Raffles Education shares soar after trading resumes
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Shares of Raffles Education Corporation (REC) soared after they resumed trading yesterday, as traders homed in on the depressed counter for some quick gains.
After hitting a high of 7.3 cents in early trading, the stock closed at 7.1 cents for a gain of 16.4 per cent or one cent.
Volume was relatively heavy, with some 44.9 million shares changing hands.
The stock was bashed down earlier this week to a record low of 6.1 cents prior to its two-day trading halt on Wednesday and Thursday, in the wake of questions raised by substantial shareholder Oei Hong Leong and the Singapore Exchange over alleged corporate governance lapses at the firm.
REC dived 25.6 per cent on Monday after Mr Oei sold 38.9 million shares, representing some 74 per cent of the shares traded that day, at an average price of 6.9 cents per share.
On Thursday, the company said several of its directors, including chairman and chief executive Chew Hua Seng, his wife Doris Chung Gim Lian and lead independent non-executive director Lim How Teck, were interviewed by the authorities over potential breaches of the Securities and Futures Act. The company said these and other directors were required to surrender their passports.
Despite yesterday's fillip, market insiders are not optimistic about further upside for the stock.
"The sell-down prior to the trading halt may have been exacerbated and made worse by large seller Oei Hong Leong selling 74 per cent in a single day, thus causing the share price to drop more than expected," said the director of a foreign-controlled broking house, who declined to be named.
"But that said, the ongoing investigations are a huge negative for the company, and not likely to see the light at the end of the tunnel any time soon. This may just be a temporary respite, I would think, barring any new future corporate development or exercise."
The investigations relate to a suspected breach of disclosure requirements under Section 203 of the Securities and Futures Act, according to exchange filings by REC on Thursday.
The Monetary Authority of Singapore and the Commercial Affairs Department on Tuesday ordered REC directors to surrender documents relating to loans extended by Malaysia's Affin Bank to REC's Malaysian subsidiaries - Raffles K12 and Raffles Iskandar.
Affin Bank had on May 27 filed writs against REC's two Malaysian units, demanding immediate repayment of a total outstanding amount of RM410 million (S$133 million).
