For as long as companies abide by the letter of corporate disclosure laws – without offering their own theories why their stocks are heavily traded – there'll be a need for us at Investor Central. Case in point: EI-Nets. It's been at the top of the Top Volume charts several times over the past weeks, leading to a query from the Singapore Exchange on October 4. At the time, EI-Nets said it had nothing to announce. The company's Executive Deputy Chairman Liau Beng Chye may well be justified in not commenting on market talk. But the market would have been better informed if he had referred to two announcements in particular which could be responsible for traders' interest, even if they at least one of them is not strictly within the control of the company.

The first is spelled out in Ashley Choo's story on Investor Central on October 5, detailing the involvement in the company by Dr Anthony Soh from Asia Growth Capital, who already subscribed to a substantial stake in late September for a fraction of the current price.

The second reason came to light this afternoon, when EI-Nets posted the auditors' opinion on its recent earnings announcement. In it, Deloitte & Touche said:

We understand from the directors of the company that they have been evaluating various strategies to improve operating performance and financial position of the company and the group to enable the company and the group to continue to operate as going concerns. It is presently not possible to determine the eventual outcome of such strategies.

The matters set out in the paragraph above indicate the existence of material uncertainties which cast a significant doubt on the company’s and group’s ability to continue as going concerns.

Heavy going.

In the same disclosure, the board counters:

The Board of Directors refers to the above audit opinion on going concerns matters and are of the view that the Company and the group is able to operate and continue as going concerns.

It recounts previous announcements, including the investment of Dr Soh.

Clearly, companies have better things to do than to constantly remind investors of previous announcements. But if companies were able to see better the point-of-view of investors, rather than just going by the letter of the law, it would help shareholders join the dots.

For as long as they don't, we at Investor Central will be keeping our jobs.


Mark Laudi

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Labels: Anthony Soh, Asia Growth Capital, corporate disclosure, EI-Nets, Liau Beng Chye