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Enoch Yiu

China High Precision Automation Group, whose shares were suspended from trading over disclosure issues allegedly related to "state secrets", had humble beginnings as a maker of watch components.
The company, co-founded by chairman Wong Fun-chung in 1991 under the brand Wide Plus, started out making instruments for quartz watches, according to its listing prospectus.
Wong graduated from Tianjin University in 1978, specialising in high-precision timing instruments and has 20 years of experience in the horological industry.
Wong usually keeps a friendly, smiling countenance for most occasions. This occurred at the happy moment of the company's listing ceremony at the Hong Kong stock exchange in November 2009 as well as last week after the firm's shares were suspended from trading last Wednesday by the Securities and Futures Commission (SFC).
This was a rare move by the regulator, which can only exercise this option when it judges that investor interest is severely jeopardised.
Wong was in Hong Kong on Friday to host a shareholders meeting at a hotel in Wan Chai for a vote to change its auditor. He kept smiling even while he was surrounded by scores of reporters and photographers who chased him for a response on the SFC action. Wong never lost his temper, only saying "thank you" and that the company would be issuing an announcement.
Wong, who has a 36.97 per cent stake in the company, was paid 1.59 million yuan (HK$1.95 million) last year, almost double the 805,000 yuan he received in 2010.
The 59-year-old businessman is also known to be close to the Fujian government. In 1987, Wong was approved as an engineer by the Fujian Provincial Bureau of Personnel. That same year he was appointed manager of Fuzhou Watch Factory, a state-owned enterprise.
At the time of the company's stock listing, 25 per cent of China High Precision's business came from making components for watches and other horological instruments. This dropped to 17 per cent for the financial year to June last year.
The rest came from making precision industrial automation instruments that are used for measuring temperature and water pressure, among other things, and are used by firms in industries such as aerospace, oil and gas, petrochemical and power generation as well as mining, automotive, food and beverages, pharmaceuticals and paper.
With 1,343 staff and a manufacturing base in Fujian, China High Precision sells its products through distributors in 15 regions across the country, including Beijing, Chongqing and Fujian.
After being delayed by the global financial crisis in 2008, the company debuted on the Hong Kong stock exchange with a HK$1.05 billion listing in 2009. Its stock price peaked at HK$7.25 in January last year.
But teething problems surfaced less than two years after the listing. Its auditor, KPMG, quit in November last year, saying it found discrepancies between the figures it obtained from independent sources and those provided by the company.
China High Precision voluntarily suspended trading from October last year in view of the problems with its auditor and only resumed trading on August 3 this year, after announcing that it could not provide all the information that KPMG sought as some of its businesses were related to "state secrets".
It replaced the so-called Big Four accounting firm with a little-known Pan-China to do a special audit. After Pan-China confirmed that the company's full-year results were "true and fair", it received the approval from the stock exchange to resume trading.
The results for the previous financial year, which KPMG had reservations about but were approved by Pan-China, showed a net profit of 304.39 million yuan, up 33.7 per cent from a year earlier.
The new auditor's view failed to comfort investors as shares resumed trading on August 3 at HK$1.47, down 46 per cent from its last close of HK$2.74 on October 27 last year before its 10-month long suspension.
Trading was halted again last Wednesday on the orders of the SFC, with its last traded price at HK$1.24.
The SFC has refused to elaborate on the reasons for its suspension order, but market watchers believe "state secret" is the bone of contention.
A source close to the SFC said the regulator was looking into the definition of "state secret" and related information.
KPMG and Sun Hung Kai Financial, the sponsor of China High Precision's listing, refused to comment. But sources close to the two firms said that at the time of its listing, the company did not mention businesses linked to "state secrets".
"From the information it provided in 2009, there was no indication that it has a significant amount of business related to 'state secrets' at the time of its listing," one source said.
In its announcement earlier this month, the company said it had obtained confirmation from the Administration for the Protection of State Secrets of Fujian province in October that "the business of the group involves state secrets".
Kenny Lee Yiu-sun, the chief executive of First China Securities, said the SFC should consider whether companies dealing in state secrets should even be allowed to be listed at all.
"If all companies said they could not disclose information for state-secret reasons, that would seriously damage market transparency and threaten investor protection," Lee said.


'Secret' listed business

Wong Fun-chung, the chairman of China High Precision Automation Group, is quizzed after the company was suspended from trading last week by regulators. Photo: Thomas Chan

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A matter of China High Precision Automation is in the spotlight after trading of its shares was suspended last week amid rumblings of "state secret" issues
