April 29 (Bloomberg) -- China Huishan Dairy Holdings Co., the milk producer backed by billionaire Cheng Yu-tung, plummeted by a record in Hong Kong trading on concerns that investors’ share sales may continue.
The shares fell for a fourth day to retreat 9.8 percent to HK$1.65, the biggest drop since they started trading in September and lower than its offer price of HK$2.67. The benchmark Hang Seng Index rose by 1.5 percent.
“Huishan Dairy is extending its decline because some pre-IPO investors sold their stakes after the lock-up period expired,” Kenny Tang, an analyst at AMTD Financial Planning Ltd., said by telephone today. “Concern by other investors on the recent disposals is reason” for today’s decline, said Tang, who recommends buying the stock.
The dairy company’s stock fell 5.6 percent on April 25 after shareholder An Yu Investments sold 284.6 million shares in Huishan at HK$2.03. In March, Swiss food company Hero sold shares at between HK$2.21 and HK$2.27 each, the Standard newspaper reported. Hero had a 3.6 percent stake in Huishan, the newspaper said.
Investors in the company, including An Yu, had agreed not to sell their shares within six months of the Sept. 27 listing, according to Huishan’s prospectus.
The company, based in Shenyang city in northeast China, signed a facility letter with the Macau branch of the Bank of China Ltd. to borrow $50 million to refinance the bank loans with higher interest rates in China, it said in a statement to Hong Kong’s stock exchange yesterday.
Huishan, which raised a $1.3 billion from its IPO last year, was established in 2009 as a raw milk producer, and has moved into the business of selling liquid milk and milk powder products, grain processing and trading.
The company owned more than 106,000 dairy cows, the second largest herd in the nation, as of end 2012, the company said in its prospectus, citing researcher Frost & Sullivan.
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