New Chinese Aluminum Billionaire¡¯s Shares Fall Day After Hong Kong Listing

Shares in China Hongqiao slipped in Hong Kong on Friday, a day after its successful debut catapulted the main owner into the upper ranks of China’s wealthiest people.

Shares in China Hongqiao fell by 0.9% to HK$7.83.  A day earlier, the aluminum maker soared 15% on its debut.  At Friday’s close, chairman Zhang Shiping’s five billion shares were worth $5 billion.

 China Hongqiao’s IPO attracted the interest of Hong Kong billionaires Joseph Lau and Cheng Yu-tung, who both hold 1.7% stakes in the company.

China Hongqiao’s top leadership, as in many Chinese companies, is made of up of the chairman’s family. His wife Zheng Shuliang, 64, is vice chairman, and his son, 41-year-old Zhang Bo, is the CEO.   China Hongqiao highlights the role of the chairman’s son in the “risk factors” section of its prospectus.  “Our future success depends significantly on the continuing services of our executive Directors (sic) and senior management of our Group, in particular, Mr. Zhang Bo, our executive Director and chief executive officer,” the prospectus says.  

“Mr. Zhang Bo is critical to the development of our business and strategic direction,” it continues. ”If any member of our executive Directors and senior management, whose names are set out in the section headed ‘Directors and Senior Management’ in this prospectus, is unable or unwilling to continue in his or her present positions, we may not be able to replace such member easily in a timely manner or at all, or we may incur additional expenses to recruit, train and retain personnel. Moreover, if any of these key personnel joins a competitor, we may lose customers, suppliers, know-how as well as other key professionals and staff members. The loss of any key personnel by our Group could have a material adverse effect on our business, financial condition and results of operations.”

Zhang  Shiping, 64, also leads Weiqiao Textile, one of the largest textile makers in China, whose shares also trade in Hong Kong.  According to China Hongqiao’s prospectus, Zhang holds about 20.9% of Weiqiao.

IPO investors in China Zhongwang, another non-government-controlled Chinese aluminum company traded in Hong Kong, have had a difficult ride since the company listed in 2009.  Zhongwang’s shares have dropped by more than 40% in the past year, compared with a 5% decline in U.S.-traded Aluminum Corp. of China, the country’s largest aluminum producer, and a 20% gain by Alcoa, the U.S. leader. Zhongwang’s chairman Liu Zhongtian still made our 2011 Forbes Billionaires List with wealth of $1.9 billion. Liu was one of a record 115 mainland Chinese to appear on the 2011 list.

China Hongqiao’s IPO was first launched in January but postponed because of adverse market conditions.

Zhang Shiping is a graduate of Anhui College of Finance and Trading.