Frankly Speaking: What’s next after Fintec’s massive RM980m loss?
Fintec Global Bhd announced a whopping loss of RM980.17 million, or 98.56 sen per share, for the financial quarter ended June 30, 2021. This was less than one year after it booked a massive profit of RM720.5 million in the quarter ended Sept 30, 2020.
The loss was “mainly due to the marking to market” for its investments into marketable securities, which Fintec said were severely impacted due to prevailing poor market sentiment. Likewise, the huge quarterly net profit last year came from a share price rally amid the penny stock fever.
Fintec had bought into loss-making listed companies like Vsolar Group Bhd, MLabs Systems Bhd and DGB Asia Bhd. It also bought into Focus Dynamics Group Bhd and AT Systematization Bhd. The share prices of these companies have fallen by as much as 90% from their peak to pre-pandemic lows.
Fintec is principally involved in the investment of both quoted and unquoted securities. However, not that many investors could stomach the wild swings in its financial performance.
Its latest known investment was the purchase of a 6.36% stake in loss-making NetX Holdings Bhd early last month.
Fintec’s latest cash flow statement shows that it raised RM114.6 million from a rights issue, plus RM71.26 million from a share issuance scheme and RM21.26 million from a private placement.
At end-June, it was sitting on RM110.1 million in cash and bank deposits. Still, over the past two months, the company placed out 855 million shares to raise funds to build a glove factory in Chemor, Perak. The venture already raises the question of whether it is too late to the game, given that the super profits among the existing players have started to normalise.
With an expanded war chest, should Fintec revamp its investment strategy considering its huge paper losses?