Jiugui Liquor shares fall after theft report

The share price of Hunan-based Jiugui Liquor Co tumbled 4.41 percent on the Shenzhen Stock Exchange on Tuesday, following a company statement saying that 100 million yuan ($16.5 million) has been stolen from its bank account.

The 100 million yuan was taken over three days on December 11, 12 and 13, from transactions conducted over the counter of an Agricultural Bank of China (ABC) branch in Hangzhou, East China's Zhejiang Province, Jiugui Liquor said in a filing posted on the Shenzhen bourse Tuesday.

The company also said it has reported the case to the police, but did not reveal which police station they went to.

Jiugui Liquor's financial reports show that 100 million yuan is about one-fifth of the company's sales revenue and five times its net profit in the first three quarters in 2013.

The filing on Tuesday has raised concern that Jiugui Liquor may have violated rules on information disclosure given that it only disclosed the case 46 days after the money transfer actually happened.

"The securities law stipulates that listed companies should disclose price-sensitive information immediately after they discover the problem," Wu Lijun, a lawyer at Shanghai-based Oriental Cambridge Law Firm, told the Global Times Tuesday.

Wu noted that it is crucial to determine when the company found out about the missing fund.

Compared to the company's share price plunge, the overall Shenzhen Composite Index dropped a moderate 0.31 percent on Tuesday.

Calls to Jiugui Liquor went unanswered on Tuesday. The ABC Hangzhou branch said Tuesday in an e-mail to the Global Times that the money transfer in the Jiugui Liquor case conformed to the relevant laws and regulations, but the bank did not disclose when Jiugui Liquor found out about the missing money.

"A person should provide corporate seals if he or she wants to make money transfers from a company account via bank counters," a Beijing-based bank employee, who declined to be named, told the Global Times Tuesday.

Wang Danqing, a partner at Beijing-based ACME consultancy, said that the missing fund has revealed loopholes in Jiugui Liquor's management, and it is very likely that the fund was transferred by insiders in the company.

"If the money cannot be retrieved, the company's whole year financial result will be greatly affected," Wang told the Global Times Tuesday.

The company has already been affected by a plasticizer scandal in November 2012, when products of Jiugui Liquor were found to have contained plasticizer that was 260 percent higher than the national standard.

The scandal resulted in the company's share prices falling by over 70 percent since then.

Wang said that the plasticizer scandal had already hurt consumers' confidence in the company's products, and the current case will further tarnish its brand image.

"The case of the missing fund would make investors doubt its overall management."

The government's anti-extravagance campaign has caused high-end Chinese liquor producers such as Wuliangye and Moutai to downscale their products, which has also increased competition for Jiugui Liquor, experts noted.

The company said in a filing late Tuesday that it is expecting to report a net loss of 68 million to 78 million yuan for 2013.