“Falling Knife” of the Week: Oceanus Group

oceanus logo Oceanus Group Limited (SGX: 579) has revived itself after being halted and subsequently, suspended for close to a month from 5th August 2013 to 9:00am this Monday, 2nd September 2013. The shares started trading at $0.023, a slip of 14.8% from 5th August 2013. At the time of writing, the shares are down 22.2% to $0.021. The plunge in share price crowns Oceanus with the “Falling Knife” of the Week accolade.

On 31st July 2013, the company held its annual general meeting (AGM) and one of the resolutions was to re-elect Mr Wu Yong Shou as a Director of the company. Shareholders present voted Mr Wu out of the company with a 95.5% majority vote. As a result, Mr Wu retired at the end of the AGM and had consequently ceased as the Executive Director of Oceanus. New directors were then appointed after the AGM.

However, Mr Wu remained as the General Manager in charge of the company’s China operations and production. The company was notified by the Head of Production on 2nd August 2013 and on 5th August 2013 that there were substantial and abnormal mortalities of abalones farms in China within a very short span of time immediately following the AGM. Therefore, the company decided to suspend trading of its shares to investigate further.

Meanwhile, on 13th August 2013, the company released its half year of Financial Year 2013 (1H 2013) results. It posted a net loss of RMB 121.9 million in 1H 2013 as compared to a net loss of RMB 118.4 million in 1H 2012. Its current ratio stood at 0.33, showing that the company might be unable to meet its short-term obligations. For 1H 2013, the cash flow from operations was a negative RMB 22.5 million as compared to a negative RMB 8.0 million in the previous year.

On 30th August 2013, the company provided an update on the abnormal death of the abalones. It said the “mortality is not materially abnormal”. For the full detailed explanation, one can refer to the SGX announcement. The request to lift the long suspension was also made on the day and the shares started trading at 9:00am on 2nd September 2013.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.