One of the hot stock for the wrong reason today is Muhibbah.
The stock last traded at 1.55 down 0.35 sen or some 18.4%.
The selling was rather furious.
The Edge Malaysia carried news on the selldown.
- Muhibbah dn after Asia Petroleum Hub faces receivership
- Update Muhibbah under pressure, skids 21c in late morning
And the valuation was interesting because CIMB chose to use the RNAV method. (Why not based on simple PE? )
Its reasoning.
I, then stumbled on K&N Research write-up on Muhibbah. K&N is downgrading Muhibbah from a BUY to a HOLD.
I was shocked with the very first sentence!
What? What? What?
- News reported that CIMB Bank is pulling out the financing for APH.
This is massive.
How come CIMB Research chose NOT to mention this fact in its report?
Now the following paragraph from KN was very interesting.
K&N discusses the possibility of Muhibbah being swept into PN17!
- Potential PN17? The potential losses could lead the company into PN17 status as the severe losses would erode its shareholder’s fund by more than 75% (as at FY10). Nonetheless, we believe this is less likely to be the case as the company may not need to write-down / provide the full amount of RM370m, as we understand that the asset is worth a significant amount and there already are interested buyers.
This is the link to SBT article: CIMB puts Asia Petroleum Hub under receivership
And Business Times broadcasted Bloomberg's short news clip: Muhibbah sinks on Kenanga downgrade
- Muhibbah Engineering (M) Bhd, a Malaysian builder, tumbled the most in three years after Kenanga Investment Bank Bhd downgraded the stock to reflect concerns of potential writeoffs from a building contract.
The stock sank 16 per cent to RM1.59 at 12:19 p.m. local time in Kuala Lumpur trading, set for the steepest drop since March 10, 2008.
The stock was cut to “hold” from “buy,” Kenanga said in a report today. -- Bloomberg
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