This article first appeared in Forum, The Edge Malaysia Weekly on June 14, 2021 - June 20, 2021

After the dizzying fall of Serba Dinamik Holdings Bhd, the books of another oil and gas company, Yinson Holdings Bhd, became the subject of discussion early last week.

In unprecedented fashion, Yinson, which is among the top three floating production, storage and offloading (FPSO) facilities providers in the world, issued a statement rebutting all seven points raised by a blogger in an article featured on an investment website.

In a nutshell, the article compared Yinson’s financials with that of Serba Dinamik, whose accounts are disputed by its external auditors.

Yinson’s rebuttal addressed issues such as why its borrowings have gone up, the amount of projects in hand versus debts taken, and how the liabilities are ring-fenced against the cash flow from the projects. It said it would normally not respond to postings or opinions by unidentified persons, but the situation warranted a rebuttal.

Although the company responded quickly and has somewhat mitigated the damage, there is no guarantee that the postings on the website will be forgotten.

The internet does not allow for the past to be buried. With a click of the mouse, anyone who has some kind of interest in Yinson will be able to look up the article.

Before the internet became the main medium of communication, companies that were the subject of speculation used to come up with their own ways to dispel negative reports, if these were untrue. Most would talk to the media, and some would counter the speculation with actions.

For instance, in the 1980s and 1990s, the late Tan Sri Loy Hean Heong of MBf Finance would travel to the finance company’s branches carrying bags of money to appease depositors who were sceptical of its financial stability.

MBf Finance used to be the subject of bank runs whenever the economy took a turn for the worse. The late Loy countered the problem by sending cash to its branches in need of emergency lines.

During the 1997/98 Asian financial crisis, shares of the Genting group of companies came under selling pressure on speculation that the late Tan Sri Lim Goh Tong was not well and might leave the group without a successor.

It so happened at that time that the Genting group was caught up in a related-party transaction (RPT) that did not go down well with shareholders. To counter allegations about the RPT, a journalist pursuing the matter was invited to Genting’s headquarters in the heart of Kuala Lumpur.

After a brief question-and-answer session with top executives, the journalist was given the rare opportunity to have a chat with Lim.

Little did the journalist realise that the whole idea of being invited to the headquarters of the casino-cum-leisure group was a way to dispel speculation that the Genting founder was not well.

These days, companies come under scrutiny from a multitude of fronts — activist shareholder groups, forums like Reddit, and armchair stock enthusiasts to stock dealers on the lookout to short a stock.

Apart from the accredited investment analysts and fund managers, the accounts and performance of companies are often scrutinised by speculators and anonymous stock enthusiasts. The postings are available on investment websites for all and sundry to view.

Stock analysts working for brokerages are always guarded in their views. Rarely do they make a “sell” call. Even for a stock such as Serba Dinamik where the major shareholders are selling down, there are few outright “sell” recommendations.

The armchair stock enthusiasts are more forthcoming with their views as they opt not to disclose their identities. Sometimes, the analysis can be quite detailed. However, at the end of the posting, the author will add a disclaimer stating that readers should not construe the posting as a “buy” or “sell” call and that they should do their own due diligence.

Technically, postings that do not have the name of the author should be read with a pinch of salt. Nevertheless, in the world of investment, it leaves an impression in the minds of investors, especially retailers.

Not many read beyond what is posted. Not many will logically question the motive of the author, or examine his or her background. Even some of the more sophisticated investors will sometimes refer to such postings, although by right, they should do their own homework on stocks.

In the case of Yinson, the company responded because of the prevailing negative sentiments on oil and gas companies, especially those with large borrowings and jobs outside Malaysia. Whether the concerns surrounding the company will continue to linger is left to be seen.

But the articles in cyber space cannot be erased so easily.

One way companies can respond to the situation is to let the numbers do the talking. The best defence against anonymous postings on investment websites is to let the results speak for themselves. Consistent results, steady growth and dividend payouts should eventually translate into better share price performance.

In the world of finance, the management of the company should manage the business well and let the numbers manage the share price.

If the stock is cheap, the company should embark on a share buyback, or the major shareholders can opt to take it private. If the stock commands high valuations, the company should leverage the opportunity to undertake placements or monetise the future earnings to pay out dividends.

Unlike politicians who hire a team of highly paid writers to counter bloggers, companies have the tools to counter the sceptics. More often than not, the numbers will speak the loudest. It is the best defence.

M Shanmugam is contributing editor at The Edge

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