This article first appeared in The Edge Financial Daily, on January 13, 2016.
KUALA LUMPUR: HeveaBoard Bhd, which has seen its share price fall 15% over the past week on “bloggers attacks”, rebounded 6.16% yesterday after its management and an analyst said the allegations were non-fundamental and frivolous.
The investor blog i3investor.com had carried three negative allegations against HeveaBoard in the past week. Besides alleging that a civil suit has been filed against the company’s managing director over the non-payment of dividends, the blog had claimed that 700 of the company’s containers of particle board were stuck in Korea due to non-conformance with quality standards, and that there were discrepancies in Heveaboard’s inter-company loan.
Following the allegations, HeveaBoard’s shares slumped 15% to RM1.46 on Monday from RM1.73 a week ago on Jan 5. However, the counter recouped some losses yesterday and rose 6.16% or nine sen to close at RM1.55, valuing it at RM678.14 million.
According to CIMB Research, the company’s managing director Yoong Hau Chun had explained via a conference call that a civil suit was indeed instituted by HeveaWood Industries (HW) (HeveaBoard’s largest shareholder with 27% stake) minority shareholders against the Yoong family for the non-payment of dividends at HW.
However, Yoong said HW was not in a position to pay dividends from 2009 to 2012 as HeveaBoard’s financials were stretched following the collapse in the particle board industry. CIMB also wrote that the High Court have decided in favour of the defendant in the suit.
The management also dismissed allegation that its containers were held up by Korean customs as “untrue”.
“Korea had changed its orders from E2 boards to E1 boards. As Korean E1 testing standards differed slightly, HeveaBoard delayed shipment to Korea pending clarification of its new testing standards. This issue has since been resolved,” CIMB noted.
On the discrepancy in its inter-company loan, HW had said it made other inter-company loans to other related parties in addition to HeveaBoard and hence, the amounts would differ, noted CIMB.
“All HeveaBoard’s debts will be repaid by mid-2016, according to management,” said CIMB, urging investors to stick to HeveaBoard’s fundamentals. It also maintained its “add” call on the counter.