According local media reports, Huang Guangyu, chairman of Gome Electric Appliance Group, is currently under investigation by Beijing police for stock market manipulation.
Prior to this, reports from Singapore said that Huang, named the richest person on the Chinese mainland by the Hurun Report 2008, was taken away by Beijing police on November 20 and in the evening of November 23, foreign media formally reported that Huang was questioned for manipulation of share prices of Shandong Jintai Group Co., a company controlled by his brother Huang Junqin.
A spokesperson from Gome says that the company will not comment on this issue. The spokesperson emphasized that Gome is an independent listed company with a mature management system and it will not be affected by rumors. In a press release issued to the Hong Kong Stock Exchange, Gome stated: "The company wishes to state that it is making necessary enquiries for the purpose of verifying the allegations. The company will make further announcement if there is any further information and clarification regarding the allegations."
Commenting on the news that Samsung has stopped supplying to Gome, the company says it is a rumor and Gome's suppliers, including Samsung, Changhong, Haier, Siemens and TCL, have sent announcements to the company, which state they will firmly support Gome and will continue to supply products to Gome.
Huang Junqin, the founder of Towercrest Group, was originally involved the appliances sales sector in Beijing together with Huang Guangyu. Later, he shifted to the real estate industry and acquired a stake in Jintai in September 2001. His two companies Beijing Towercrest Investment Management Group and Beijing Towercrest Real Estate Group hold 10% and 1.92% stake of Jintai, respectively.
Reports from Hong Kong, Taiwan and Singapore say that the news originated from anonymous mobile phone messages sent to reporters in Beijing saying that Huang and financial director of Gome Zhou Yafei had been taken away by the relevant law enforcement department and are under investigation. Huang's wife Du Juan and another key finance officer of the company have reportedly fled.
At the same time, Gome today reported its unaudited financial results for the nine months ending September 30, 2008. Revenue reached approximately CNY36.396 billion, representing growth of approximately 20.04%. Consolidated gross margin rose by 1.57% to approximately 16.75% while profit from operating activities rose by 45.31% to reach approximately CNY1.87 billion. Net profit attributable to equity holders rose by approximately 111.55% to approximately CNY1.59 billion. Gome's same store sales grew by approximately 3.18% during this period, as well.
