IN our previous story on Dataprep Holdings Bhd, FocusM has associated the gravity-defying meteoric rise of the information communications technology (ICT) firm – from a mere 16.5 sen on the eve of this year’s lunar new year (Feb 11) to where it is today – to duit raya and a rags-to riches story.
On the same note, we cannot help but feel astonished as to what unique value proposal the company – having been in a loss making position for a decade – is able to bring to investors, let alone how it has survived the market regulator’s unusual market activity (UMA) query and later the advice to investors to exercise caution which we branded as “red card”.
As how the stock fare will eventually impact “the pockets” of many retail investors, FocusM has sought the opinion of the Minority Shareholders Watch Group CEO Devanesan Evanson on his take on Dataprep:
“First and foremost, Bursa Malaysia, the front-line regulator of the stock exchange, has alerted investors to exercise caution and make informed decisions in trading of Dataprep’s shares.
The regulator went on to say that it “will not hesitate to take appropriate regulatory action to ensure fair and orderly trading”. Reading between the lines, the regulator seems to be alluding that trading may not be fair and orderly.
Bursa does not issue such cautions willy-nilly; therefore, when they do, it must be taken seriously.
The share price has displayed extreme intra-day volatility. A snapshot of the trades for the half-day morning session yesterday (March 16) indicates the shares having traded as high as RM4.13 and as low as RM2.66 on the back of a volume of 53.21 million shares.
The intra-half day statistics should put minority shareholders on alert as to what to expect in the short term at least, which is a roller-coaster ride.
Looking at the recent meteoric rise in the share price, minority shareholders should take cognisance of the fact that Dataprep’s share price soared from 16.5 sen on Feb 11 to a 20-year high of RM3.79 on Monday (March 15) which is slightly more than a month.
In addition, there are share placements – both completed and planned – which will have a dilutive effect on existing shareholders: 139.06 million new shares, representing up to 30% of the total number of issued shares were placed out by Dec 21 last year at below 20 sen.
Now, another share placement is in the pipeline. The new proposed private placement will be equivalent to up to 20% of its issued share capital. The second placement comes barely two months after the completion of its previous private placement exercise.
There have been a few announcements. Minority shareholders must read the announcements in detail to understand what is being said so that they can make an informed investing decision.
For example, there is an announcement of a memorandum of collaboration with IT consulting company Asia Coding Centre Sdn Bhd “to undertake a project in relation to providing an integrated solution technology for COVID-19 screening to Kementerian Kesihatan Malaysia (Health Ministry)”.
What minority shareholders should discern form this announcement is that it is only a memorandum of collaboration with the IT consulting company. Also, the undertaking of a project merely means that here is no guarantee that the initiative will end up as a profit centre.
As always, informed investing should be the order of the day.”
At 10.24am, Dataprep was down 17 sen or 5.07% at RM3.18 with 7.66 million shares traded, thus valuing the company at RM1.95 bil. – March 17, 2021
Photo credit:Vynn Venture Sdn Bhd
