Blumont Group, one of the best performing stocks this year, its share price sharply declined by 56% to S$0.88 after lifting of trading halt today. Pursuant to SGX-ST Rule 8.10, SGX-ST has exercised its authority to temporarily suspend trading to safeguard the interests of the market as there could be circumstances that would result in the market not being fully informed. We believe the series of questions from the SGX together with brokers’ restrictions for online trading are the main catalysts for share price decline. Despite its billion dollar market cap, UOB Kay Hian has included it in its list of Small Cap Stock & Restricted Stocks for online Trading yesterday.
Blumont revenue is mainly derived from the provision of sterilisation and irradiation services. For 2Q13, Blumont was making a loss of S$22.4m (due to fair value adjustments of financial assets) compared to a net profit of S$11.9m a year ago. Revenue fell 5% to $714,000. As a result, 1H13 net profit dropped 63% to S$8.58m. Its near cash stood at S$2.2m at end quarter due mainly to the sales of quoted financial assets and a property at Clear Water Residence, Malaysia. Net asset per share was 6.27 cents. At S$2.39, the stock is trading at 446x its historical price-earnings multiple. We think even at S$0.88, the stock risks-reward is still not compelling.