Tug-of-war over future of manufacturer

Top News | Avery Chen 22 Aug 2019

There's a tug-of-war between senior executives and the family of billionaire Chiang Chen over a push to privatize Chen Hsong.

Ann Chiang Lai-wan, a pro-establishment lawmaker and Chiang's second daughter, said her 95-year-old father "would be very angry if the company were to go private."

Some of the management team at Chen Hsong - which mainly engages in plastic injection molding machines-related businesses - proposed to privatize the company and transform it to a property business due to its weak financial results and stock price, local media reported.

But major stakeholders strongly oppose the plan as "it differs from founder Chiang Chen's intention."

Chen Hsong will hold an annual shareholders meeting today. Its shares closed at HK$2.71 yesterday with a market capitalization of HK$1.7 billion.

Chen Hsong's revenue fell 2 percent year-on-year to HK$1.64 billion for the year ended March 31, while its net profit declined by 11 percent year-on-year to HK$90 million amid gloomy global manufacturing sentiment due to the ongoing Sino-US trade war.

The company entered the real estate industry last year through a framework agreement with Gaw Capital to convert its three plots of land in Shenzhen into residential development use.

Ann Chiang said her father did not intend to privatize the company.

She said her father donated all his Chen Hsong shares to establish the Chiang Chen Industrial Charity Foundation in 1990, and "he made the Chen Hsong listing one year later so those shares would be transparent and under public scrutiny."

She added: "In terms of charity, the family of Chiang won't go back on our word."

The Chiang Chen Industrial Charity Foundation is the biggest shareholder of the company with more than a 60 percent stake. Schroders is the second-largest shareholder with a 7.93 percent stake, according to shareholding disclosures from the Hong Kong stock exchange.

Chiang Chen came to Hong Kong from his hometown in Shandong in 1949, and founded Chen Hsong in 1958.

After more than half a century of endless expansion, Chen Hsong has grown from a small machinery workshop to one of the largest manufacturers of injection-molding machines in the world.

Chiang Chen stepped down as chairman in April last year and became the honorary chairman of the company following his retirement. Chiang Lai-yuen, Chiang's sixth daughter and chief executive of the company, succeeded him. His youngest son, Chiang Chi-kin, was then appointed deputy chairman.

avery.chen@singtaonewscorp.com

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