KUALA LUMPUR (Feb 17): Shares of Able Global Bhd (KL:ABLEGLOB) continued to slide on Monday after news that the Malaysian Anti-Corruption Commission (MACC) has launched a graft probe into the dairy manufacturer and tin can maker's chairman.
Able Global's share price fell as much as 5.7% to touch its intraday low of RM1.49 in the morning session on Monday, but pared some losses to end the day at RM1.51, still down seven sen or 4.43%. A total of 4.3 million shares were traded. Its market capitalisation stood at RM468.8 million. Its share price has fallen 20.94% year to date.
In a filing with Bursa Malaysia last Friday, Able Global said its chief executive officer and executive director Edward Goh Swee Wang had also been remanded by the anti-graft agency to assist in an ongoing investigation in relation to its chairman and executive director Ng Keng Hoe. Goh and his father Goh Mia Kwong collectively hold a 19.3% stake in Able Global, while Ng holds 12.5%.
On Wednesday (Feb 12), Able Global announced that Ng had been remanded by the MACC.
The company has maintained that the ongoing investigation pertains to Ng's private company matters and at this juncture, is not related to Able Global or its group of companies. In the interim, Ng's administrative and executive functions have been suspended and taken over by the board of directors and key senior management of the company.
In a note to clients on Monday, Inter-Pacific Research said while Able Global has reaffirmed its commitment to maintaining business operations as usual and upholding corporate governance standards, the local research firm believes near-term market sentiment and investor confidence could be negatively impacted.
"While the investigation is unrelated to Able Global or its group of companies, the remand of both top executives raises concerns over corporate governance and leadership stability.
"Given the uncertainties surrounding the group’s leadership, corporate governance risks and potential share price volatility, we adopt a cautious stance until more clarity emerges regarding the outcome of the ongoing investigations," it noted.
Inter-Pacific Research has downgraded its recommendation on Able Global to "neutral" from "buy", with a lower target price of RM1.98, derived from pegging target price-to-earnings ratios of 10 times (15 times previously) and eight times (unchanged) to the 2025 earnings of its F&B and tin manufacturing segments respectively due to the heightened corporate governance risks that could affect its earnings outlook.
On Friday, PublicInvest Research had also downgraded its rating on Able Global to "trading buy" from "outperform", noting that while the ongoing graft probe on Ng’s private company may not have any financial repercussion on the research firm's earnings forecasts, it is likely to create a significant share overhang given the perceived reputational risk associated with this investigation.
PublicInvest Research had also reduced its target price to RM1.85, from RM2.65 previously, based on a lower price earnings multiple of seven times, which is in line with its three-year historical average.