TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issu...
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Andrea Soh
18 February 2015
Commodity trader Noble Group on Tuesday defended its financial statements as its shares continued to reel for a second day following accusations of accounting malpractices by Iceberg Research, a little-known research firm. The two-day fall saw its market value plummeting S$1.05 billion.
Iceberg Research had on Sunday published a report that questioned Noble’s treatment of certain companies such as Australian coal miner Yancoal as associates, and said the practice “grossly overstated” the value of these companies.
Noble said in its announcement to the Singapore Exchange after Tuesday’s trading hours: “The group reports its results in accordance with International Financial Reporting Standards, and the annual financial statements for 2013 and prior years have been audited by Ernst & Young who issued unqualified opinions.”
“The carrying values of our associates, including Yancoal, are tested for impairment using discounted cash flow models that are updated every quarter. As is always the case these valuations are currently being audited as part of the FY2014 audit,” it added.
Shares in Noble Group, the largest commodity trader in Asia by sales, fell for a second session amid heavy trading on Tuesday, losing 5.4 per cent, after an 8 per cent plunge on Monday. Some 63.7 million shares changed hands, making it the most heavily traded stock on SGX.
Noble took issue with Iceberg’s approach. “If their intention, as claimed in the report, was to highlight supposed deficiencies in our accounting principles for the benefit of investors, it would have been normal to approach the group to discuss their concerns, rather than publishing a report of this kind shortly before our annual results announcement and just before a holiday period,” it said.
“Neither we, nor any of our external banking or investor stakeholders are familiar with Iceberg. We have found no address or formal contact details; the author or authors of the report have chosen to remain anonymous...,” it added.
Iceberg had also claimed that the recovery of Noble Agri’s business was “manufactured” through accounting manoeuvres. This would result in the final price for the 51 per cent stake it is selling to a consortium led by Chinese grain trader Cofco being lower than the S$1.5 billion that has been paid.
Noble said it has not misled the market about the performance of the agriculture unit, and has made public the performance in operating income from supply chains before expenses, interest and other charges for the nine months of its 2014 financial year.
Analysts pointed out that the issues raised by Iceberg are not new. “We find that the report has a sensational bias, omits any investment positives, and we don’t think all of its analytical inputs are necessarily valid,” said Macquarie analyst Conrad Werner in a note. He reiterated his “outperform” rating on the stock with a target price of S$1.60. OCBC analyst Carey Wong has placed the brokerage’s “buy” call and S$1.30 target price under review, until further clarity is given by the group.
The precedence of large shareholders coming to the rescue of companies that have fallen prey to shortsellers has left some in the market wondering if the same will happen for Noble. “The market remembers that in the cases of Olam and China Minzhong, white knights eventually ‘rescued’ these companies...,” said CMC Markets analyst Nicholas Teo, noting that China Investment Corporation has a 10 per cent stake in the firm.