The Singapore Exchange has taken Internet services company YuuZoo Corp to task for posting an investment research report which valued their shares at up to eight times the firm's trading price.
On May 21 last year, YuuZoo posted a report by British investment research firm Edison Research which said that, based on Edison's calculations, the firm's shares could be valued at up to $1.83.
YuuZoo's shares were then trading at between 21 cents and 23.5 cents.
Following the company's announcement, which had the headline "Edison Investment Research sees significant upside on share price, puts fair value at up to S$1.83 in view of new signed agreements", YuuZoo's shares rose to as high as 33.5 cents on May 25 last year on high trading volume.
Soon after, on June 1, YuuZoo clarified that the statements in the Edison report reflected the views of the investment research firm and that the company did not share any information with Edison.
Yesterday, SGX issued a strongly worded reprimand to YuuZoo and said that the presentation of the report by YuuZoo was inappropriate.
"SGX is of the view that YuuZoo's SGXNet announcement and news release were not balanced and fair as the company presented the most optimistic scenario of a fair value of up to S$1.83 without sufficient qualification or explanation," it said.
SGX also noted that the report had estimated YuuZoo's shares in a wide band, of between 26 cents and $1.83, based on several scenarios that it had drawn up.
YuuZoo chose to highlight the most optimistic scenario, said SGX, despite Edison stating that the $1.83 value would be true only if YuuZoo's business had matured, which was not the case for the tech firm in its current form.
"The presentation of the most favourable outcome without providing sufficient details for a proper understanding of the information could lead to the investing public not making informed investment decisions."
It added that the firm did not provide explicit disclosure that the Edison report was not endorsed by the company or its board.
YuuZoo's shares have since fallen from the 33-cent high and has been trading between 24.5 cents and 12.7 cents over the past year. Its shares closed 0.1 cent lower at 17.3 cents yesterday.
This article was first published on July 16, 2016.
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