China Resources on drive to win over local cadres in wake of graft scandal
Chairman Fu Yuning embarks on campaign to restore trust in wake of graft scandal
China Resources Holding's new chairman has met with at least 10 provincial governments since taking control six months ago - a charm offensive that is helping the state-owned conglomerate move past a major corruption scandal.
In the wake of an investigation that has ensnared former chairman Song Lin and six other executives, Fu Yuning, who holds a rank equivalent to vice-minister in the central government, vowed that the conglomerate would emerge from the scandal like "a phoenix arising from the ashes".
The meetings, many of which have involved Fu travelling to the provinces, have seen him warmly chatting with leading politicians as well as promising new and often big sums in investment, according to promotional photos and material released by the company.
The campaign by the politically connected Fu, formerly chief of China Merchants Group, another state-controlled conglomerate, has shored up investor confidence and underscores the strong government and bank support that state-owned enterprises can call on.
"It seems Fu Yuning is doing the right things," said Xu Yinhui, investment manager at brokerage Guotai Junan Securities in Shanghai.
"He has been boosting internal controls to reduce the chances of corruption while securing different types of support from local governments - which I think should be positive for the long-term development of the company."
A sweeping anti-corruption campaign initiated under President Xi Jinping has targeted both state-run firms as well as domestic and foreign private companies alike.
Whereas state-owned giants like China Resources and PetroChina are emerging stronger under new management, private companies have had it harder. Agile Property Holdings, whose billionaire founder and chairman has been detained, has had to scrap a rights issue and seek a loan extension.
Shares in China Resources' listed units, like the broader market, have been hit by a downbeat economic outlook and the pro-democracy protests in Hong Kong in recent weeks.
But in a sign that sentiment towards the conglomerate is picking up, brokerages have over the past two weeks upgraded price targets or investment ratings for shares of China Resources Power Holdings, China Resources Gas Group and beer-to-retail group China Resources Enterprise, citing long-term growth prospects.
The conglomerate's 11 listed units have a combined market capitalisation of US$50 billion and assets of over HK$1 trillion.
