The collapse of Perak Transit Bhd’s share price must be the talk of the town among investor circles.
The bus company’s price has dropped by more than half this week, falling from nearly 70 sen – a level it held for the past few years – to 33 sen on Thursday.
As of the time of writing, no one seems to know what’s going on, including the company and its owners.
The company says its business as usual and that it is “not aware of any corporate developments, negotiations, rumours, or reports that could explain the trading activity”, confirming it remains in compliance with Bursa Malaysia’s listing requirements, particularly Paragraph 9.03 on immediate disclosure obligations.
Perak Transit operates integrated transport terminals such as Terminal Meru Raya in Ipoh and has been expanding into property and renewable energy.
Executive director Datuk Cheong Peak Sooi told a new portal that the company is aware of the sharp decline in its share price, but noted that the movement does not correspond to any changes in its business operations or fundamentals.
His brother Datuk Seri Cheong Kong Fitt – the company’s founder, managing director and largest shareholder – has been actively trading his shares this month.
He currently holds a direct 7.613% and indirect 6.581% interest in the company.
In cases like Perak Transit’s share price crash, margin calls on certain shareholders are often a factor.
It isn’t clear if this is the case with Perak Transit, but filings show some selling of pledged shares belonging to Kong Fitt.
That said, he has also been buying shares on the market.
Nevertheless, significant risks are associated with companies whose owners pledge large amounts of their securities to financial institutions.
These institutions conduct periodic checks on margin facilities and may reduce exposure to over-leveraged clients, often not wanting to be the last party out the door when a stock price rout occurs.
This is why, every now and then, we see certain stocks being aggressively sold down in the local equity market.