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Mirach Energy shares plunge further as SGX RegCo flags suspicious trading activities

Stanislaus Jude Chan
Stanislaus Jude Chan9/27/2019 07:00 AM GMT+08  • 4 min read
Mirach Energy shares plunge further as SGX RegCo flags suspicious trading activities
SINGAPORE (Sept 30): Shares in Mainboard-listed Mirach Energy nosedived 23.9% to close at 14 cents on Sept 25, just a day after Singapore Exchange Regulation (SGX RegCo) urged investors to exercise caution when dealing in the counter. On Sept 26, the comp
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SINGAPORE (Sept 30): Shares in Mainboard-listed Mirach Energy nosedived 23.9% to close at 14 cents on Sept 25, just a day after Singapore Exchange Regulation (SGX RegCo) urged investors to exercise caution when dealing in the counter. On Sept 26, the company’s share price plunged a further 2.3 cents, or 16.4%, to close at 11.7 cents.

In an announcement on Sept 24, the regulator noted that Mirach Energy’s share price had more than doubled from 13 cents on Feb 8 this year to close at 29 cents on Sept 3.

However, SGX RegCo said a review of the trades in Mirach Energy in this period showed that a small group of individuals was responsible for over 69% of the buy volume of the shares. It added that these individuals appear to be connected to each other.

In particular, SGX RegCo pointed out that the closing price of Mirach shares jumped 21% from 16.3 cents to 19.7 cents between April 29 and May 15, despite the benchmark Straits Times Index falling 188.25 points, or 5.5%.

Between Feb 8 and Sept 20 this year, Mirach Energy’s market capitalisation had surged from $18 million to $44.5 million.

SGX RegCo said it is reviewing the trades in Mirach Energy shares and will take the necessary actions, including referring the case to statutory authorities where warranted.

SGX’s warning came five hours after Mirach Energy disclosed that See Hoy Chan Investment, its second-largest shareholder, sold its entire 7.81% stake via a married deal. The 18.08 million shares changed hands for $3.4 million, or 19 cents each.

According to the company’s filing, the sale was made on Sept 20. As at Sept 26, it had yet to disclose the emergence of a new substantial shareholder, nor had any of the existing shareholders increased their stake.

In a filing to SGX on Sept 26, Mirach Energy proposed a change of auditors from Ernst & Young to BDO. The company said this is estimated to result in cost savings of up to about 25% in audit fees. It added that a change of auditors would also enable the company to benefit from fresh perspectives and views of another audit firm.

Mirach Energy said outgoing auditors E&Y have confirmed that they were not aware of any professional reasons why BDO should not accept the appointment as auditors of the company. Further, the company did not have any disagreement with E&Y on accounting treatments within the last 12 months.

According to Bloomberg data, Mirach Energy’s largest shareholder is its executive chairman, William Chan Shut Li, who holds an 8.02% stake. Other significant shareholders are Wee Cheng Kwan (5.61%), Wong Kai (3.39%) and Ho Bun Hoi (1.8%).

On May 31, the company announced that Li Kaichun has been appointed its CEO with effect from June 1. Li, a trained lawyer from China, was CEO of a company called Hubei Chuanggou Products Trading Services.

Mirach Energy, which is currently on the SGX Watch-List under both the Financial Entry Criteria and the MTP Entry Criteria, has not disclosed any open-market purchases or open-market sales over the past six months. In April, the group was granted a 15-month extension to exit the list by June 5, 2020.

After paring down a large part of its oil and gas business in the past years, the group diversified into property construction as well as agriculture management businesses.

As at June 30, the group’s construction activity for its first housing project, situated in Perak, Malaysia, is at 15.94% completion, while its second construction project has not commenced due to ongoing discussions with the developer.

On the agriculture business front, the group had acquired a 70% equity interest in RCL Kelstar, a Malaysian company that provides management services to three partners that are allowed to cultivate, harvest or sell durian trees and fruits on about 1,650 acres of concession land.

For the 1HFY2019 ended June, Mirach Energy posted a fivefold surge in revenue to US$1.8 million ($2.5 million), from US$358,000 in the corresponding period a year ago. The majority of this revenue was contributed by RCL, which generated revenue of RM6.8 million ($2.2 million) in 1HFY2019.

The increase in revenue saw the group significantly narrow its losses to US$99,000 in 1HFY2019, from US$946,000 a year ago.

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