SINGAPORE (Feb 9): DBS Group Research has pulled the plug on coverage of Midas Holdings, after the company announced late Thursday night that certain sums of money and shares in its China subsidiaries and associates have been frozen by Chinese courts.
Midas called for the suspension of trading in its stocks at 9am on Friday.
This comes after the supplier of aluminium parts to the rail sector said it uncovered several litigations, enforcement orders and court documents involving its various subsidiaries and associate companies based in China.
See: Midas CEO says shares and money in China subsidiaries and associates frozen by courts
“We suspend and drop coverage of the stock,” says analyst Paul Yong in a report on Friday. “Given that we are not able to rely on the group’s financial statements, it will be difficult for us to put a value to the stock.”
The way Yong sees it, the development is “surprising”, given Midas’ long listed and operating history.
“This looks like a severe lapse in internal process and controls and/or indicates serious corporate governance issues,” Yong says.
“Our immediate key areas of concern would be how large are the assets at risk (or still available to shareholders), whether the group’s key businesses can continue to operate, and what were the corporate governance lapses involved and what legal redress is available, if any,” he adds.
Year to date, shares of Midas had gained 77.8% to last trade at 19.2 cents before it was halted from trading on Thursday morning.
