Shares of “China’s No 1 butcher” WH Group, the world’s largest pork meat processor, plunged as much as 11 per cent on Thursday after news broke that mainland authorities shut down one of its slaughter houses where dead pigs had been infected with African swine fever.
Officials of Zhengzhou city in central China suspended operations and sealed off the slaughter house, which is controlled by WH’s subsidiary Shuanghui Development, for six weeks.
Hong Kong-traded shares of WH Group, which owns US-based Smithfield Foods, began to dive from HK$6.50 at 2pm after a number of mainland Chinese media published reports that 30 pigs transported from northeastern Heilongjiang province to the slaughter house had died from African swine fever. The stock closed 7.5 per cent lower at HK$6.08.
The circulation of the reports also triggered the sharp drop of Shuanghui shares in Shenzhen, which tumbled by their daily 10 per cent limit to close at 22.41 yuan.
A WH spokesman confirmed with the Post that the sealed off slaughter house was controlled by Shuanghui, without giving further details.
“2018 is really an unlucky year for WH,” said Barney Wu, analyst with Guotai Junan Securities.
“The swine fever incident is likely to weigh on both the supply and demand for the company’s products, as the expenditure for processing meat could rise, and consumers could be daunted by the incident and buy less meat,” he said.
China recorded its first ever outbreak of African swine fever – a highly contagious viral disease of pigs which does not affect humans or other animal species – in northeastern Liaoning province early this month. The province has culled 8,116 hogs after the outbreak on August 3, according to the provincial animal husbandry bureau.
A notice published online by China’s Ministry of Agriculture and Rural Affairs on Thursday confirmed that “a food company” located in the “Economic and Technological Zone” in Zhengzhou, Henan’s provincial capital, was found to have transported 30 swine fever-infected pigs. As a result, the area where the pigs were found had been sealed off and no livestock can enter or exit the plant.
WH Group, which sees more than half of its turnover from the US, reported a 7.7 per cent drop in net profit for the first half of the year this week, as revenues were hurt by escalating trade tensions between Chin and the US during the six-month period. Shares of the company have fallen 17 per cent since last August.