Hong Leong Capital volatile ahead of trade suspension

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KUALA LUMPUR (Mar 25): Hong Leong Capital Holdings Bhd fell as much as 85 sen or 10% before erasing losses in lacklustre transactions ahead of its stock trade suspension tomorrow.

Bursa Malaysia has decided to suspend financial services entity Hong Leong Capital's (fundamental: 2.7; valuation: 0.3) share trade as the group's public shareholding spread did not meet the exchange regulator's requirement.

In spite of the low trading volume of 36,400 shares at 12:30pm today, Hong Leong Capital's share trade was volatile as the stock fell to a low of RM7.40 so far today before settling higher at RM8.70 at afternoon market break.

Hong Leong Capital, the second-largest gainer across Bursa Malaysia, was earlier the top decliner.

Shares of Hong Leong Capital had fallen to current levels from a six-month intraday high of RM13.88 seen on November 3, 2014.

On March 18 this year, Hong Leong Capital, controlled by tycoon Tan Sri Quek Leng Chan, had announced to Bursa Malaysia that the firm did not have a plan to rectify its public shareholding spread shortfall.

This was despite time extensions given by Bursa Malaysia, which requires public-listed firms here to have a minimum public shareholding spread of 25%.

As of Dec 31, 2014 Hong Leong Capital’s public shareholding spread was 18.67%.

Hong Leong Capital's decision not to rectify the shareholding spread is not surprising. This is because Quek had earlier attempted to privatise Hong Leong Capital at RM1.71 a share.

The privatisation attempt via Hong Leong Financial Group Bhd, however, failed. In Feb 2013, Hong Leong Capital said Hong Leong Financial did not secure adequate acceptance from minority shareholders of Hong Leong Capital under the takeover offer.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)