KUALA LUMPUR (Feb 14): An anti-graft investigation into Able Global Bhd (KL:ABLEGLOB) executive chairman may drag on shares of the dairy company, analysts said, flagging reputational damage and other uncertainties ahead.

TA Securities downgraded its recommendation for Able Global to “sell” from “buy” previously, telling investors to reduce exposure while awaiting clarity. The research house, one of three covering the stock, also downgraded its environmental, social, and governance (ESG) rating on Able Global.

“We believe the investigation involving Able Global’s chairman is unlikely to have a significant financial impact on the group,” TA Securities said. “However, this development warrants a reassessment of our ESG evaluation, particularly regarding governance.”

On Thursday (Feb 13), Able Global disclosed that its executive chairman Ng Keng Hoe had been remanded by the Malaysian Anti-Corruption Commission (MACC). The investigation is related to Ng’s private company and is not related to Able Global at this juncture, said the company in a bourse filing.

Ng controls a 12.46% stake in Able Global, according to its latest annual report. In the interim, Able Global said the board and key senior management will collectively take over Ng’s suspended administrative and executive functions.

Shares in Able Global rebounded on Friday, up eight sen or 5% to RM1.62 at 9.30am, giving the company a market capitalisation of RM489 million. On Thursday, Bursa Malaysia suspended intraday short selling of Able Global’s shares, after dropping more than 15% or 15 sen.

Public Investment Bank, meanwhile, warned that the investigation is likely to create a “significant share overhang”, given the perceived reputational risk, even as there may not be any financial impact.

The house also downgraded the stock to “trading buy”, from “outperform”. The latest rating means that the stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next three months, but the underlying fundamentals are not strong enough for an “outperform” call.

Able Global now only has two “buy” calls, with a 12-month target price at RM2.30, implying potential gain of 42% from its last price. Year to date, the stock has declined nearly 17%.

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