KUALA LUMPUR (April 7): Malaysian Bulk Carriers Bhd (Maybulk) was slapped with an unusual market activity (UMA) query by Bursa Malaysia today after its share price spiked 5.38% this morning.
At 11.05am, the counter pared gains at 96.5 sen, up 3.5 sen or 3.76%, with 44.96 million shares transacted for a market capitalisation of RM975 million.
It pared gains further at 11.19am at 93.5 sen, up half sen or 0.54%, with 51.86 million shares done. Year to date, the stock has grown 15.53%.
Bursa has asked Maybulk to state if there was any corporate development to the group's business including those in negotiation stage or a rumour concerning the business that resulted in the sharp rise of share price and volume.
It is worth noting that two days ago, MIDF Research upgraded the stock to "buy" with a target price of RM1.04 based on five-year average price-to-book ratio of 0.88 times.
It said the worst could be over for the dry bulk shipping sector and that valuations for Maybulk should revert to its five-year mean.
In addition, Maybulk has taken steps to impair various items on its balance sheet making price-to-book valuation more reflective of current market prices and conditions.
In a note to clients, MIDF Research said Maybulk management took measures in the fourth quarter ended Dec 31, 2015 to impair various items on its balance sheet.
"With the impairments done, Maybulk has assumed the worst in terms of charter rates for its vessels. Thus, minor declines or a persistence of the current low rates would unlikely cause large losses for its in-chartered fleet (28% of total dry bulk tonnage).
"Meanwhile, Maybulk will likely suffer only small losses on disposal (if any) should it decide to sell its vessels on the secondary market with an impairment done on its owned fleet to its net realisable value," it said.
It also pointed out that oil and gas offshore vessel provider PACC Offshore Services Holdings Ltd showed signs of improvement after gaining 22% year to date.
MAYBULK (5077) - UMA Maybulk gets UMA query after stock spikes 5.4%
http://www.theedgemarkets.com/my/article/maybulk-gets-uma-query-after-stock-spikes-54
