rongsheng heavy

Rongsheng Shipbuilding Chairman Tied to CNOOC-Nexen Insider Trading Scandal

Total Views: 12
July 30, 2012

rongsheng heavy(Bloomberg) — China Rongsheng Heavy Industries Group Holdings Ltd. plunged to its lowest level since 2010 in Hong Kong trading after the U.S. Securities and Exchange Commission filed a complaint accusing a company owned by Chairman Zhang Zhi Rong of insider trading.

The nation’s largest private shipbuilder tumbled 16 percent to close at HK$1.17, the lowest level since it was listed in November 2010. The stock has fallen 45 percent this year, compared with a 6.2 percent rise in the Hang Seng Index.

The SEC accused Hong Kong-based Well Advantage Ltd., solely owned by Zhang, of trading illegally before an announcement by Cnooc Ltd. that it would buy Nexen Inc. for $15.1 billion. Zhang, who is also chairman and founder of Hong Kong-listed real estate developer Glorious Property Holdings Ltd., wasn’t directly charged in the complaint by the SEC, which also obtained a court order freezing assets of traders it said were involved in the illegal transactions.

“Given news that the SEC has ordered a freeze on accounts allegedly related to Rongsheng Chairman Zhang Zhi Rong, we believe our recent upgrade to hold for Rongsheng, based on Rongsheng hitting crisis level valuations half that of peers, now appears to have been too early,” Vincent Fernando, an analyst at Religare Capital Markets, wrote in a note to clients today. He cut the rating on the stock to sell from hold.

Daily Operations

The SEC complaint won’t affect Rongsheng Heavy’s business and operations, the shipbuilder said in a filing today to the Hong Kong stock exchange.

It also said Zhang doesn’t have any executive role in the company, and day-to-day business activities and operation of the group is carried out by the management team led by Chief Executive Officer Chen Qiang.

Zhang was listed as China’s 38th richest person with a fortune of $2.9 billion in the 2010 Hurun Report, which tracks the country’s affluent.

Rongsheng Heavy also said today it expects first-half profit to decline significantly over last year’s because of falling orders and prices for ships. The company hasn’t announced any new orders in 2012.

Copyright 2012 Bloomberg

Back to Main