Friday, 27 September 2013 04:10
Maloneys shun AGM but convey message via pre-recorded video
No show by new Director MP Duminda Silva
Executive Director says investors being lined up for $ 21 m infusion
Shareholders repeatedly told at AGM share price will rise to Rs. 15 within months
Retail investors gamble in market as stock price soars by 45% yesterday with 49 m shares traded
Sans big guns, the troubled Touchwood Investments Plc (TWOD) survived a heated Annual General Meeting yesterday with various assurances, but shareholder concerns remained despite the stock price shooting up on speculation.
Amidst allegations they were absconding, Chairman and Vice Chairperson/CEO Mr. and Mrs. Roscoe Maloney weren’t present at the AGM as they remain overseas but they addressed the shareholders via a pre-recorded video message. They have assured that the Company is progressing amidst challenges and efforts were underway to strengthen the prospects. A reference that some were creating difficulties or tarnishing their reputation was also made.
Newly-appointed Executive Director and Acting CEO Lanka Wijendra Kiwlegedara, who was formerly Business Development Director, chaired the AGM flanked by two other Directors. MP Duminda Silva, whose appointment as an Independent Director to the TWOD Board this week has come under wide criticism, wasn’t present as well.
The AGM, held at Renuka City Hotel, lasted for two-and-a-half hours as shareholders, some of whom were elderly, raised various issues. Company officials however maintained the AGM was cordial but the length of the AGM suggests otherwise.
Kiwlegedara had given the same assurances of the Maloneys but revealed that efforts are underway to line up investors who will infuse $ 21 million into the company. Kiwlegedara had also repeatedly stated that the company’s share price would rise to the Rs. 15 level in the coming months.
This emphatic comment by the Executive Director was viewed by some shareholders as being manipulative, the reason being that as a responsible management or Board shouldn’t give such a direction or prediction.
It couldn’t be confirmed whether the Executive Director’s comment had wooed retail investor sentiment, but TWOD’s stock price shot up yesterday by 45% or Rs. 1.50 to close at Rs. 4.80. It hit an intra-day high of Rs. 5.20. Nearly 49 million shares or 46% stake of TWOD changed hands via 3,633 trades for Rs. 204 million. The number of trades confirms the recycling of transactions or heavy buying and selling within the day.
For those who had bought TWOD at the all-time low of 90 cents a few weeks ago, selling at Rs. 5 yesterday would have resulted in a huge windfall or over 400% return. Last week TWOD closed at Rs. 1.70, reflecting a 182% gain by yesterday.
For long-term investors or shareholders, in comparison to the 2012 closing, the current TWOD share price is 47% down whilst in comparison to the 52-week high of Rs. 22, TWOD is currently trading at Rs. 17.20 or a 78% low.
During the bull or the bubble run (whichever way one may term it) of the Colombo Bourse, TWOD peaked to Rs. 272. Net asset value of TWOD is Rs. 30 per share though some analysts have questioned the valuation given the nature of the company’s business.
Touchwood styles itself as the pioneer of the agro-forestry investment industry in Sri Lanka. It specialises in the cultivation of high value exotic tropical timbers as an alternative and sustainable source of forest products (mahogany, vanilla, sandalwood, teak and other cash crops).
As per its 2012/13 Annual Report, TWOD has planted over 400 trees of high-value timber in 2,854 acres spanning 42 plantations in six districts. This is in addition to timber plantations in Thailand in which customer deposits have been taken by the company.
As at end FY13, TWOD’s assets amounted to Rs. 8 billion, up from Rs. 6.8 billion in the previous year. Despite styling itself as pioneer and in business for over a decade, TWOD remains saddled with over Rs. 500 million worth retained losses. Liabilities amounted to Rs. 4.7 billion as at end FY13, up from Rs. 3.7 billion a year earlier.
The company is also facing a winding up application filed in Western Province High Court by a customer K.A.D.L. Priyanka Nanayakkara on account of a Rs. 3.8 million claim. TWOD has opposed the claim and will challenge the case in Court. The case is scheduled to come up on 3 October.
The Daily FT learns that there is a growing number of defaulted customers who will support the case filed by Nanayakkara.
The Securities and Exchange Commission (SEC) is continuing with its investigations on TWOD. Between 9 and 16 September, trading of TWOD shares was suspended for six market days.
The SEC also directed the company to refrain from acquiring, transferring, disposing, pledging, hiring, mortgaging, leasing, creating a charge over or otherwise alienating any non-current assets depicted in the balance sheet of the company without the prior approval of the SEC till the completion of the investigations; to desist in any manner from destroying, concealing, altering, removing, amending or cause to be destroyed, concealed, altered, amended or removed any information that is in the records or books of the company maintained in the ordinary course of business; and extend to the SC the company’s fullest cooperation in respect of the investigations conducted by the SEC.