“Limit down club” syndrome having strong grip on Rapid Synergy, YNH as blood bath continues unabated

MOST “limit down club members” have seemingly recouped their recent steep loses today (Jan 22) minus two socks associated with businessman Datuk Dr Yu Kuan Chon with both Rapid Synergy Bhd and YNH Property Bhd hitting limit down again for the sixth and fourth time respectively over the past two weeks.

The industrial mould manufacturer who is Bursa Malaysia’s biggest loser at the time of writing opened at limit down with a share price of RM1.95, down 83 sen or 29.86% from its previous close. Its volume stood at 527,900 shares at the time of writing.

Meanwhile, YNH Property which is today’s (Jan 22) most active stock is the second biggest loser on the local bourse after having shed 29 sen or 33.92% to 56.5 sen with 222.95 million shares traded.

Specifically, Rapid Synergy which was traded at RM29.50 before the market closed for Christmas break (Dec 22) started to head south from Boxing Day onwards with its maiden limit down having occurred on Jan 10 when its share price plunged RM7.02 or 30% to close at RM16.38.

At Rapid Synergy in which he holds a 22.8% stake, Dr Yu would have incurred a loss amounting to RM473.76 mil as the company posted a decline of RM2.08 bil in market cap, according to The Edge on Jan 17.

As for YNH Property in which he holds a significant 32.58% stake, Dr Yu is expected to have succumbed to a paper loss of RM358.49 mil due to persistent forced selling that wiped off RM1.1 bil in market capitalisation since Jan 9.

To re-cap an Unusual Market Activity (UMA) query by Bursa Malaysia Securities Bhd on Jan 11 (following its then second successive limit down), Rapid Synergy said was unaware of any corporate development relating to the group’s business affairs that has not been previously announced save for “some proposals to sell certain landed properties of the company and its subsidiaries”.

“However, these proposals are still in the stages of discussion. The board believes that it would be more appropriate to release announcement(s) to Bursa Securities once the terms of the offers have been finalised and agreed upon by both parties.”

Interestingly, The Edge contributing editor M. Shanmugam has described Datuk Dr Yu Kuan Chon’s rise to fame in Corporate Malaysia as “not due to his ownership of the flagship development company YNH Property and precision tooling outfit Rapid Synergy”.

“He became a well-known figure after an epic seven-year corporate battle with tycoon Tan Sri Quek Leng Chan as the latter attempted to privatise Hong Leong Capital Bhd (HL Cap) in 2013,” he wrote in an article for the Alternative Views section of The Edge Weekly entitled “Rapid Fall of Dr Yu’s Shares Shatters his Invincible Image”.

“But as Dr Yu built up a minority position in HL Cap, the highly illiquid counter hit more than RM13 in 2015. Subsequently, Bursa Malaysia suspended the stock for failing to meet its requirement for a public shareholding spread.”

The suspension was only lifted five years later on Nov 13, 2020 after HL Cap undertook a private placement to fulfil the shareholding spread regulation. Based on HL Cap’s latest annual report, Dr Yu still holds more than seven million shares in the company.

“But Dr Yu’s aura of invincibility has been shattered as his stocks have been crashing since Jan 9. YNH is now reduced to a penny stock while Rapid is also heading that way as investors continue to dump its shares,” argued Shanmmugam.

Prior to last week, YNH Property shares had been steadily rising in the last 18 months – from less than RM3 to RM5 amid thin trading volume while Rapid which was hovering at RM5 two years ago gradually shot up to a high of RM29.50 prior to the 2023 Christmas break.

At their height, the combined value of YNH and Rapid was RM5.4 bil. Today (Jan 22) it is worth only slightly more than RM500 mil (RM208 mil for Rapid and RM299 mil for YNH Property) amid looming uncertainties of a turnaround of fortune. – Jan 22, 2024

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