Shares of China’s top dairy maker Yili Group jumped by 10 per cent on Thursday, after video footage showing the company’s chairman and CEO Pan Gang attending its annual shareholder meeting in his first high-profile public appearance recently, squashing rumours that the chairman had been taken away for investigation.
In a short video posted Thursday by Chinese media Sina Finance on Weibo – China’s equivalent of Twitter- Pan was seen stepping on stage in a black suit and white shirt- the executive’s most common public attire- amid thunderous applause from shareholders.
“Distinguished shareholders, good afternoon! Thanks very much for attending this meeting,” said Pan in the 16 second video.
Despite the short clip, investors’ confidence in Yili appeared to have been boosted, with shares in the company jumping by the daily 10 per cent limit in Shanghai on Thursday to reach the highest close in one month.
With 80 per cent of participants in China’s stock markets being retail investors, share prices can fluctuate dramatically on releases of even very vague company information or national policies about a certain industry. Companies base in Hainan, China’s southernmost province, surged in April when Beijing announced a milestone initiative to transform the island into a free-trade zone.
Similarly, Yili saw its shares plunge at the end of March, eviscerating nearly 6.1 billion yuan (US$959.6 million) in market value, when rumours that Pan had been taken into custody for investigation circulated on Chinese social media platforms, including WeChat.
Two Chinese bloggers who were accused by authorities of disseminating the articles and claims have since been arrested. Yili replied to the rumours saying the chairman, 48, suffered from a congenital heart problem known as aortic stenosis and fell ill as a result of a gruelling work schedule and that he was advised to travel overseas for treatment. The company said this was the reason the executive had been seen in public only sporadically last year and had to miss the Hainan Boao Forum – China’s answer to Davos – in April this year.
“Pan’s public appearance is definitely good news for Yili,” said Zhu Danpeng, an associate with China Branding Institute.
“Given the company’s scale and earnings history, its shares should be trading higher,” said Zhu.
However, some argued that this incident has exposed a weak point in China’s non-comprehensive information disclosure system, as there are no clear rules on what information a listed company should reveal to shareholders.
“Currently there is only a very broad framework for regulating what information companies should disclose in China, this needs to change,” said Shen Meng, an executive director with investment bank Chanson & Co.
The company, one of China’s largest dairy makers in the highly fragmented industry, reported 5.9 per cent growth in 2017 net profit to 6 billion yuan. The company also recorded a 12.3 per cent rise in revenue to nearly 68 billion yuan for the year.