What’s up at Xin Hwa?
ANY account of alleged irregularities within a company is bound to be a red flag for investors.
So when logistics firm Xin Hwa Holdings Bhd said on Thursday that it had been alerted on some financial irregularities and had appointed KPMG Management & Risk Consulting Sdn Bhd to conduct an independent review on the firm, investors dumped the stock.
The stock was down close to 5% post-lunch trading hours yesterday.
But more importantly, what are the irregularities? And is there something major brewing in the company?
Xin Hwa was listed a few years ago amid much fanfare. Its stock did well on its debut. And it has obtained a string of contracts since.
Still, like many of its counterparts, its most recent profits saw a dent amid increasing competition in the domestic logistics scene with net profit falling by nearly 33% year-onyear.
For its most recent quarter ended Sept 30, the firm made a net profit of RM2.03mil, over 30% less compared to more than RM3mil made for the same period a year earlier.
In its announcement to Bursa Malaysia on Thursday, Xin Hwa said the alleged irregularities “relate to some transactions and payments” and that the investigation will commence on Feb 18 and is expected to be completed within 10 weeks.
Investors who believe in the company will just have to wait for the outcome.
To be sure, the last time a listed company said there were “financial irregularities” within its stable of subsidiaries, it was found that some of its key management people could not account for certain transactions and were subsequently sacked.