Shares of Shanghai Bairun Investment Holding Group experienced a sharp decline after the company, known for its production of flavors, fragrances, and pre-mixed cocktails, revealed that Chinese authorities had detained Chairman Liu Xiaodong on suspicion of bribery.
Bairun [SHE: 002568] closed 9.8 percent lower at CNY19.85 (USD2.76) per share in Shenzhen today in response to the news.
In a statement, Bairun clarified that all directors, supervisors, and senior executives, with the exception of Liu, who also serves as general manager, continue to fulfill their duties as usual. The company emphasized that this development would not significantly impact its production and operations, affirming that Bairun’s controller remains unchanged.
Liu Xiaodong, holding approximately 41 percent of Bairun’s shares, equivalent to 4.3 billion shares, stands as the company’s largest shareholder, as disclosed by Bairun in December. With a personal fortune estimated at CNY14.5 billion (USD2 billion), Liu ranked 388th on the 2023 Hurun China Rich List released in October last year.
Sales generated by Bairun’s Rio Cocktails brand constituted 90 percent of the company’s revenue in the first half of last year, with the remaining portion attributed to its flavors and fragrances segments, as outlined in the company’s most recent earnings report.
Despite the current setback, Bairun anticipates a substantial increase in net profit after deducting non-recurring gains and losses, forecasting a surge of 50 percent to 70 percent to reach between CNY730 million and CNY830 million (USD100 million and USD115.3 million) for the fiscal year 2023, as announced at the end of last month.
