Taiwan firm's shares tumble due to scandal

The awards acquired by Taiwan company Wei Chuan Foods Corp, which produces everything from ice cream to the flavor-enhancer monosodium glutamate. The company's shares tumbled by the 7 percent daily limit at the close in Taipei trading on Oct 14. [Provided to?China Daily]

Shares of Wei Chuan Foods Corp, the Taiwan food company whose chairman recently resigned amid a tainted lard scandal, plunged for a fourth day on Tuesday in a rout that has seen its market value shrink by one-quarter in less than a week.

Wei Chuan, which produces everything from ice cream to the flavor-enhancer monosodium glutamate, tumbled by the 7 percent daily limit at the close in Taipei trading. The stock capped a four-day, 25 percent decline, the steepest since its listing in 1991. Taiwan's Taiex Index gained 0.7 percent.

The company, which had gotten the tainted edible oil from supplier and fellow Ting Hsin International Group member Cheng I Food, said last month it expects to lose NT$79.4 million ($2.65 million) from product recalls and lost inventory. Its chairman, Wei Yin-chun, resigned last week, as the government started investigations into the safety of its food supply.

"The company's business outlook isn't that good, and the stock should be avoided," Wu Xiulian, an analyst from Jih Sun Securities Ltd, said by phone in Taipei on Tuesday. "The tainted lard event almost led to a public boycott of all of the company's products, from milk to beverages, in Taiwan."

Of five analysts who track the stock, four of them have a hold rating, while one has a sell, according to data compiled by Bloomberg.

"We understand the concern of consumers, investors and the public, and will continue to communicate with our distribution channels, investors and banks," Howard Weng, public relations manager at Wei Chuan, said on Tuesday.

Ting Hsin's public image was damaged last November, when Wei Chuan's edible oils were found to contain a restricted chemical and the company issued an apology as it removed products from stores. Last month, Ting Hsin supplier Chang Guann was found to have supplied tainted lard for use in the company's products.

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