Hall of Shame

Consumer Staples

Ausnutria Dairy (1717 HK)

Year: 2019

Ausnutria Dairy Corporation Ltd, Hong Kong Company, is a pediatric milk formula company. The Company is engaged in the dairy industry with its production facilities based in the Netherlands. Ausnutria Dairy Corporation markets and sells dairy products to the People's Republic of China, Europe, North America, the Middle East, and other overseas countries.   It listed on the Hong Kong Exchange in August 2009 raising HK$1.38B in it's IPO.

March 29, 2012  - Ausnutria’s shares were suspended after allegations by its auditor Ernest &  Young. A subsequent investigation revealed that Ausnutria was fabricating sales and that certain officers tried to cover it up by doctoring the Company’s books and records. 

May 28, 2013 - The HKEX Listing Committee censures Ausnutria Dairy Corporation Ltd and Mr Chen Yuanrong (CEO), and criticises Directors Mr Wu Yueshi, Ms Ng Siu Hung and Mr Yan Weibin for breaching the Listing Rules and/or the Director's Undertaking.

December 5, 2013 - Ausnutria re-issues its 2011 Annual Report under "The unresolved issues and reconstruction of records and restatement and adjustment of financial statements".   This included the results of a forensic review by PwC.

August 4, 2014 - Ausnutria’s shares resumed trading.

August 15, 2019 - Shortseller Blue Orca Capital issued a report on Ausnutria Dairy Corporation.   It believed that Ausnutria was up to it's old tricks again.  Thier extensive investigation indicated that the Company inflates revenues, hides costs, misleads Chinese consumers and secretly enriches executives through undisclosed related party transactions.   The issues raised were :-
     1.  Customs Data Indicates Infant Milk Formula Sales in the PRC Overstated by 52%.
     2.  Understating Labor Costs and substantially less profitable than it claims; Labor Costs Hidden Off the Books
     3.  Misleading Chinese Consumers which risks consumer backlash in China
     4.  Nutriunion: Sham Transactions and Siphoned Subsidiaries
     5.  Corporate Scandal and a Pattern of Undisclosed Related Party Distributors

In conclusion, Blue Orca Capital believes that the Company, whose history is tarnished by fraud and scandal, whose executives engage in brazen undisclosed related party transactions and whose financials, in our opinion, cannot be relied is simply uninvestable.

Aug 15, 2019 - In a note on the short-sellers report, GMT Research commented as follows : "In the 8th short-seller attack on Hong Kong listed companies this year, Blue Orca alleges that Ausnutria has been faking sales and profits. The company’s shares are suspended pending a rebuttal from management. It is sometimes possible to demonstrate that a company’s financials do not reflect the allegations, but not here. The company shows similar financial traits to past frauds, and these have become more pronounced over the past two years. Ausnutria’s unusual corporate structure, with production assets in Europe and sales in China, might help explain some of these traits. The best shareholders can hope for is a comprehensive rebuttal and some form of share price support from CITIC. The safer option might be to sell, if possible."

Aug 16, 2019 -  Ausnutria issued a response to the allegations in the report and stated that it considers such allegations completely unfounded and gravely misleading.

Aug 19, 2019  - In a rebuttal report to Ausnutria s response, Blue Orca accused the company of issuing hasty, incomplete and flimsy 6-page responses and raised new evidence to prove its financial performance misrepresentation.

HKEX: Listing Committee censures Ausnutria for breaching Listing Rules, 28 May 2013
Blue Orca Capital: Short on Ausnutria Dairy Corporation, 15 Aug 2019
GMT Research: Note on Blue Ocra's Report, 15 Aug 2019
Ausnutria Dairy: Response to the Allegations, 16 Aug 2019
Blue Orca Capital: Rebuttal to Ausnutria Dairy Corporation's response, 19 Aug 2019
Ausnutria Dairy: Restated 2011 Annual Report & Forensic  report
Ausnutria Dairy: Annual Report 2017
Ausnutria Dairy: Annual Report 2018
HKEX: Ausnutria Dairy 
Newswire: Ausnutria Dairy News


Company From To
Ernst & Young 24-Sep-09 -


(IPO - Initial Public Offering, ASO - Additional Share offerings)

Type Date Role Party
IPO 8-Oct-09 Auditor(s) Ernst & Young
IPO 8-Oct-09 Co-Manager(s) First Shanghai Securities Ltd
IPO 8-Oct-09 Co-Manager(s) CMB International
IPO 8-Oct-09 Global Coordinator(s) Bank of China International
IPO 8-Oct-09 Global Coordinator(s) Macquarie Group
IPO 8-Oct-09 Joint Lead Managers-Books Macquarie Group
IPO 8-Oct-09 Joint Lead Managers-Books Bank of China International
IPO 8-Oct-09 Joint Lead Managers-No Books Bank of China International
IPO 8-Oct-09 Joint Lead Managers-No Books Macquarie Group
IPO 8-Oct-09 Legal Adviser to the Issuer(s) Mallesons Stephen Jaques
IPO 8-Oct-09 Legal Adviser to the Issuer(s) Jingtian & Gongcheng
IPO 8-Oct-09 Legal Adviser to the Issuer(s) Conyers
IPO 8-Oct-09 Legal Adviser(s) to the Manager(s) Commerce & Finance Law Offices
IPO 8-Oct-09 Legal Adviser(s) to the Manager(s) Clifford Chance
IPO 8-Oct-09 Private Equity Sponsor(s) Bank of China International
IPO 8-Oct-09 Private Equity Sponsor(s) Macquarie Group
IPO 8-Oct-09 Registrar(s) Computershare


(CAC/MAC Chairman / Member Audit Committee - NC Nomination /Governance Comm. - CC Compensation/Remuneration Committee)

Type Name Role From To
Executive Ng Siu Hung 19-Sep-09 -
Executive Van Der Meer Bartle CEO 7-Jun-13 -
Executive Yan Wei Bin Chairman, MCC, CNC 8-Jun-09 -
Independent Lau Chun Fai Douglas CAC, CCC, MNC 2-Jan-15 -
Independent Jason Wan MAC, MCC, MNC 19-Sep-09 -
Independent Aidan Maurice Coleman MAC, MCC,MNC 6-Dec-18 -
Non-Executive Tsai Chang-Hai 19-Jan-16 -
Non-Executive Qiao Baijun 6-Dec-18 -
Non-Executive Shi Liang Vice-Chairman, MCC, MNC 6-Dec-18 -
Senior Management Wong Wei Hua Derek Company Secretary, CFO In July 2011 -