Bearish analyst booted out by boorish CFO

AN earnings briefing in Hong Kong turned heated when the chief financial officer refused to continue with his presentation until an analyst from Macquarie Group had left the room.

In a video obtained by Bloomberg News, PAX Global Technology’s Chris Lee can be seen standing over a seated Timothy Lam and ordering him to leave the conference room on Wednesday.

Lam began coverage of PAX Global’s stock in April with an underweight rating, making him the only analyst out of 17 tracked by Bloomberg to have a bearish recommendation at the time.

On Thursday, Lee said he regretted his behaviour, which was a “one-off” that did not reflect management’s position, and he welcomed “diverse points of view”, according to an e-mailed statement.

The analyst was asked to leave because PAX Global disputed parts of his report, not because of the rating, Lee said earlier, by phone. Lam had not been invited to the briefing, Lee added.

Macquarie spokeswoman Ida Cheung declined to comment.

All analysts should have been able to attend the briefing, regardless of their view on the company, Lam wrote in a note, in which he maintained his underweight rating and raised his target price by 10 Hong Kong cents (about R0.17).

Ryan Roberts, a Hong Kongbased analyst at MCM Partners, who attended the briefing, said: “If someone with that temperament is leading up the finance department, which is arguably one of the most important, perhaps it raises questions how that department is run.”

Nomura Holdings cut its rating on PAX Global, which makes point-of-sale payment systems, in a report that was titled “CFO conduct disrupts shareholder value”.

Shares in the company dropped 2.1% at the close, their biggest loss in a month, after rallying 5.6% the previous day.

“Before the analysts’ briefing meeting started, the company’s CFO asked a sellside analyst to leave the conference room,” Nomura analysts led by Leping Huang wrote in the note. “While we do not judge this dispute, we think this may hurt PAX Global’s shareholder value.”

Nomura lowered its recommendation on the stock to reduce from neutral, citing concerns that the company’s Chinese market faced increased uncertainty due to the central bank’s policy of renewing all third-party payment service providers in the second half of this year.

PAX Global reported on Tuesday that its first-half net income had climbed to HK$310.6-million from HK$309-million a year earlier.

Among the 19 analysts’ recommendations tracked by Bloomberg, 15 have a buy rating, two have neutral, while Macquarie and Nomura have bearish ratings.

Lam’s 12-month target price implies a 5.6% drop for the stock from Wednesday’s close.

Investors have boosted bets against the company. Short interest in the stock climbed to a record 10.3% of its outstanding shares on August 3, up from 1.6% a year ago, IHS Markit and Bloomberg data show. —

We think this may hurt PAX Global’s shareholder value