Touchwood in the woods sans Duminda factor?

The resignation of ruling party Member of Parliament (MP) Duminda Silva from the Touchwood Investments PLC board of directors yesterday, took a toll on the share price of the firm in the Colombo Stock Exchange.

The share fell almost 40 percent or lost Rs.2 during yesterday’s trading from the closing price of the previous day and closed at Rs.3.10. The share was also fea- tured at the top of the ‘top 10 losers’ for the day.

During yesterday’s trading, Touchwood share hit an intraday low of Rs.2.90 despite hitting a high of Rs.4.50. The number of shares traded stood at just over 21 million and revenue generated was Rs.75.49 million.

According to brokers, the counter clearly witnessed selling pressure.

However, as analysts pointed out, Touchwood share price still remains high, given it was trading around Rs.1.70-1.80 on September 23.

The announcement of the appointment of MP Duminda Silva the following day (Sept.24) to Touchwood board pushed the share up over 70 percent to close at Rs.3.10.

Incidentally, the share closed at the same price yesterday, despite the market officially receiving the news of the resignation of MP Silva from the Touchwood director board.

According to some analysts, the share price sticking above Rs.3 level, despite the resignation of MP Silva, might be an indication of the confidence the investors have on the firm’s restructuring plans which were announced and later communicated to the Colombo Stock Exchange.

The agro-forestry investment firm submitted a disclosure to the CSE in the early trading hours this Monday, which summarized the comments made by its newly appointed Chairman, L.W. Kiwlegedara during the firm’s AGM last Thursday.

The disclosure said, a new group of investors had j oined to support Touchwood and these investors will be infusing Rs.200 million in the short term to address current liquidity issues faced by the company.

It also said these investors were working on securing funds worth US $ 21 million to develop projects, which included planting sandalwood.

The disclosure further noted that the company will be rolling out a detailed strategic plan for the long-term and also revealed its intentions to hire “very capable ex-management personnel, who have extended their help.