about the authenticity of the deals mounted after trading in the stock was suspended on March 19.
The statement to the Shanghai Stock Exchange said its Hong Kong-registered partner, the China International Fund declined to disclose copies of its public housing projects contracts with the Angolan government, saying it had agreed not to disclose the contracts to a third party.
Zhou Jinfa, president of the Zhejiang-based company, said earlier that none of the firm's directors and senior executives were involved in stock speculation, adding the company also wanted to know who had benefited.
'The talks (with the China International Fund) were long and involved many company officials, so it was hard to guarantee discretion before the company announcement,' he admitted.
The two-year contracts first aroused suspicion in the steel sector, where experts claimed they involved 3.3 million tons of steel products, the 21st Century Business Herald reported on Monday.
It said Hangxiao Steel Structure, however, produced only 300,000 tons of steel structures in 2006.
Zhou dismissed the discrepancy, saying the plant had a total production capacity of 680,000 tons and the contracts allowed for subcontracts.
'The company expects to examine the preparatory work for six construction sites in Angola in mid-April. This is no international joke,' he said.
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