Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Back on the 9 February, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN) <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0210/2021021000043.pdf" target="_blank" rel="noopener">announced</a> a pre-conditional Partial Offer from  <a href="https://www.smartkarma.com/entities/maanshan-dingtai-rare-a" target="_blank" data-smartkarma-citation="entities:4128:1" rel="noopener">S.F. Holding (002352 CH)</a> ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.</p>
<p>Below is a timeline of events that subsequently unfolded:</p>
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<h3>Data in the Date</h3>
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<td style="width: 139.871px;">30-Mar-21</td>
<td style="width: 606.141px;">The controlling shareholders of <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN), including <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a>, plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0330/2021033003206.pdf" target="_blank" rel="noopener">fulfilled</a> - this forms part of the pre-conditions.</td>
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<td style="width: 139.871px;">9-Apr-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0409/2021040901991.pdf" target="_blank" rel="noopener">announced</a> that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.</td>
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<td style="width: 139.871px;">26-May-21</td>
<td style="width: 606.141px;">At an SGM, KLN shareholders overwhelmingly <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0526/2021052600981.pdf" target="_blank" rel="noopener">approved</a> the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.</td>
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<td style="width: 139.871px;">7-Jun-21</td>
<td style="width: 606.141px;">The free float waiver has been <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0607/2021060701185.pdf" target="_blank" rel="noopener">received</a> from the HKEx.</td>
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<td style="width: 139.871px;">15-Jun-21</td>
<td style="width: 606.141px;">
<p>Approval by the shareholders of <a href="https://www.smartkarma.com/entities/kerry-properties-ltd" target="_blank" data-smartkarma-citation="entities:3320:1" rel="noopener">Kerry Properties (683 HK)</a> <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0615/2021061501141.pdf" target="_blank" rel="noopener">obtained</a></p>
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<td style="width: 139.871px;">29-Jun-21</td>
<td style="width: 606.141px;">CFIUS approval <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0629/2021062900794.pdf" target="_blank" rel="noopener">received</a>
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<td style="width: 139.871px;">20-Jul-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0720/2021072000823.pdf" target="_blank" rel="noopener">announced</a> approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.</td>
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<td style="width: 139.871px;">2-Aug-21</td>
<td style="width: 606.141px;">KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0802/2021080201361.pdf" target="_blank" rel="noopener">announced</a> NDRC and MoC approval has been received as to the partial offer.</td>
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<td style="width: 139.871px;">9-Aug-21</td>
<td style="width: 606.141px;">Exactly on the Long Stop date, KLN <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0809/2021080901151.pdf" target="_blank" rel="noopener">announced</a> all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. </td>
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<td style="width: 139.871px;">12-Aug-21</td>
<td style="width: 606.141px;">Composite Doc <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0811/2021081101136.pdf" target="_blank" rel="noopener">dispatched</a>
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<td style="width: 139.871px;">17-Aug-21</td>
<td style="width: 606.141px;">The Record Date for the Special Dividend is expected to be the 1 <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0817/2021081701332.pdf" target="_blank" rel="noopener">September</a>. The Special Dividend is expected to be paid on or about Friday, 17 September 2021</td>
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<td style="width: 139.871px;">18-Aug-21</td>
<td style="width: 606.141px;">Irrevocables <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800881.pdf" target="_blank" rel="noopener">received</a>. Thai MGO waiver received,. </td>
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<td colspan="2" style="width: 746.012px;"><em>Source: HKEx announcements</em></td>
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<p>All appears to be going to plan.  The first close is the 2 September. </p>
<p>Then KLN announced on the 24 August a <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0824/2021082401338.pdf" target="_blank" rel="noopener">delay</a> in the record date for the Special Dividend. KLN estimates:</p>
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<p>that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.</p>
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<p>With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?</p>
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<p>More below the fold. </p>
<p>Plus updated <em><strong>Ye Olde Arb Grids</strong></em>. </p>
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Back on the 9 February, Kerry Logistics Network (636 HK) (KLN) announced a pre-conditional Partial Offer from  S.F. Holding (002352 CH) ("SFH").  SFH intended to acquire 931.21mn shares or 51.8% of shares outstanding, of KLN. The Offer price of  HK$18.80/share was a 19.83% discount to last close. KLN's shares also gained 25% prior to the suspension.
Below is a timeline of events that subsequently unfolded:





Date


Data in the Date



30-Mar-21
The controlling shareholders of Kerry Logistics Network (636 HK) (KLN), including Kerry Properties (683 HK), plus shares held by executive directors, comprise 63.1% of shares out. These shareholders have given an irrevocable to tender 575.545mn shares or 32% of shares out. Those irrevocables have now been fulfilled - this forms part of the pre-conditions.


9-Apr-21
KLN announced that the antitrust approval has been received from the State Administration for Market Regulation with respect to the Partial Offer.


26-May-21
At an SGM, KLN shareholders overwhelmingly approved the sale of its Hong Kong, Taiwan warehouse business to Kerry Holdings.


7-Jun-21
The free float waiver has been received from the HKEx.


15-Jun-21

Approval by the shareholders of Kerry Properties (683 HK) obtained



29-Jun-21
CFIUS approval received



20-Jul-21
KLN announced approval by the Independent Shareholders in respect of the Special Deal Agreements and the Framework Services Agreement had been obtained.


2-Aug-21
KLN announced NDRC and MoC approval has been received as to the partial offer.


9-Aug-21
Exactly on the Long Stop date, KLN announced all of the pre-cons have been met - or waived (the Thai waiver in particular)  - and that the Composite Document is expected to be dispatched, on or before, the 16 August. 


12-Aug-21
Composite Doc dispatched



17-Aug-21
The Record Date for the Special Dividend is expected to be the 1 September. The Special Dividend is expected to be paid on or about Friday, 17 September 2021


18-Aug-21
Irrevocables received. Thai MGO waiver received,. 


Source: HKEx announcements





All appears to be going to plan.  The first close is the 2 September. 
Then KLN announced on the 24 August a delay in the record date for the Special Dividend. KLN estimates:

that the Record Date for the Special Dividend will be on or around Wednesday, 15 September 2021, instead of Wednesday, 1 September 2021 as disclosed in the Special Dividend Announcement. The Special Dividend is expected to be paid on or about Tuesday, 5 October 2021, instead of Friday, 17 September 2021.

With the Partial expected to close on the 2 September, questions have been asked whether those shareholders who have already tendered - or those investors who tender before the 2 September - whether they are still eligible for the special dividend?


More below the fold. 
Plus updated Ye Olde Arb Grids. 





Kerry Logistics (636 HK): Technicalities As Partial Draws To An End

Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<p>In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.<br><br>Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively. <br><br>We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.<br><br><br>In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), China Resources Power Holdings Company Limited (836 HK), as well as outflows from Wh Group Limited (288 HK), Meituan (3690 HK), and Li Ning Company Limited (2331 HK).</p>

In our weekly HK Connect Flow series, we aim to highlight key stocks and sectors which the mainland investors traded via the southbound Hong Kong Connect, as analyzed by our proprietary data engine.  Since the opening of Hong Kong Connect scheme in 2014, southbound Chinese money started to play an increasingly important role in the Hong Kong stock market. In a Hong Kong exchange report released in July 2019, the exchange highlighted that flows from mainland China accounted for 12% of the total trading volume in the market and is ahead of the US investors' 10% and UK investors' 7% share respectively.   We split the stocks eligible for the Hong Kong Connect trade into three groups: HSCEI component stocks, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.   In this insight, we will highlight inflows into Tencent Holdings Limited (700 HK), China Resources Power Holdings Company Limited (836 HK), as well as outflows from Wh Group Limited (288 HK), Meituan (3690 HK), and Li Ning Company Limited (2331 HK).

Hong Kong Connect Flows: WH Group, Meituan, Li Ling Led the Outflows

Travis Lundy

<p><a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> will see its Tender Offer completed on Monday 30 August. I expect the result will be out as per the 30 July Circular - at 7pm HKT. </p><p>Then we wait. </p><p>And things get a little weird and possibly a little bumpy this week. </p><p>And into the week after...</p><p>But we wait anyway. </p><p>More below the fold. </p><hr><table class="table table-striped">
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<tr><td colspan="3" style="text-align: left; width: 535pt;"><h3>Insights on This WH Group Event To Date</h3></td></tr>
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<td style="text-align: center;"><strong>Date</strong></td>
<td style="text-align: center;"><strong>Author</strong></td>
<td><strong>Title</strong></td>
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<td style="text-align: center;">02-Jun-21</td>
<td style="text-align: center;"><a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" rel="noopener">David B</a></td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-288-hk-today-s-pig-is-tomorrow-s-bacon" target="_blank" data-smartkarma-citation="insights:52429" rel="noopener">WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? </a></em></td>
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<td style="text-align: center;">06-Jun-21</td>
<td style="text-align: center;"><a href="https://www.smartkarma.com/profiles/travis-lundy/insights" target="_blank" rel="noopener">myself</a></td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-buyback-offer-announced-strong-accretion-creates-accretion-risk" target="_blank" data-smartkarma-citation="insights:52613" rel="noopener">WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk </a></em></td>
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<td style="text-align: center;">20-Jun-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-vs-peers-too-many-piggies-going-to-market" target="_blank" data-smartkarma-citation="insights:53217" rel="noopener">WH Group Vs Peers - Too Many Piggies Going to Market? </a></em></td>
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<td style="text-align: center;">05-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-trading-opportunities-abound" target="_blank" data-smartkarma-citation="insights:54016" rel="noopener">WH Group - Trading Opportunities Abound </a></em></td>
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<td style="text-align: center;">10-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-long-only-fundamental-investors-can-take-advantage-too" target="_blank" data-smartkarma-citation="insights:54223" rel="noopener">WH Group - Long-Only Fundamental Investors Can Take Advantage Too </a></em></td>
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<td style="text-align: center;">30-Jul-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-offer-doc-out-this-little-piggy-went-to-market" target="_blank" data-smartkarma-citation="insights:55210" rel="noopener">WH Group Offer Doc Out - This Little Piggy Went To Market </a></em></td>
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<td style="text-align: center;">17-Aug-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-partial-buyback-offer-now-unconditional" target="_blank" data-smartkarma-citation="insights:56210" rel="noopener">WH Group Partial Buyback Offer Now Unconditional </a></em></td>
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<td style="text-align: center;">18-Aug-21</td>
<td style="text-align: center;">myself</td>
<td><em><a href="https://www.smartkarma.com/insights/wh-group-stock-plummets-as-ousted-son-drags-pigs-into-the-mud" target="_blank" data-smartkarma-citation="insights:56282" rel="noopener">WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud </a></em></td>
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</table>

WH Group (288 HK) will see its Tender Offer completed on Monday 30 August. I expect the result will be out as per the 30 July Circular - at 7pm HKT. Then we wait. And things get a little weird and possibly a little bumpy this week. And into the week after...But we wait anyway. More below the fold. 






Insights on This WH Group Event To Date

Date
Author
Title


02-Jun-21
David B
WH Group (288 HK): Today's Pig Is Tomorrow's Bacon? 


06-Jun-21
myself
WH Group Buyback Offer Announced - Strong Accretion Creates Accretion Risk 


20-Jun-21
myself
WH Group Vs Peers - Too Many Piggies Going to Market? 


05-Jul-21
myself
WH Group - Trading Opportunities Abound 


10-Jul-21
myself
WH Group - Long-Only Fundamental Investors Can Take Advantage Too 


30-Jul-21
myself
WH Group Offer Doc Out - This Little Piggy Went To Market 


17-Aug-21
myself
WH Group Partial Buyback Offer Now Unconditional 


18-Aug-21
myself
WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud 




WH Group Post-Tender Outlook - Index Selldown and Back-End Trading/Valuations

Last Week in Event SPACE: BHP, WH Group, Beijing Capital Land, China Life, Macau Gaming Concessions

<p>Talk about timing....  There is a quote, often attributed to George Bernard Shaw, which says...</p><blockquote><p>“Never wrestle with pigs. You both get dirty and the pig likes it.”</p></blockquote><p>An <a href="https://m.21jingji.com/article/20210818/herald/4a9608d9f5f5c7989d30c32968022298.html" target="_blank" rel="noopener">article</a> out this morning in 21st Century Business Herald offers a description of an "article" in an outlet called New Meat Industry (新肉业) which was titled "Wan Hongjian: Father and Bandung in My Eyes" ("万洪建：我眼中的父亲和万隆") ['Bandung' is <a href="https://www.smartkarma.com/entities/wh-group-ltd" target="_blank" data-smartkarma-citation="entities:13200:1" rel="noopener">WH Group (288 HK)</a> Chairman Wan Long].</p><p>WH Group shares are down 9.8% in heavy trading volume at the lunch break. Major onshore subsidiary Henan Shuanghui is down 6% in lower volume.</p><p>Wan Hongjian, of course, is the eldest son of Chairman Wan Long. Wan Hongjian was proposed as Executive Director for the June AGM in March of 2018, appointed as an executive director of WH Group in June 2018, and two months later was named deputy chairman. His history as of March 2018 was as follows:</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/496/original/Screenshot+2021-08-18+at+11.13.20+AM.png?1629256485" class="editor-image img-responsive" data-smartkarma-image-id="224496"></figure><p></p></section><p>It appeared that the eldest son, the "Prince Lord" as he was described in the local onshore media at times, was being groomed to take over. </p><p>Wan Hongjian was, however, unceremoniously stripped of his roles as Executive Director, Deputy Chairman, and Vice President exactly two months ago on 17 June 2021 with WH Group stating in its <a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0617/2021061700420.pdf" target="_blank" rel="noopener">release</a>, <em>"The reason for such removal is that the Company is of the view that Mr. Wan is unable to fulfil his duties of skill, care and diligence as a Director due to his recent misconduct of aggressive behaviors against the Company’s properties." </em></p><p>Wan Hongjian recounted in a newspaper interview (reference link <a href="https://www.foodprocessing.com/industrynews/2021/ceo-of-smithfield-parent-steps-down/" target="_blank" rel="noopener">here</a>) after departing how he had once punched a door and banged his head on a cabinet when told to leave his father’s office. Other articles suggest that he had been pinned to the floor by his father's bodyguards with his bloodied face ending up on social media, this after "disagreements over managerial choice". Other articles (one <a href="https://www.feedstrategy.com/business-markets/wh-group-removes-executive-director-over-embezzlement/" target="_blank" rel="noopener">here</a>) defined the 'aggressive behaviors' as "embezzlement" but the company has been quiet. From a variety of articles, it appears as if there were long-standing disagreements between father and son. </p><p>A somewhat strange <a href="https://www.yicaiglobal.com/news/exclusive-wh-group-ex-vp-wan-hongjian-talks-about-the-bust-up-with-his-father-smithfield-takeover--" target="_blank" rel="noopener">article</a> showed up last week in Yicai Global which talked about the disagreements and Wan Hongjian's "bust up" with his father, but the article here too is one-sided, and odd - it deserves a read.  </p><p>Of import in this story, Wan Long - 50+ years in the industry - and heretofore Chairman and CEO of WH Group, at 81yrs of age, last week stepped down as CEO, handing off the reins to longtime CFO Guo Lijun. At the same time, the second sone Wan Hongwei was promoted to Executive Director and Vice Chairman of the Board of Directors. The "excuse" given was that it was to comply with SFC rules/guidance that the roles of Chairman and CEO should be separate for good governance. </p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/224/509/original/Screenshot+2021-08-18+at+11.36.52+AM.png?1629257931" class="editor-image img-responsive" data-smartkarma-image-id="224509"></figure></section><div class="content-highlight"><p>That appears to have triggered things.</p></div><p>But it is not his brother's ascension. To that, Wan Hongjian apparently said “我首先要恭喜弟弟，也会给他发一个祝福信息，同时提醒他以后在这个位置上的三个注意事项：不说话！不说话！不说话!” (which might translate to <em>"I want to congratulate my younger brother first, and I will also send him a message of blessings and remind him of three important points in this position in the future: Don’t speak! Don’t speak! Don’t speak!"</em>).</p><p>The "disagreement over managerial choice" is and apparently has been the choice to appoint Guo Lijun as CEO.</p><h3>The NEW Article</h3><p>There are a number of accusations levelled in the 21st Century Business Herald article - best to read the article oneself - among which the major ones are that</p><ul>
<li>Chairman Wan Long and then-CFO Guo Lijun conspired to have onshore subsidiary <a href="https://www.smartkarma.com/entities/henan-shuanghui-investment-development" target="_blank" data-smartkarma-citation="entities:20515:1" rel="noopener">Henan Shuanghui Investment &amp; Development (000895 CH)</a> (of which WH owns 70+%) buy 100,000 tons of imported pork (a six-parter" 六分体 is two shoulders, two hindquarters, two mid-sections) at an elevated price, against the advice of local management, after which the price of pork in China plummeted, leaving inventory losses on Henan Shuanghui. </li>
<li>Wan Hongjian also reiterates his original opposition to the 2013 purchase of Smithfield Foods by WH Group, which in earlier interviews he had stated was a bad decision because the US market was not growing and the Chinese market is growing (though the Five Year Plan proposed for Shuanghui is growth and Wan Hongjian calls the basis for that planning "ridiculous.")</li>
<li>Wan Hongjian appears to object <em>vociferously</em> to the choice of Guo Lijun as CEO. </li>
<li>There is the broad accusation that the original setup of WH Group involved illicit monetary transfers and that the purchase of Smithfield was designed to get money offshore.</li>
</ul><p>It appears that a copy of the article/letter/posting by Wan Hongjian on "New Meat Industry" is available in full on sina.com <a href="https://finance.sina.com.cn/chanjing/gsnews/2021-08-18/doc-ikqciyzm2080209.shtml" target="_blank" rel="noopener">here</a>. That letter is much more detailed and very clearly says<em> "My conflict with Mr Bandung [his father] was triggered by the choice of CEO."</em></p><p>As I hit the "publish" button, the company has just released a "<a href="https://www1.hkexnews.hk/listedco/listconews/sehk/2021/0818/2021081800225.pdf" target="_blank" rel="noopener">clarification</a>" which says</p><blockquote>
<p><em>The board of directors (the “Board”) of WH Group Limited (the “Company”, together with its subsidiaries, the “Group”) has noted the recent decrease in the price and increase in trading volume of the shares of the Company, and has also noted certain media reports regarding allegations made by Mr. Wan Hongjian (a former director of the Company who was removed for misconduct) against the Group (the “Allegations”). </em></p>
<p><em>The Board would like to clarify that the Allegations are untrue and misleading. </em></p>
<p><em>Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). </em></p>
<p><em>T</em><em>he Company reserves its right to take legal actions against Mr. Wan Hongjian and/or those responsible for the Allegations.</em></p>
</blockquote><p><em>More below the fold. </em></p>

Talk about timing....  There is a quote, often attributed to George Bernard Shaw, which says...“Never wrestle with pigs. You both get dirty and the pig likes it.”An article out this morning in 21st Century Business Herald offers a description of an "article" in an outlet called New Meat Industry (新肉业) which was titled "Wan Hongjian: Father and Bandung in My Eyes" ("万洪建：我眼中的父亲和万隆") ['Bandung' is WH Group (288 HK) Chairman Wan Long].WH Group shares are down 9.8% in heavy trading volume at the lunch break. Major onshore subsidiary Henan Shuanghui is down 6% in lower volume.Wan Hongjian, of course, is the eldest son of Chairman Wan Long. Wan Hongjian was proposed as Executive Director for the June AGM in March of 2018, appointed as an executive director of WH Group in June 2018, and two months later was named deputy chairman. His history as of March 2018 was as follows:It appeared that the eldest son, the "Prince Lord" as he was described in the local onshore media at times, was being groomed to take over. Wan Hongjian was, however, unceremoniously stripped of his roles as Executive Director, Deputy Chairman, and Vice President exactly two months ago on 17 June 2021 with WH Group stating in its release, "The reason for such removal is that the Company is of the view that Mr. Wan is unable to fulfil his duties of skill, care and diligence as a Director due to his recent misconduct of aggressive behaviors against the Company’s properties." Wan Hongjian recounted in a newspaper interview (reference link here) after departing how he had once punched a door and banged his head on a cabinet when told to leave his father’s office. Other articles suggest that he had been pinned to the floor by his father's bodyguards with his bloodied face ending up on social media, this after "disagreements over managerial choice". Other articles (one here) defined the 'aggressive behaviors' as "embezzlement" but the company has been quiet. From a variety of articles, it appears as if there were long-standing disagreements between father and son. A somewhat strange article showed up last week in Yicai Global which talked about the disagreements and Wan Hongjian's "bust up" with his father, but the article here too is one-sided, and odd - it deserves a read.  Of import in this story, Wan Long - 50+ years in the industry - and heretofore Chairman and CEO of WH Group, at 81yrs of age, last week stepped down as CEO, handing off the reins to longtime CFO Guo Lijun. At the same time, the second sone Wan Hongwei was promoted to Executive Director and Vice Chairman of the Board of Directors. The "excuse" given was that it was to comply with SFC rules/guidance that the roles of Chairman and CEO should be separate for good governance. That appears to have triggered things.But it is not his brother's ascension. To that, Wan Hongjian apparently said “我首先要恭喜弟弟，也会给他发一个祝福信息，同时提醒他以后在这个位置上的三个注意事项：不说话！不说话！不说话!” (which might translate to "I want to congratulate my younger brother first, and I will also send him a message of blessings and remind him of three important points in this position in the future: Don’t speak! Don’t speak! Don’t speak!").The "disagreement over managerial choice" is and apparently has been the choice to appoint Guo Lijun as CEO.The NEW ArticleThere are a number of accusations levelled in the 21st Century Business Herald article - best to read the article oneself - among which the major ones are that
Chairman Wan Long and then-CFO Guo Lijun conspired to have onshore subsidiary Henan Shuanghui Investment &amp; Development (000895 CH) (of which WH owns 70+%) buy 100,000 tons of imported pork (a six-parter" 六分体 is two shoulders, two hindquarters, two mid-sections) at an elevated price, against the advice of local management, after which the price of pork in China plummeted, leaving inventory losses on Henan Shuanghui. 
Wan Hongjian also reiterates his original opposition to the 2013 purchase of Smithfield Foods by WH Group, which in earlier interviews he had stated was a bad decision because the US market was not growing and the Chinese market is growing (though the Five Year Plan proposed for Shuanghui is growth and Wan Hongjian calls the basis for that planning "ridiculous.")
Wan Hongjian appears to object vociferously to the choice of Guo Lijun as CEO. 
There is the broad accusation that the original setup of WH Group involved illicit monetary transfers and that the purchase of Smithfield was designed to get money offshore.
It appears that a copy of the article/letter/posting by Wan Hongjian on "New Meat Industry" is available in full on sina.com here. That letter is much more detailed and very clearly says "My conflict with Mr Bandung [his father] was triggered by the choice of CEO."As I hit the "publish" button, the company has just released a "clarification" which says
The board of directors (the “Board”) of WH Group Limited (the “Company”, together with its subsidiaries, the “Group”) has noted the recent decrease in the price and increase in trading volume of the shares of the Company, and has also noted certain media reports regarding allegations made by Mr. Wan Hongjian (a former director of the Company who was removed for misconduct) against the Group (the “Allegations”). 
The Board would like to clarify that the Allegations are untrue and misleading. 
Having made such enquiry with respect to the Company as is reasonable in the circumstances, the Company confirms that it is not aware of any reasons for these price and trading volume movements or of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). 
The Company reserves its right to take legal actions against Mr. Wan Hongjian and/or those responsible for the Allegations.
More below the fold. 

WH Group - Stock Plummets as Ousted Son Drags Pigs Into The Mud

Hong Kong

WH Group is the world's largest pork company, operating across China, the US, and Europe. It integrates hog production, slaughtering, and the processing and distribution of packaged meats and fresh pork. The company's core business includes a wide range of packaged meat products and fresh pork. Headquartered in Hong Kong, the company traces its origins back to 1958.

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WH Group (288 HK)

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