KUALA LUMPUR: United U-Li Corp Bhd (Uli Corp), SLP Resources Bhd, Oriental Food Industries Holdings Bhd and SCGM Bhd saw their shares being sold down heavily yesterday, erasing a combined RM242 million in market capitalisation.
At the closing bell yesterday, the four mid-cap companies saw their share prices drop between 5% and 14%, at a time when the local benchmark index FBM KLCI was almost unchanged at 1,694 points.
It is understood that the selldown was initiated by a local bank-backed asset management house which is a common shareholder of Uli Corp, SLP, Oriental Food and SCGM.
Uli Corp, a Shah Alam-based cable support systems and integrated ceiling systems supplier, saw its share price plummet 75 sen or 14.6% to close at RM4.40 yesterday, down from RM5.15. It lost about RM108.8 million in market capitalisation (cap) to settle at RM638.9 million. The counter was still traded at its 52-week high of RM6.86 on June 23.
Kedah-based plastic packaging solutions specialist SLP also saw its share price drop 28 sen or 11.3% to end the day at RM2.20. Its market cap was reduced by RM69.2 million to RM544.1 million. It was still traded at its 52-week peak of RM3.10 on July 15.
Shares in Oriental Food, a Melaka-based snack food and confectioneries producer, dived 18 sen or 8.3% to close at RM2, giving it a market cap of RM480 million. It lost about RM43.2 million of its market value within a day. The stock was trading as high as RM2.55 on June 8.
SCGM’s share price fell 16 sen or 5.2% to close at RM2.94 yesterday. It shed RM21.1 million in market value to settle at RM388.1 million. The Johor-based manufacturer of thermo-vacuum formed plastic packaging was still traded at its 52-week peak of RM3.65 on June 23.
It is worth noting that Uli Corp, SLP, Oriental Food and SCGM were among the top 10 losers on Bursa Malaysia yesterday, taking the second, fourth, eight and ninth spots respectively. All these four counters have suffered in a big sell-off since last week.
The sharp decline in the share prices of Uli Corp and SLP caught the regulator’s attention yesterday, with Bursa Malaysia Securities Bhd slapping them with an unusual market activity query.
Year to date, shares of Uli Corp, Oriental Food and SCGM have fallen 19.3%, 19% and 7.2% respectively, while SLP is the only stock that is still holding up its gain at 15.8%.
Interestingly, share prices of these four companies have been trending upwards in the last three years (see price charts). In other words, instead of losing money, investors who went in earlier may only see part of their profits evaporated.
Three years ago, SLP, Uli Corp and SCGM were only penny stocks that traded at 35 sen, 71 sen and 53 sen respectively. At current prices, these counters have jumped by more than 530%, 510% and 450% respectively.
In a report dated Aug 8, Kenanga Research analyst Marie Vaz downgraded SLP to “market perform”, with an unchanged target price (TP) of RM3.11.
“We are comfortable with our earnings estimates at this juncture as SLP continues to see margin improvements year-on-year and maintains its export-driven expansion play,” she said.
Meanwhile, SCGM had announced on Aug 10 that it is planning to undertake another 10% private placement of its shares, estimated to raise RM46.2 million.
In a note dated Aug 11, PublicInvest Research analyst Chong Hoe Leong highlighted that the proposed placement is expected to have a dilutive effect on SCGM’s earnings per share in financial year ending April 30, 2017. He reiterated an “outperform” call on SCGM, with a TP of RM4.