Hot Stock Southern Acids falls 6% after UMA reply

by **Cals** Mon 28 Apr 2014, 13:15

Hot Stock Southern Acids falls 6% after UMA reply

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Monday, 28 April 2014 12:12

KUALA LUMPUR (Apr 28): Southern Acids (M) Bhd fell as much as 6% after replying to an unusual market activity (UMA) query by Bursa Securities following a spike in its share price last week.

At 12.02 pm, the group’s shares were traded at RM5.40, down 23 sen or 4.1% with some 249,300 shares exchanging hands.

The stock was the top decliner on the bourse, falling as much as 32 sen or 5.7% to a low of RM5.31.

In a reply to the exchange's UMA query, Southern Acids said that the rise in price and volume of its share recently could be due to "a certain research house reporting that they are raising their target price on our company's share as published online.

“The revision was made after the said research house revised their estimate of value on our 260.82 ha (644.49 acres) oil palm estate land in Selangor after equating the said land with property development in the nearby area,” Southern Acids said.

In a note last week, PublicInvest Research had raised its target price for Southern Acids to RM9.20 from RM7.77 and said that the stock was undervalued.

The target price upgrade came after the research house revalued the 260.82 ha tract in Kota Kemuning, Shah Alam, owned by the company.

It said that the land is now worth at least RM758 million, which exceeds its current market capitalisation of RM572 million, based on valuation of RM27 psf as compared to its previous valuation of RM20.

“Our new valuation is based on the latest transacted price by Eco World Development Bhd which had recently purchased 124.94 ha (308.72 acres) of land in the vicinity for RM470.6 million or RM35 psf,” said the research house.