(Yicai Global) May 9 -- The Shenzhen Stock Exchange has called on Sanlux to provide further details on the Chinese rubber maker's plans to grow medicinal hemp in Laos. 

The bourse has written to the Zhejiang province-based firm asking it to provide more information on Laos' policies and laws on medicinal hemp, the market's size and prospects as well as the project's overall feasibility, according to a statement posted on the exchange's website. The bourse aims to determine whether the scheme can create synergies with Sanlux's primary business, making V-belts and other rubber products.

The firm's share price [SHE:002224] rose by the maximum daily 10 percent limit yesterday after it reached a deal with authorities in Phongsali province in Laos to set up a pilot hemp project. Sanlux gained 0.9 percent today to close at CNY6.91 (USD1.01), while the benchmark Shenzhen Component Index fell 1.4 percent.

"Sanlux has years of experience in investing in rubber parks in Phongsali and is the largest foreign-funded firm there and has brought economic benefits and jobs to the local place," Board Secretary Guo Lijun told Securities Daily. "The Laos government is promoting medicinal hemp projects, so we are grabbing the opportunity to conclude the cooperation."

Sanlux works on 5,025 hectares of land for its rubber planting in Laos and runs a processing plant there.

The exchange has also asked the company to prove its qualifications for planting and processing hemp, its talent pool and technology, as well as major risks and solutions and analysis on investment returns over three years.

A number of Chinese companies have announced plans to enter the medicinal hemp sector since the start of this year, including generic drugmaker Dezhan Healthcare, Conba Pharmaceutical and Er-Kang Pharmaceutical. In each case their shares received an initial shot in the arm.

Editor: William Clegg