KUALA LUMPUR (Feb 3): ATA IMS Bhd's share price seems to have gained a new lease of life in the recent two weeks.
The share price of the loss-making electronics manufacturing services provider, which has fallen out of investors' favour due to the loss of a major client, has more than doubled since mid-January from a low of 19.5 sen to above 45 sen.
The stock continued its climb on Friday (Feb 3), surging 9.2% to close at 47.5 sen — the highest level since August last year — at the midday break.
Some 68.45 million shares changed hands. Its average daily trading volume since mid-January stood at 14.19 million shares.
The recent big leap in its share price — a 143% jump from the lowest point of 19.5 sen on Jan 13 — has sparked speculation that corporate exercise could be brewing in the company, including the emergence of new shareholders.
Currently, its chairman Datuk Seri Foo Chee Juan is the company’s largest shareholder, with a 33.87% stake via Oregon Technology Sdn Bhd, while its chief executive officer Datuk Fong Chiu Wan holds a 26.28% stake. Overseas-Chinese Banking Corp Ltd (7.17%) and PP Tech Ltd (7.15%) are the other two substantial shareholders, according to Bloomberg.
Meanwhile, ATA IMS has flagged that the company is assessing the need for an impairment for goodwill of RM76.4 million arising from the acquisition of the IMS group in 2018.
“The company is in the process of discussions with customers and working out the new projections to assess the impact on goodwill on consolidation, and will provide an estimate of the impairment, if any, as soon as possible,” it said in a filing with Bursa Malaysia.
To recap, in 2018, the company acquired the entire equity interest in the IMS group. Arising from this acquisition, the group recognised a goodwill of RM76.4 million. Goodwill is not amortised, but tested for impairment annually based on projected revenues, profit and loss accounts, and the discounted cash flows of the various cash generating units within the group, explained ATA IMS.
ATA IMS posted a net loss of RM18.3 million for the nine-month period ended Sept 30, 2022, compared to a net profit of RM12.2 million for the previous corresponding period. Its revenue shrank to RM607.79 million, more than halved from RM1.48 billion a year ago.
The counter took a beating last year after British home appliance maker Dyson, which contributed 80% of the group’s revenue as at November 2021, terminated its contracts with ATA IMS.
A Bloomberg poll shows that among analysts covering the stock, there is one "hold", one "reduce" and two "sell" calls on the stock, with target prices between 17 sen and 29 sen.
In May last year, ATA IMS said it will undertake an impairment exercise and slash its operating capacity, following the termination of the contracts.
According to a Bursa filing on May 31, 2022, the group had entered material litigation against United Max Construction, which was claiming RM4 million in compensation from ATA IMS for failing to return vacant possession by the end of the factory tenancy agreement in February 2021.