Shares of Beijing Media Corp (
The company "has suspended the duties of the six employees until further notice" and plans an internal probe, said Beijing Media, in which the Government of Singapore Investment Corp has an 8 percent stake, in a statement to the Hong Kong stock exchange today. The stock was suspended for one day yesterday after China's Caijing magazine reported the investigation.
Beijing Media, which raised the maximum US$116 million it sought in an initial public offering in December, is the latest in a series of Chinese listed companies to be embroiled in corruption allegations. The company, which sells advertising in the Beijing Youth Daily newspaper, last month reported a 99.7 percent slump in first-half profit as advertising sales declined.
The incident "reflects poor company management," said Selina Sia, a Hong Kong-based analyst with UBS AG, who has a "reduce" recommendation on Beijing Media's shares.
"The company didn't say anything until newspapers reported it. I think it's quite irresponsible," she said.
The company's stock fell as much as HK$3.50 to HK$9.50 as they resumed trading after the suspension, and was at HK$10.60, down 18 percent, as of the 12:30pm trading break in Hong Kong. The shares have dropped 52 percent this year.
The employees taken into custody include two vice presidents and the head and deputy head of the advertising department, Beijing Media said in the statement. President Sun Wei (
"With the implementation of the above measures, the board does not anticipate any significant disruption will be caused to the daily operations" of the company, Beijing Media said.
In August, Beijing Media said net income fell to 170,000 yuan (US$21,000) as advertising revenue declined, inventory costs rose and it made more bad-debt provisions. Earlier that month, the company said it sold fewer advertisements to developers, its key source of revenue, after the government took steps to cool the real-estate market in cities such as Shanghai and Beijing.
The company got 63 percent of its revenue from advertising in the first half. The revenue from Beijing Youth Daily, which accounts for most of the company's advertising sales, slumped 50.2 percent from a year earlier.
The employees detained are vice-presidents Zheng Yijun (鄭誼軍) and Niu Ming (鈕明), advertising department head Yu Dagong (于大公), deputy head Zhu Weijing (朱偉京) and advertising department officers Duan Tao (段濤) and Lu Jianning. They are being questioned by prosecutors in Beijing, according to the statement.
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