China Tontine Plummets After Warning of Loss: Hong Kong MoverGuy Collins
China Tontine Wines Group Ltd. fell to the lowest level in more than three years after the wine producer said weak demand and the government’s austerity campaign will result in a first half loss.
China Tontine dropped as much as 16 percent to 33 Hong Kong cents, headed for the lowest close since its listing in November 2009, before trading at 34 Hong Kong cents at 3:16 p.m. local time. The benchmark Hang Seng Index fell 0.02 percent.
Wine sales in China have come under pressure as economic growth has slowed and the government has taken steps to rein in lavish spending by officials and state-owned companies as part of a fight against corruption. China’s gross domestic product slowed to 7.5 percent in the second quarter, matching economists’ forecasts, from 7.7 percent in the first quarter, according to data today from the National Bureau of Statistics.
A China Tontine statement after the market closed on July 12 attributed its expected loss for the six months ended June to “weaker demand for domestic wine products amid the slowing pace of economic growth,” as well as to a slump in sales of mid-range and high-end wines due to “government-imposed restrictions on entertainment and hospitality as part of its anti-corruption drive.” The company’s financial position remains stable, it said.
China Tontine bought a 60 percent stake in Yantai Baiyanghe Winery Co. in September, expanding its product range of wines and brandies and giving it access to premium imported French wines.
The company, based in China’s northeastern Jilin province, sells sweet and dry wines under the Tongtian and Tongtian Hong labels.