Wednesday, October 04, 2006

Stock News: Citiraya falls on return, seen grossly overvalued

Shares in electronics waste recycler Citiraya Industries slumped when trading in them resumed after a 19-month suspension as the stock is considered grossly overvalued, dealers said. At 11.21 am, Citiraya was down 0.875 sgd or 81.02 pct at 0.205 compared to its pre-suspension price of 1.08. It was the most actively traded stock with a hefty 362.02 mln shares exchanged. The Straits Times index was up 1.54 points at 2,594.81. The trading resumption followed Citiraya shareholders' approval of a plan to restructure the company, which includes issuing and allocating 1.90 bln new shares, equivalent to 75 pct of its enlarged capital, to Equation Corp (formerly Heshe Holdings) and Oei Hong Leong Foundation for 16.01 mln sgd or 0.008485 sgd per share. "At the current price, market cap is about 500 mln sgd, which is outrageous. Fundamentally, the stock should be worth less than 0.10 sgd, " a dealer at a local brokerage said. "There is a lot of speculation now but I believe it will eventually drop to 0.10 sgd in a few weeks," he said. Trading in Citiraya was suspended in January last year at the start of a criminal investigation of senior officials of the company. Subsequently, its assistant general manager, Ng Teck Boon, was sentenced to eight years in prison for corruption. Ng was convicted in connection with a 1.82 mln sgd scam in which he bribed staff working with customers of Citiraya. The bribes were part of a ploy to divert unwanted electronic scrap to Citiraya so that the firm could resell it in other markets.

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