Penny stocks drop on news of investigation

PUBLISHED Business Times OCTOBER 26, 2013

JUST as shares of Asiasons Capital, Blumont Group and LionGold Corp shares appeared to be clambering out of their doldrums, news of the Monetary Authority of Singapore's (MAS) investigation into their trading activities dragged them down again.

"MAS and the Singapore Exchange (SGX) are conducting an extensive review of the activities around these stocks," MAS said in a statement yesterday. "This episode has also surfaced broader issues regarding the market structure and practices which MAS and SGX intend to review thoroughly."

All three stocks slid to their lowest level in a week as skittish investors took profit. Asiasons shares fell 18 per cent to 19 cents, Blumont stock dropped 19 per cent to 16 cents and LionGold shed 15 per cent to 25 cents by the close of trading yesterday. The three counters were among the five biggest percentage decliners on the SGX.

"(The three stocks) are like this poor guy who just got discharged from the hospital, only to get langgar (Malay for hit) by a truck again, said a broker who requested anonymity.

MAS's remarks, made in response to queries from the media, were the first confirmation that authorities were investigating the circumstances surrounding the meteoric rise of the three stocks over the past year, way beyond their fundamentals, before their spectacular crash wiped out billions from their market value. The fiasco has led to criticisms of whether SGX could have acted earlier to protect the interests of retail investors caught up in the bubble, and calls for an official investigation.

After SGX allowed the three counters to be traded freely on Monday - without the trading restrictions that banned investors from contra trading and short-selling them since Oct 6 - the relief sent the three stocks soaring between 80 and 93 per cent, albeit from the low bases to which they had plummeted.

Said another broker: "MAS doesn't look at where the share price is trading. It's not out there to time the market. Obviously there's some information that MAS knows that the rest of the market doesn't know, which warrants a further investigation."

When contacted by BT yesterday, LionGold's spokeswoman said: "As far as we understand from press articles on the matter, MAS is investigating the trading activities surrounding LionGold's shares and not on the company's operations. LionGold trusts MAS and SGX to look into the matter accordingly."

Asiasons' managing director Jared Lim said: "This isn't unexpected, given the recent volatility. We do hope though that the investment public recognises a difference between the trading activity and the actual operations of a company."

Blumont declined to comment.

Giving its assurance that "the operations and financial positions of the broking firms remain sound", MAS said that it had been closely monitoring their overall exposure by collating reports on losses and major counter-party exposure to the three counters.

This comes as remisiers and brokerages fretted over the losses that they could be saddled with if clients with unsettled contra positions on the stocks could not or refused to pay for their stock purchases during the designation.

In a statement yesterday, SGX clarified that the use of its three regulatory tools - issuing a query, designating a security and suspending trading - was not intended as a comment on the fundamentals or value of the three companies concerned. "When SGX suspended the three counters, it was acting to fulfil its responsibilities to preserve a fair, orderly and transparent market. This remained the sole objective when the securities were designated and when trading resumed," it said.

Any investigation into possible breaches of the Securities and Futures Act, including insider trading and market manipulation, is distinct and separate from the regulatory tools. Investigations are undertaken to review past trading conduct and detect possible transgressions, SGX explained. The bourse operator added that it devotes significant resources into detecting and investigating market misconduct, and works closely with statutory authorities against offenders of the law.

IPCO International Ltd, Blumont Blumont Group Ltd (formerly known as Adroit Innovations Ltd), Innopac Holdings Ltd (formerly known as Inno-Pacific Holdings Ltd), and Magnus Energy Group Ltd.

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Old news ...

Dubious IPCO family

So far, we have unearthed the complex web of dealings between four SGX-listed companies – IPCO International Ltd, Blumont Blumont Group Ltd (formerly known as Adroit Innovations Ltd), Innopac Holdings Ltd (formerly known as Inno-Pacific Holdings Ltd), and Magnus Energy Group Ltd.

Here is our detailed story on the web of these companies.

IPCO and Innopac have not responded to numerous requests for comment.

But there are five other companies in this network.

These five companies are Annica Holdings Ltd (formerly known as Oculus Ltd), LionGold Corp Ltd (formerly known as The Think Environmental Co Ltd and before that as Asia Tiger Group Ltd), Chaswood Resources Holdings Ltd (formerly known as Asia Silk Holdings Ltd), Asiasons Capital Ltd (formerly known as Integra2000 Ltd), and ITE Electric Co Ltd.

Most of the relationships are visible in the shareholdings patterns of these companies.

LionGold Corp Ltd’s notable shareholders are: Asiasons Capital Ltd (7.21%), Forte Services Ltd (3.51%), Whitefield Management Ltd (2.46), G1 Investments Pte Ltd (2.45%), Magnus Energy Group Ltd (1.88%), and ITE Assets Holdings Pte Ltd (1.40%).

Tan Sri Dato’ Nik Ibrahim Kamil Bin Nik Ahmad Kamil is the man behind Forte Services Ltd (refer page 4 of ASX-listed Signature Metals Ltd’s January 20, 2012 announcement).

Dato’ Nik Ibrahim is also the Executive Chairman and CEO of LionGold Corp.

As we have already mentioned, Whitefield Management Ltd, a British Virgin Islands Company, belongs to Mr Idris Bin Abdullah, who is a lawyer based in Malaysia (refer Asia Tiger Group’s August 13, 2007 announcement).

And those who have read our story on IPCO would recall that G1 Investments Pte Ltd is a wholly-owned subsidiary of Blumont Group Ltd.

And yes, ITE Assets Holdings Pte Ltd is a subsidiary of ITE Electric Co Ltd.

Moving on, Asiasons Capital Ltd’s notable shareholders are: Asiasons Investment Managers Inc (39.96%), Porterhouse Capital Ltd (11.37%), Mohammed Azlan Bin Hashim (3.93%), and Friendship Bridge Holding Company Pte Ltd (2.99%).

Dato’ Mohammed Azlan Bin Hashim is the man behind Asiasons Investment Managers Inc and Porterhouse Capital Ltd (refer Asiasons Capital Ltd’s October 9, 2012 announcement).

Dato’ Azlan has been a Director of Malaysia’s sovereign wealth fund Khazanah Nasional since June 1, 2004.

Friendship Bridge Holding Co Pte Ltd is also a shareholder of Innopac Ltd and Blumont Group Ltd.

So far, we know the companies and people behind LionGold Corp and Asiasons Capital.

Now, let us focus on Chaswood Resources Holdings Ltd.

Its notable shareholders are: Posh Corridor Sdn Bhd (62.37%), Reddy Andrew Roach (22.95%), and Sugiarto Edwin (1.10%).

Surprisingly, Asiasons Capital Ltd, via its various subsidiaries, is the controlling shareholder of Posh Corridor Sdn Bhd (refer Asiasons WFG Financial Ltd’s December 2, 2010 announcement).

Another important shareholder of Chaswood is Sugiarto Edwin who is also the largest shareholder and Chairman of Annica Holdings Ltd.

Next in the line-up is ITE Electric Co Ltd.

Its notable shareholders are: Ho Cheng Leong (16.58%), Chee Suwen (6.40%), Sim Chee Keong (4.68%), Li Hua (4.63%), and G1 Investments Pte Ltd (1.35%).

Ho Cheng Leong is the CEO of ITE Electric Co Ltd.

He was also one of the placees in Annica Holdings’ placement of 210 mln shares in April 2012 (refer Annica Holdings’ April 9, 2012 announcement).

Also, he was allotted 40 mln shares by IPCO International in a placement exercise in January 2008 (refer IPCO’s January 8, 2008 announcement).

Finally, Annica Holdings Ltd’s notable shareholders are: Sugiarto Edwin (8.25%), and Tan Cheng Guan (1.06%).

Edwin Sugiarto is an Indonesian businessman with diversified business interests.

He is the Chairman of Annica Holdings and has also served as non-executive Chairman of Asia Silk Holdings Limited (now known as Chaswood Resources Holdings Ltd).

Just like Ho Cheng Leong, though on a different occasion, Mr Sugiarto was also allotted 62.5 mln shares by IPCO International in a placement exercise in November 2010 (refer IPCO’s November 11, 2010 announcement).

In May last year, Mr Sugiarto was fined by the Monetary Authority of Singapore for a delay in notifying the market of a change of interest in Annica Holdings Ltd (MAS’ press release).

Apart from cross-shareholdings, all these companies and/or promoters have had numerous business dealings among themselves.

For instance, Neo Kim Hock, the Chairman and largest shareholder of Blumont, bought 20 mln shares in Annica Holdings in December 2010 (refer Annica Holdings’ December 8, 2010 announcement).

Similarly, Annica Holdings bought Nu-Haven Incorporated, a shelf-company in British Virgin Islands, in 2008 (refer Annica Holdings’ July 23, 2008 announcement).

Later, Nu-Haven Incorporated emerged as a shareholder of Innopac and Blumont (refer Handshakes map in our earlier story on IPCO dated February 1, 2013).

So, IPCO, Innopac, Blumont, Magnus Energy, Annica Holdings, Asiasons Capital, Chaswood Resources, LionGold Corp, and ITE Electric are different companies belonging to a common set of people.

But let us step back to look at the bigger picture.

Dato’ Mohammed Azlan Bin Hashim, the man behind Asiasons, seems to be at the helm of this web of nine SGX-listed companies.

Any reasonable investor would wonder if Dato’ Azlan’s affiliation with Khazana Nasional has any bearing on the various dealings (mostly loss-making) among these companies.

At the same time, the recent placement of majority stake in IPCO International to Dato’ Mohd Zaid Ibrahim, the former Law Minister of Malaysia, complicates the picture.

What could be the motivation for such a complex web of companies, shareholdings and cross-shareholdings?http://www.investorcentral.org/text_show.php?textid=17612

IPCO International

Highly speculative counter to be sure but also has some undervalued elements.

Builds piers and terminals but in recent times have also build things like utilities, oil/gas infrastructure like offshore platforms. A look at their website shows a list of projects that they completed all over the world. They won 30 year rights to supply gas to homes, offices and industries to several cities in Hubei province in China.

Other Interesting titbits is that they have shares in some companies like blumont and innopac. By estimation and reckoning close to 200mil shares in innopac, around 140mil shares in blumont.

blumont has some iron ore mining interest and innopac recently taken over ASX listed diamond mining company. Blumont also vested in innopac so this cross holding very interesting. Both blumont and innopac share prices have gone parabolic in recent times

It doesn't stop here, there seems to be like many prominent investors turning up at ipco lately and some have further increased their stakes. Recently a lot of shares have been placed out to 3 individuals, 1 related to financial institution, 1 is from a hedge fund, the last is to a very prominent ex-unmo politician Mohd Zaid Ibrahim.

If you google about Zaid you will see that he is lawyer, ex-umno law minister, opposition MP for a while he is also a member of International Islam Financial Market (that was formed in Dubai) click on the membership on the IIFM website shows a list of bankers financial authorities, oil companies the who's who of the islamic world etc .. so Zaid is well connected in the oil/gas industry. He also owns a law firm company zicolaw which has many offices around SEA. He recently announce he's given up politics to do business when he took a 7-8% stake in ipco.

Enforce rules on directors' trades

Tardy disclosures: SGX, MAS shouldn't accept explanations at face value

Money | Updated today at 01:20 AM
By Goh Eng Yeow, Senior Correspondent

SOMETIMES the actions of insiders speak with more clarity and insight than all the analysts' reports, or efforts of a company to doll itself up, put together.

That is why many investors place great store in closely tracking corporate insiders' trading patterns. Company bosses and big shareholders may, after all, have access to information not known to the public - and they therefore know just when to buy and to sell.

What better show of faith by a boss than to invest his own cash in the business he is running? And if he is selling off huge chunks of his own shares - whether of his own volition or at the behest of banks - what does this say about his commitment to the firm?

As a result, traders pay considerable attention to insiders' trades, especially when big tranches of shares change hands.

Keeping an eye on what insiders are doing might also spare investors the anguish of seeing their investments go up in smoke, especially if they spot unusual trading patterns such as big sell-offs.

Given all this, any tardiness by listed firms in announcing share trades - especially big ones - should be viewed seriously. These lapses can hurt investor confidence badly and dent a company's share price performance. There is, after all, a legal requirement for listed firms to inform investors of any changes in the holdings of directors and substantial shareholders not later than the end of the next business day.

Over the years, another telling sign of a trouble-plagued listed firm is when it starts putting out unpalatable announcements late at night when most folks are getting ready for bed, or are sound asleep already. One may ask how investors can make sensible investment decisions at such late hours, even if they manage to stay up to catch the announcements.

So what are we to make of the recent disclosures made by beleaguered Blumont Group on sales of its shares by the company's chairman Neo Kim Hock and substantial shareholder Ooi Cheu Kok?

On Oct 4, Blumont crashed 56 per cent within an hour of the opening bell. This forced the Singapore Exchange (SGX) to suspend its trading "as there could be circumstances that would result in the market not being fully informed".

Later, it was reported that Mr Neo had sold the firm's stock just days before the counter's plunge on Oct 4. He sold four million Blumont rights - instruments allowing investors to buy Blumont shares - on Oct 2 and another three million Blumont rights on Oct 3. But disclosures were made close to midnight on Oct 7 in a 12-page announcement.

The SGX allowed Blumont to resume trading on Oct 7, after banning contra trades and short-selling to rein in excessive speculation and possible disorderly trading. But that failed to stop the stock from collapsing a further 85 per cent that day.

On Oct 7, when trading resumed, Mr Neo sold 1.41 million shares, as its price crashed. He then unloaded another 34.26 million shares from Oct 8 to Oct 14.

Disclosures on these sales were made one hour before midnight on Oct 14. That meant a seven- day lag on disclosing the first of his latest spate of sales. But Blumont said: "Mr Neo only had knowledge of the bank loan/forced sale of the securities held on Oct 14."

Another insider, substantial shareholder Ooi Cheu Kok sold 32.16 million shares on Oct 7. His sales alone accounted for 28 per cent of the 115.5 million Blumont shares traded on Oct 7.

Like Mr Neo, disclosure of his sales was made only on Oct 14, and again, close to midnight. Even the reason for the sale was similar. "Mr Ooi only had knowledge of the bank loan recall/ forced sale of the securities held on Oct 13," Blumont said.

Between Oct 8 and Oct 14, a further 228.7 million Blumont shares changed hands as it swung between 13 cents and 20 cents. In that period, forced selling of Mr Neo and Mr Ooi's shares totalled 40 million shares, or 17.5 per cent of all the Blumont shares traded.

It begs the question: Would investors (or rather punters) have changed their course of action, if the information on the forced selling of Mr Neo and Mr Ooi's shares was available to them earlier?

As SGX's deputy chief regulator Richard Teng once noted: "Incomplete or inaccurate information may lead to wrong conclusions and a greater risk of loss."

The SGX and its regulator, the Monetary Authority of Singapore, should ensure that listed firms adhere strictly to the guidelines laid down on disclosing of shareholdings by directors and substantial shareholders. They should not accept at face value any explanation for tardy disclosures.

As for Blumont's recent habit of putting out unsavoury announcements close to midnight, this column leaves readers to draw their own conclusions. Enough has been aired on the subject.

Rowsley XB calculation

Dunks  Dunks is offline

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if at 38ct old rowsley is priced at 0.38 +0.20+0.20 =0.78 

warrant will be 20ct each and you got 2 free warrant for 1 row share

so every 1 bid...the old rowsley share will increase by 1.5ct

ofcourse theoritical pricing..not counting com as well as nvr take into consideration time value of wt

if current rowsley is 0.375 old rowsley is 0.765

if current rowsley is 0.39 old rowsley price is around 0.81 example

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02-10-2013 01:12 PM #7795

Guest260  Guest260 is online now

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Quote Originally Posted by Mangotree  View Post

Can someone enlighten me, i bought 20,000 shares at 0.65 before 30sept. With the current price 0.380 how much have i earned in profit? How to calculate.. Sorry, its my 1st free warrants stock. Many thanks in advance for those who bother to reply!

20 lots at 65c = 13K

now 38c = 7.6K

you lose 5.4K

you get 40 lots warrants 

40 X (38c - exercise price 18c = 20c) = 8k

Net you make 2.6K - This assume the mother shares price remain at 38c.

Note: your broker commission not included yet.

Do you have a set of trading rules that you follow?

Trading Rules that I Adhere To

October 16th, 2013 singapore stock broker  

Here's the trading rules that I follow when comes to pure trading (as compared to investing):

*    Capital management: each position should not risk more that 2% of total investible capital.

*   If a position already in profit, avoid allowing it to slip into negative.

*   Keep the number of open position to a manageable number for yourself.

*    Set strict cutloss. Position risk management: Do not risk more that 7-8% of each trade position (this 7-8% of the trade position has to be lower than % of capital cutloss). Follow it religiously.

Important: At initiation of position – must know exactly where is the cutloss point.

*    If have no conviction of the trade but still want to proceed, always trade small(er).

*    Wait patiently for the best possible entry points.

*     Always trade in the direction of the major trend (trend is your friend).

*     Averaging:

Never ever average down. Only average up – either in same size or reducing size (in dollar value).

After adding position, must know what is your weighted average cost and where is your trailing stop – and execute accordingly when time comes. No thinking, just act according to plan.

*  Let winners run, cut losses short. (i.e. Keep losses small, and have big winners).

* Discretionary: Great traders reduces their trade size when things are not happening in their favor and increases (note: use with care and perhaps gradually, depending on your skill level) their trade size when they trade well.

Side note: On averaging down, I restrict myself to not average down except for dividend paying, quality blue chips counters and at far enough prices.

—

Always make sure to  manage risk, trade safe and well ;)

Switching to mid and big cap for earnings bet

by ckchoy

With the quarter earnings around the corner, we can take a look at battled down counters, which I think would be mid and big caps like shipping, commodity and food industry. Eg Vard, NOL, Cosco, Noble, Golden Agri, Sinograndness, Yamada, etc.
Prefer counters with low P/E, below 15 or best below 10. Do your own homework.

Avoid those high P/E counters with no fundamental as their coming quarter results may continue disappoint investors. Come back after the earnings period over, around end of Nov.

Confidence in Penny stocks needs time to recover

Today the drop in penny continued. After this shattered confidence in the market, we think that it will take quite a bit of time for confidence to recover. The leaders of penny, namely Liongold, Asiasons and Blumont has become a shattered dream. It seems they are given the "Penny Idols" status due to their meteoric rise.

This year, there are other penny stocks that seem to do relatively well too. Today they suffered a drop just like the trio. Ossia, ISDN and Mirach Energy also suffered a 20-30% drop today after seeing the same rocket rise this year.

The paradox today is that STI is in the green for the most of today. Currently STI is only 1 point down.

This morning I received an off-line interview in the morning (when I am sleeping still, ha!) by FM958 to talk on the status of penny, and whether we can buy at such low prices.

My view is that both the big players and retailers are hurt in this process. And it will surely also take some time for the big players to recover before daring to enter these pennies again. Retailers will stay on the sideline now.

Avoidance is the best policy for these stocks!