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Chinese Bottled-Water Giant Nongfu Spring Rises on Buyback Plan

By Sherry Qin

 

Nongfu Spring shares jumped after its majority shareholder's plan to boost his stake in the Chinese bottled-water giant.

Shares of the Hangzhou-based company rose as much as 8.1% early Wednesday before paring gains to trade 5.0% higher at HK$35.45.

Nongfu Spring's billionnaire founder and controlling shareholder Zhong Shanshan, via controlled entity Yangshengtang, plans to purchase up to HK$2 billion (US$256.0 million) of shares from the open market in about six months, according to an exchange filing after Tuesday's market close.

Nongfu's shares have weakened recently, given market concerns about its first-half revenue, Citi analysts Xiaopo Wei and Vincent Young said.

Heavy rain has affected much of southern China in recent weeks, which could hurt Nongfu's water business, they said in a research note.

Meanwhile, Zhong faced a barrage of online criticism in March from Chinese social-media users questioning his loyalty to China. The weekslong assault caused a drop in Nongfu's shares, which remain more than 20% lower so far this year.

Zhong's share-buyback plan aims to "demonstrate his confidence in the company's growth prospects as well as recognize the company's intrinsic value," the analysts said.

 

Write to Sherry Qin at sherry.qin@wsj.com

 

(END) Dow Jones Newswires

July 09, 2024 23:44 ET (03:44 GMT)

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