SGX RegCo has issued a “trade with caution” warning on loss-making Kitchen Culture Holdings, following unusual share price movements over the past few months, including a crash of nearly a third earlier today.

Just last Thursday (Aug 14), the company announced plans to buy a 30% stake in big data firm OOWAY Technology for $23.92 million by issuing 90 million new shares at 26.58 cents each.

Jim Rogers, better known as a commodities bull, is a co-founder of OOWAY Group, which is selling the stake in OOWAY Technology to Kitchen Culture. “With the complementary strengths of OOWAY and Kitchen Culture, I believe that our collaborations will yield exciting results in the future,” he said.

From a recent peak of 33 cents on Aug 11, Kitchen Culture shares have since lost more than half its value to close at 14.7 cents on Aug 17. The shares have gained more than 300% since April, when it was trading at around 6.5 cents. 

The company has been in the sights of the regulator for quite a few months. On June 4, SGX RegCo issued a trading query on Kitchen Culture following unusual price movements.

Besides the unusual share price movements, the red flag from SGX RegCo follows a review of trades in Kitchen Culture shares by a group of trading accounts that “appeared to be influencing” share prices of the kitchen furnishings company.

“The individuals behind these accounts are likely connected to the traders highlighted in RegCo’s previous Trade with Caution alert issued on Sept 24 2019,” says SGX RegCo on Aug 17.

On Sept 24 2019, a Trade with Caution warning was issued on another listed company Mirach Energy, which saw its share price increase from 13 cents on Feb 8 2019 to 29 cents on Sept 3 2019. 

“SGX's review of the trades in Mirach between Feb 8 2019 and Sept 3 2019 showed that a small group of individuals was responsible for over 69% of the buy volume of Mirach shares. These individuals appear to be connected to each other,” said SGX RegCo then.

For the most recent six months to Dec 2019, Kitchen Culture reported a loss of $1.56 million. The company said earlier this year that it is trying to diversify its business.

In its statement on Aug 17, SGX RegCo noted two recent corporate actions undertaken by Kitchen Culture that were deemed “crucial” to the transactions at hand.

On April 29 2020, it announced a convertible loan agreement with maximum conversion into 46,694,626 new ordinary shares. 

The conversion price of 14.9 cents per conversion share was at a premium compared to the volume weighted average price of 14.15 cents on April 24 2020 used as a reference in the announcement.

On July 22 2020, KCH announced a proposed placement of 40,572,000 new ordinary shares at issue price of 23.5 cents, a discount compared to the volume weighted average price of 26 cents on July 17 2020 used in the July 22 2020 announcement.

On both occasions, there were substantial price movements prior to these announcements.

SGX Regco said it is reviewing the trades in Kitchen Culture shares and will take the necessary actions including referring the case to statutory authorities where warranted.