Time to shorten disclosure time frame?

In the past few months, Bursa Malaysia has seen some interesting shareholding changes in some penny stock companies.

Companies such as Envair Holdings Bhd, Sanichi Technology Bhd and DVM Technology Bhd have seen quick enter-and-exit shareholders. The three are listed on the ACE Market whose market capitalisations are below RM50 million.

The roller coaster rides of the share prices that coincide with substantial shareholding changes raise the question whether the existing time frame for disclosures on changes in substantial holdings should be tightened further.

According to the Companies Act 1965, substantial shareholders need to notify the listed company within seven days of the shareholding transaction. This also applies to emerging and ceasing substantial shareholders.

Under Bursa Malaysia’s ACE Market Listing Requirements, the listed companies are required to make an immediate announcement to the stock exchange upon receipt of notifications from substantial shareholders.

But, is seven days too long considering the significant impact insider moves could have on share price movement?

This is because while these new substantial shareholders had immediately notified the companies of their emerging substantial stakes, it took some of them awhile to notify the companies when paring down their stakes.

Take Envair Holding Bhd for example.

Carpet Raya Sdn Bhd director Deepak Jaikishan emerged as a substantial shareholder in Enviar on Dec 2 with a stake of 5.06%. He then sold the entire stake less than two weeks later on Dec 14.

The announcement of Deepak becoming a substantial shareholder was made to the stock exchange on the very same day he acquired the shares. However, the announcement of his exit was made seven days later, although that was within the regulated time frame.

Before Deepak’s entry and exit, the Envair also saw the entry and exit of two Chinese nationals.




On Nov 1, Chinese national Jiang Chuan Yi emerged as a substantial shareholder when he bought a 6.75% stake in a direct deal on Nov 1. He then sold the same stake on Nov 23, and announced to the exchange on the same day. Envair rallied 277% to 41.5 sen on Nov 1 from 11 sen a month earlier.

It had pared down since to close at 32 sen yesterday. Prior to that, Envair was trading quietly between eight sen and 14.5 sen.

Last month, Envair announced that it was entering the oil and gas business by supplying two million barrels of light crude oil monthly to a Chinese company for a five-year duration.

Another Chinese national, Zhang LiYing bought 10.8 million Envair shares or a 9.11% stake in a direct deal on Oct 13 but it was only notified on Nov 2.

Zhang then sold off the 10.8 million shares on Dec 14 on the open market, and notified Bursa Malaysia on Dec 16. It is not known if Jiang and Zhang are linked to the Chinese company.

Another company that saw quick entry-and-exit shareholding changes is Sanichi.

On Aug 3, Mohd Wira Abdul Daim, the son of former finance minister Tun Daim Zainuddin, emerged as a substantial shareholder in Sanichi after he bought a 6.12% equity stake.

The transaction was immediately notified to Sanichi and Bursa Malaysia on the same day the shares were bought. Wira only held the stake for two days before he sold all 10 million shares on Aug 5. However, the notification was only filed with Bursa Malaysia six days later on Aug 11.

Sanichi rose to an earlier 15-month high of 10.5 sen on the next day after the announcement that Mohd Wira bought into the company. Prior to that, Sanichi was only trading in the range of 3.5 sen and six sen.

Trading of Sanichi shares were halted on Aug 4 at 4.05 pm due to an announcement that a Germany firm Projektarbelt Technische Beratung Venretung International (Protev) is commencing due-diligence process on the company.

Sanichi and Protev had earlier signed a memorandum of understanding (MoU) to form an alliance to set up a one-stop plastic injection mould fabrication solution centre. After Mohd Wira’s entry-and-exit, Sanichi’s shares slumped back to as low as four sen on Aug 29, down 62% from the peak of 10.5 sen.

Its shares later saw another spike that could be linked to an agreement with an Indonesian company to market and distribute three million metric tonnes of coal annually in China.

Sanichi had triggered two unusual market activity (UMA) queries from Bursa Malaysia — on Nov 8 and Dec 12. Sanichi closed at 13 sen yesterday.

Until today, it is not known why Mohd Wira had emerged as substantial shareholder in Sanichi for barely three days.

Meanwhile, DVM Tech also saw a quick entry-and-exit shareholder.

On Aug 2, Raymond Yip Wai Man bought 12.98 million shares or a 7.4% stake on the open market in DVM Tech. He then bought another 1.43 million and 3.95 million shares in two separate open market transactions on Aug 4 and 12 respectively, bumping his stake to 10.43%.

However, he ceased to be a substantial shareholder when he disposed 9.8 million shares on Aug 15. The disposal was only filed on Aug 18 while the acquisitions were filed on the days they were purchased.

On Aug 2, Danish citizen Christian Kwok-Leun Yan Heilesen bought 12.05 million DVM Tech shares, or a 6.85% stake on the open market. DVM Tech had closed at 25 sen that day. The transaction was notified to the company and Bursa Malaysia on Aug 4.

On Aug 12, he acquired an additional 4.6 million shares, bumping his shareholding to 9.46%. The notice was filed on the same day.

On Aug 15, Heilesen ceased to be a substantial shareholder when he sold 8.35 million shares. DVM Tech closed at 15 sen on Aug 15. The notice was only filed with Bursa Malaysia three days later.

DVM Tech saw its share price surge 233% to 25 sen on Aug 2, from 7.5 sen a month earlier. It had since fallen to close at 8.5 sen yesterday.

What is interesting about these three companies is that they have seen their share price increase prior to the emergence of the shareholders, and then on a declining trend after that.

In some instances, the substantial shareholders had taken some time (although all within the seven days time frame) before notifying their shareholding changes to the companies.

As such, there could be instances where retail investors bought shares in a company due to the entry of new shareholders, only to see the same shareholders exit the company at the same time.

While it is not known why these shareholders had quickly entered and exited these companies, perhaps it is time for regulators to consider shortening the disclosure period from seven days.

This is in line with how fast information is disseminated these days via the Internet and mobile services, and how efficient and sensitive markets are to news.

After all, the present seven-day disclosure rule was shortened from 14 days earlier. With current technology and reduced dependence on snail mail, perhaps a shorter period is now warranted?

A shorter period would be good to prevent any instances of speculation due to the emergence of new shareholders.


This article appeared in The Edge Financial Daily, December 23, 2011.



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KL shares in red at mid-afternoon

Shares prices on Bursa Malaysia were further adrift at mid-afternoon today as market players remained cautious ahead of key events in Europe, dealers said.

As at 3.08pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) fell 12.33 points to 1,470.66.

The Finance Index plunged 165.82 points to 13,233.15, Plantation Index shed 57.09 points to 7,825.73 and the Industrial Index declined 11.57 points to 2,668.85.

The FBM Emas Index lost 70.75 points to 10,144.87, FBM 70 Index fell 34.68 points to 10,997.61 and the FBM ACE Index declined 55.41 points to 4,205.83.

Decliners led advancers by 423 to 218 while 265 counters were unchanged and total volume stood at 1.098 billion shares worth RM652.921 million.

The most active, SAAG Consolidated added half-a-sen to seven sen, Sycal Ven-WA perked three sen to 12.5 sen and DVM Technology inched up half-a-sen to 9.5 sen.

As for the heavyweights, Maybank slipped 10 sen to RM8.20, Sime Darby lost one sen to RM8.93, CIMB dropped 20 sen to RM7 while Petronas Chemicals was flat at RM6.08. -- Bernama



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KL shares still in the red at midday

Share prices on Bursa Malaysia continued to lose grounds at midday today as the market remained under pressure on external developments.

At 12.30pm, the FBM KLCI was down 10.10 points at 1,472.89, after opening 5.24 points lower at 1,477.75.

Dealers said investors were cautious ahead of a European Union summit this week. Economic data from Japan and Australia that indicated the global economy is slowing also weighed on the local equity market.

The Finance Index dipped 125.78 points to 13,107.37, the Industrial Index slipped 7.39 points to 2,673.03 and the Plantation Index dropped 49.88 points to 7,832.94. The FBM Emas Index lost 59.25 points to 10,085.62, the FBM 70 Index declined 35.03 points to 10,997.26 and the FBM Ace Index was down by 46.98 points to 4,214.26.

Decliners led advancers by 364 to 216 while 275 counters were unchanged, 631 untraded and 25 others suspended. Trading was moderate with a total volume of 895.838 million shares worth RM498.921 million.

Among active stocks, SAAG Consolidated earned 0.5 sen to 7.0 sen, Sycal Ven-WA added 3.5 sen to 13 sen and DVM Technology inched up 1.0 sen to 10 sen.

Sanichi Technology was suspended pending a reply to queries and further clarification on the details of the two announcements made by the company yesterday. British American Tobacco lost 34 sen to RM47.66, JT International eased 25 sen to RM6.55, while Kuala Lumpur Kepong erased 22 sen to RM21.94

Of the heavyweights, Maybank dropped 9.0 sen to RM8.21, Sime darby was flat at RM8.94, CIMB fell 15 sen to RM7.05 while Petronas Chemicals edged up 1.0 sen to RM6.09. -- Bernama



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SC: Actively-traded stocks under watch

Over the recent weeks, several stocks, including penny shares, outperformed the best performing FTSE Bursa Malaysia KLCI component stock by multiple fold.

KUALA LUMPUR: The Securities Commission (SC) says it is monitoring actively-traded stocks to ensure fair and orderly market.

"In the discharge of our regulatory obligations, the SC vigilantly monitors all counters and price movements to ensure a fair and orderly market," said an SC spokesperson.

Over the recent weeks, several stocks, including penny shares, were in the limelight. A number of them outperformed the best performing FTSE Bursa Malaysia KLCI component stock by multiple fold.

Petronas Dagangan Bhd, the best-performing FBM KLCI component stock, has been rising 40 per cent so far this year. In contrast, the likes of Harvest Court Industries Bhd, Envair Bhd and GPRO Technologies Bhd gained between 175 per cent and over 500 per cent year-to-date.

Bursa Malaysia is also doing its best to keep the market in order.

So far this month, four companies have been queried for "unusual market activities" by Bursa. They are Harvest Court, GPRO, Maxbiz Corp and Sanichi Technology.

The SC said it is also looking into the activities of local and foreign investors, as well as detecting any unusual market activities for all transactions.

For example, GPRO, over the last two to three months, saw the emergence of Christian Kwok-Leun Yau Heilesen, who now owns almost 25 per cent of the company.

Heilesen was a controversial figure after the DVM Technology incident, where he, along with another foreign investor, had bought a substantial stake in the company and asked for an extraordinary general meeting to seek the removal of several directors including its founder. However, Heilesen disposed of his entire stake in DVM about a week later.

"The SC has its own market surveillance system to monitor and detect any irregular or unusual market activities for all transactions, be they local or foreign investors.

"The SC then reviews these transactions to determine if any further action is required," it said.

The rise of penny stocks on Bursa

Over the past two weeks, penny stocks have been dominating the top active lists. More importantly, a bulk of these active penny stocks have appreciated in prices.

Kuala Lumpur: Interest on penny stocks is on the rise again, a sign of renewed confidence among retail investors, said brokers and analysts.

Penny stocks are quoted securities that are trading below the RM1 mark. They are seen as studs in a bull market, as retailers clamour for action at the lowest possible cost.

Over the past two weeks, penny stocks have been dominating the top active lists. More importantly, a bulk of these active penny stocks have appreciated in prices.

Interest in penny stocks are mainly driven by retail investors' confidence, added participation of day traders and speculators and the willingness of brokerages to provide margins.


"It clearly shows the return of retail investors, which is also a sign of the return of confidence on the market," Jupiter Securities head of research, Pong Teng Siew, told Business Times on Friday.

Another analyst added that the rally in these penny stocks could be driven by recent gains on blue chip counters.

"Many blue chips have gained significantly over the past four weeks, resulting in a good run last month. A number of these stocks have now become 'expensive'. This may be why investors are now shifting their focus onto penny stocks," said an analyst from a local research house.

Among the top performing penny stocks over the past two weeks are Harvest Court Industries Bhd, which more than tripled from 27 sen to 87.5 sen; Connectcounty Holdings Bhd (+80 per cent); Sanichi Technology Bhd (+54 per cent); Karambunai Corp Bhd (+50 per cent); DVM Technologies Bhd (+18 per cent); GPRO Technologies Bhd (+15 per cent); XOX Bhd (+14 per cent); and Envair Holding Bhd (+10 per cent).

Retail investors' participation in stock market has also increased over the recent days.

So far this month, at least one-third of trades were done by local retail investors and last Thursday, most of the trades were done by retail investors (41.73 per cent local retail participation against 34.98 per cent local institution participation and 23.29 per cent foreign participation).

Data also showed that retail investors were net seller of about RM40 million worth of shares over the past week.

"This is normal, as most retail investors adopt short-term trading mentality, so the net sellers position may probably because they buy low, sell high," added Pong.

While the growing interest signifies the return of retail investors confidence, analysts remained uncertain if it could translate into a year-end mini-bull run.

"I think all signs are pointing to a short-term rally, but it is difficult to determine when it will start or end, or how long it will last," said the analyst who declined to be named.

Fresh impetus for some

PETALING JAYA: The emergence of new, politically connected shareholders and directors appears to be giving fresh impetus to selected small counters on Bursa Malaysia amid the current weak market sentiment.

The companies that have seen politically linked figures come on board in recent months include Harvest Court Industries Bhd, Envair Holding Bhd and Sanichi Technology Bhd.

The three counters, two of which are listed on the ACE Market, saw significant price movements on high trading volume in recent weeks. What is interesting is that all three companies made losses in their last financial years.

Mohd Nazifuddin Najib, the son of Prime Minister Datuk Seri Najib Razak, was appointed a non-executive director of Harvest, which was lifted from its PN17 status in December 2009, at the end of October.

Nazifuddin is also chairman of Sagajuta (Sabah) Sdn Bhd, best known as the developer of the 1Borneo mall in Kota Kinabalu, Sabah. Sagajuta has several ongoing projects including 1Sulaman and 1Likas in Kota Kinabalu, and 1Gateway in Klang. Its controlling shareholder and managing director is Datuk Raymond Chan Boon Siew.

Both Chan and Nazifuddin joined Harvest’s board on Oct 28 after Chan emerged as a substantial shareholder of Harvest 10 days earlier, when he acquired 23.808 million shares, or a 13.85% stake, at 20 sen per share.

The value of Chan’s stake has since tripled, with the stock closing at 64 sen yesterday as investors anticipate he may inject Sagajuta’s assets into Harvest was awarded a contract by Sagajuta for the supply of door leaves for some RM7.03 million.

Chan’s entry into Harvest follows the abortion of earlier plans to inject Sagajuta into Jerneh Asia Bhd.

About a week prior to Chan and Nazifuddin’s appointments, the company received an unusual market activity (UMA) query from Bursa Malaysia on Oct 17.


In response, Harvest said it is unaware of other developments, apart from the discussions between managing director and shareholder Ng Swee Kiat and Affin Bank Bhd for the proposed purchase the entire shares and warrants held by Affin in Harvest.

The query, however, did not stop Harvest shares from rising further, especially after the two appointments.

The counter reached a new high yesterday of 64 sen, a 760% premium to its recent low of 7.5 sen on Sept 26, 2011. The counter gained 334% year-to-date (YTD) compared with 509% in the last three months on an average daily trading volume of 8.34 million.

It is worth noting that for the whole of last year, Harvest posted a net loss of RM2.82 million from a net profit of RM12.16 million a year ago.

While the company posted a net profit of RM168,000 in 2QFY11 ended June 30, it is still in the red for the nine-month period with a net loss of RM678,000.

Envair, meanwhile, appointed Mohd Anuar Mohd Hanadzlah, the brother of Second Finance Minister Datuk Seri Ahmad Husni Mohd Hanadzlah executive director.

The loss-making Envair, which manufactures, sells and services clean air and containment facilities, made headlines recently when it unveiled plans to sell two million barrels of light crude oil per month to a Chinese company for a five-year period, in a deal worth some US$182 million (RM573 million) per month.

Envair was asked by Bursa Malaysia to clarify the deal. This was one of a number of queries from the exchange on Envair’s announcements since Oct 13 that it wanted to venture into the oil and gas business.

The company has also announced that ZAI Corporate Finance Ltd, a London-based investment banking firm, was interested in subscribing to up to 30% of its share base under a private placement exercise. There have been no updates on this development.

Envair posted a net loss of RM290,000 in 2QFY11 ended June 30 and a net loss of RM816,000 for the nine-month period. For the whole of FY10 ended Dec 31, it made a net loss of RM5.38 million.

Envair shares gained some 204% over the three months on an average trading volume of 1.26 million. YTD the counter put on some 407% to settle at 35 sen yesterday.

ACE Market-listed Sanichi Technology Bhd saw the emergence of Datuk Mohd Wira Dani Abdul Daim, son of former finance minister Tun Daim Zainuddin, as a new substantial shareholder three months ago.

Wira Dani recently bought 10 million shares or 6.12% of the loss-making precision moulds and tools maker for RM6 million or six sen per share. The transacted price was about 20% below the market price 7.5 sen at the time.

Sanichi’s share price shot up by as much as 10% after Wira Dani bought into the company in early August.

But over the recent three months, Sanichi lost over 47% to close at 5 sen yesterday. It reached its 52-week high on Aug 4, 2011 at 11.5 sen and its low of 3.5 sen on Dec 22, 2010.

Sanichi is still in the red with a net loss of RM14.93 million in FY11 ended June 30 on the back of RM9.44 million revenue.

Also notable are two counters that have seen significant movement in their share prices of late: GPRO Technologies Bhd and DVM Technology Bhd.

Interestingly, the reason behind the price movement of both companies appears to be centred around one individual: Christian Kwok-Leun Yau Heilesen.

The movement in its share price prompted Bursa Malaysia to query GPRO Technologies earlier this week.

In response, GPRO said it was not aware of any activity that may have contributed to the unusual price movement and yet, the counter settled at 23.5 sen yesterday, translating into about 200% gain YTD.

To recap, GPRO, whose market capitalisation is barely RM24 million, saw the emergence of Heilesen as a new major shareholder, when he bought 38.23 million shares or a 15.29% stake in the ACE Market-listed IT firm recently.

Heilesen acquired the shares on the open market for RM3.25 million or 8.5 sen each in early September. At current prices, the value of his stake has appreciated nearly three times.

This is the second ACE Market - listed loss-making company that Heilesen has bought into in less than two months. The first was DVM, which he later sold down in less than three weeks in August.

Heilesen made news last month when he bought into DVM and requested an EGM to remove four directors from the company’s board. However, he sold down his stake barely two weeks after the share purchase.

To recap, Heilesen, a Danish national, and Raymond Yip Wai Man from Hong Kong emerged as substantial shareholders in DVM via the acquisition of its shares on the open market. Both had a combined interest of close to 20% in the company before selling down their stakes.

While the duo were picking up shares on the open market, the company’s single largest shareholder, Datuk Goh Kian Seng, was paring down his stake to 5.05%.

DVM closed at 7.5 sen yesterday, an increase of more than 40% YTD, but down 73.2% from its recent high just three months ago.

It reached a high on Aug 2, 2011 of 28 sen, which was a 409% premium to its record low of 5.5 sen last November.


This article appeared in The Edge Financial Daily, November 4, 2011.