Shares of Best World International dived 23 per cent yesterday, wiping $70 million off their value after the firm responded to an unusually lengthy query from the regulator after trading hours on Wednesday.
The Singapore Exchange (SGX) had asked Best World to explain sections of its stellar first quarter earnings report issued last month.
The query, which followed three other market surveillance queries from SGX over a two-month span, may have given some investors cold feet about the group's fundamentals, analysts said.
Maybank Kim Eng investment analyst Clement Ho said: "The SGX query creates a negative impression, given the ABL (Asiasons, Blumont, LionGold) saga three years ago."
Best World is different, however, as the group is backed by sound earnings growth, he noted.
"We are quite comfortable (but) given today's sharp slump, movements in the next four to six weeks will probably be tempered down."
The Straits Times reported yesterday that Best World's share price had more than quadrupled from 33.5 cents at the start of the year to $1.375 at Wednesday's close.
The counter slumped to close at $1.06 yesterday with 5.4 million shares changing hands, but the stock is still up a whopping 216 per cent so far this year.
CIMB Securities analyst Jonathan Seow said yesterday: "I wouldn't say (the SGX queries) are a warning sign. They are probably just doing their due diligence. Nothing fundamental to the business changed between today and yesterday."
Best World founder and co-chairman Doreen Tan told The Straits Times on Wednesday that "whatever the share price, to us it is just a paper value. What is important to us is that we must make more profits, because that tells us our distributors are making money".