September 9, 2011

 

Yurun shares dive after unit's tainted pork news
 

 

Shares of Chinese pork processor Yurun Food Group Ltd fell as much as 19% Thursday (Sep 8), touching a two-year low, following news that pork produced by one of the company's units contained traces of a banned lean-meat additive.

 

This was the latest addition to a string of negative publicity for the company in recent months, developments that have triggered massive selling in Yurun's Hong Kong-traded shares.

 

A Hebei-based Yurun unit sold pork products that contained clenbuterol, a banned drug used as a slimming additive in hog feed, according to the news report.

 

China has been cracking down on the illegal manufacture and sale of clenbuterol. Police have arrested nearly 1,000 people, seized 2.5 tonnes of the additive, and closed six production laboratories in Sichuan and Hubei provinces over the last six months, sources said.

 

Yurun's shares have been down sharply since late June when market chatter spread that US short seller Muddy Waters may issue a negative report on the company, amid concerns at the time it was receiving large amounts of government subsidies.

 

The chatter came just as some funds were selling shares of overseas-listed Chinese companies because of concerns about accounting practices, analysts said at the time.

 

In July, Chinese media reports alleged Yurun was producing "problematic meat" at a plant in Shaanxi province, prompting the company to suspend production at the facility for internal inspections.

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