Frankly Speaking: Drastic share price fluctuations at Sedania merit closer look

This article first appeared in The Edge Malaysia Weekly, on June 7, 2021 - June 13, 2021.
Frankly Speaking: Drastic share price fluctuations at Sedania merit closer look
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ACE Market-listed technology firm Sedania Innovator Bhd’s share price jumped almost five times — from 30.5 sen on May 19 to a historical high of RM1.46 on May 28 — before plunging to 97 sen on June 1.

On May 31, Sedania Innovator announced a record quarterly profit of RM4.21 million for the first quarter ended March 31. This was the highest it had chalked up since its initial public offering in 2015, and reversed a net loss of RM1.82 million in the same quarter last year. In FY2020, the company reported a net loss of RM12 million.

Group revenue in the first quarter rose more than sixfold to RM17.06 million from RM2.77 million in the previous corresponding quarter.

At about the same time, on May 25, Jakel Group managing director Datuk Seri Mohamed Faroz Mohamed Jakel surfaced as a major shareholder of Sedania Innovator with a 12.55% stake. The notice of interest of substantial shareholder change was received by the company on May 28.

Faroz’s entry into Sedania Innovator likely did not (at least not directly) drive up its share price as he acquired the block of shares via a private placement exercise instead of on the open market. Then again, perhaps investors believe he is set to improve on Sedania Innovator’s operations.

Now, one can’t help but wonder if there are certain groups at Sedania Innovator who have been capitalising in advance on non-public knowledge of stellar earnings or imminent changes in shareholding. Who really benefited from the sudden surge and fall in its share price in a space of less than two weeks?

Like it or not, exploiting information that is not yet public happens in a lot of listed companies. But in the case of Sedania Innovator, the price increases over a short period may be just too drastic to avoid scrutiny.

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