EMS plunges 27 per cent prompting SGX query

SINGAPORE - Oilfield services equipment firm EMS Energy on Wednesday plunged 26.7 per cent to finish at S$0.22 on the stock market, prompting a query from the Singapore Exchange (SGX) to explain the "unusual price movements".

After market close, the company replied that it was unaware of any information that might explain its trading activity.

It also announced that its subsidiary, Koastal Eco Industries, had won a small 43.7 billion Vietnamese dong (S$2.8 million) contract from the Vietnam Singapore Industrial Park Bac Ninh to build phase two of a sewage treatment plant. The contract brings the total amount of its contract wins year-to-date to S$4.5 million.

The VSIP project is slated for completion in Q1 2017. EMS expects to recognise most of the revenue for these contracts in its current fiscal year. But this positive news failed to explain its earlier price plunge, which brokers guessed could be related to its 15-for-1 share consolidation late last year, which saw it go from a micro penny stock of just a couple cents to about 30 cents.

Since the start of this year, the stock has nearly halved, going from 38 cents to 22 cents, amid a wider oil market rout and market volatility.

The stock has also become illiquid post-consolidation, with a public float of just about 20 per cent, as it now attracts less speculative interest, brokers noted.

A broker said: "The cheaper the absolute price, people tend to buy more. A two-cent stock, more people tend to punt on it, thinking you cannot lose a lot. The bids all disappear when a stock gets consolidated."

Attempting to explain the price fall on Wednesday, the broker added: "Perhaps somebody who had a small block had to end up driving down the price to unwind the stock, although I think that still doesn't really explain the close to 30 per cent drop."

This article was first published on Jan 28, 2016.
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