CHINA: Carlsberg "full confidence" in Chongqing Brewery management
Carlsberg has said that it has "full confidence" in management at Chinese partner Chongqing Brewery, despite seeing the group's shares suspended from trading.
Chongqing Brewery Co's (CBC) shares were suspended from trading on 23 December, following a series of heavy price losses. Next month, the group will hold a shareholder meeting on whether to dismiss its chairman, while today (6 January) there is speculation that Chongqing Light Textile Holdings Co plans to cut its 20% stake in the firm.
The developments could have repercussions for Carlsberg, which is the largest individual CBC shareholder and has a 29.7% stake in a beer joint-venture with CBC. Carlsberg and CBC operate a joint-venture in China, along with Chongqing Light Textile Holdings Co, which has an 18.58% share in the venture.
When contacted by just-drinks, a Carlsberg spokesperson would not comment other than to say: "We have full confidence in CBC's current management team."
Investor confidence in CBC was initially shaken by disappointing results from the trial of a new hepatitis B drug, conducted by Chongqing's biotech arm, Chongqing Jiachen Biotechnology. The company has since failed to reassure the market.
"We have no further comments to make regarding CBC's biotech business and associated share price movement," said the Carlsberg spokesperson today. Chongqing's shares lost around two thirds of their value in the month up to 23 December.
Analyst group Sanford Bernstein estimated that each 10% drop in Chongqing Brewery's share price wipes DKK6 off Carlsberg's share price, in theory. It said in a note late last month that the value of Carlsberg's stake in Chongqing would be reduced significantly if the Chinese brewer's shares fail to recover.
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