Singapore’s Big Loser of the Week: 3Cnergy Ltd

Credit: hobvias sudoneighm

3Cnergy Ltd (SGX: 502), which was featured in mid-April as a big weekly winner, has turned into a big loser this week. Its shares have sank by a breath-taking 29% since last Friday to close at S$0.25 yesterday. In comparison, the Straits Times Index (SGX: ^STI), Singapore’s market benchmark, had declined by only 0.4% during the same time frame.

As noted in my earlier article, the firm is a provider of “real estate and housing agency services for residential, commercial, and industrial markets. It also offers bank referral services, training services, and classified advertisement booking services, among others.”

I also wrote in that earlier article that 3Cnergy was exploring a potential sale of its wholly-owned subsidiary HSR International Realtors Pte Ltd (HSR for short) to Ng Kai Man for S$2 million.

Last week, 3Cnergy announced that it will not be selling HSR to Ng after all. This came after a consensus could not be reached between buyer and seller.

But, 3Cnergy added in its announcement that another individual, Liew Siow Gian, Patrick, has emerged as a potential buyer of HSR. 3Cnergy and Liew had entered into a conditional sale and purchase agreement dated 11 May 2015. But lo and behold, the sale price this time will be a nominal sum of just S$1.

Liew and his wife, Lim Sook Lin, together own 15 million shares of 3Cnergy, representing 12.5% of the company. Liew, who has more than 15 years of experience in the real estate agency business, used to be a promoter of HSR Group together with his wife. In February 2011, the Liews sold HSR Group to 3Cnergy (previously known as “Wepco Limited”) in a reverse takeover transaction.

HSR had been incurring losses of around S$5 million over the past two financial years and currently has a negative net asset value. 3Cnergy’smanagements sees the sale as a “strategic decision” after taking into account how the “property industry is expected to remain challenging in the next twelve months” and “the cash flow burden arising from high costs relating to the existing premises”.

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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.