RCE shares slide on disruption of loan disbursement by Kowaja

KUALA LUMPUR: Shares of RCE Capital Bhd have come under selling pressure since its announcement to Bursa Malaysia last Friday that Koperasi Wawasan Pekerja-pekerja Bhd (Kowaja) would not be making any further loan disbursements from Dec 1 onwards.

RCE’s share price has fallen 5.5% since Friday, closing at 60 sen yesterday with 3.4 million shares traded.

The stock was heavily traded on Monday with 16.3 million shares changing hands. 

“Kowaja is currently the largest borrower of our wholly owned unit RCE Marketing Sdn Bhd (RCEM), which provides personal loans to its members who are primarily in the civil service via an on-lending arrangement for funds borrowed from RCEM,” RCE said in the announcement. 

It clarified that Kowaja had been requested to submit a plan to the Malaysian Cooperative Commission or Suruhanjaya Koperasi Malaysia (SKM) for complete endorsement of its compliance with SKM’s guidelines.

“Until such endorsement, Kowaja will temporarily cease disbursement of loans from Dec 1 onwards,” it added.

Nevertheless, RCE said Kowaja has given its assurance that all loans disbursed up to Nov 30 will continue to be serviced while it worked with SKM to resolve the temporary disruption in its operations. RCE had not noticed any disruption to the servicing of loans either.

RHB Research Institute, in a report on Tuesday, said it understood from the management that the endorsement is just a validation exercise. Once all the documentation has been submitted, endorsement should follow shortly — as early as next month.

“We are inclined to share (the) management’s optimism and believe a factor in favour of a quick resolution is Kowaja’s size. According to statistics from SKM, there were over 7,200 registered cooperatives last year and we note that Kowaja was ranked among the top ten cooperatives in terms of memberships with over 75,000 members,” it said.

It added that while RCE was prepared to wait and see, it did not rule out the possibility of tying up with other cooperatives should the issue drag on.

RCE had said last Friday that the temporary disruption in disbursement of loans by Kowaja is not expected to have any material financial impact on the group for FY2011 ending March 31 nor on its ability to meet its debt obligations.

Nevertheless, it did warn that if the curtailment was prolonged, there may be some impact on RCE’s future profitability in the long term.

“We will keep the market informed as and when there are further material developments on the above,” it ended.

The management declined to comment when contacted by The Edge Financial Daily.

Meanwhile, RHB Research maintained its outperform call on RCE but lowered its target price for the stock from RM1.27 to 95 sen, ascribing a 25% discount to its earlier share price given the near-term risk of Kowaja failing to receive SKM’s endorsement or prolonged resolution of the matter.

On Nov 19, RCE announced a 2QFY2011 net profit of RM31.24 million, rising 65.2% year-on-year and 32.15% quarter-on-quarter.

http://www.theedgemalaysia.com/i ... ment-by-kowaja.html

tak

Please demand 500g sugar being added into the Kopi-peng from the Kopitiam boss. 

or

Tell them to tapau the rest (at least) 450g of unadded sugar.

Guys,
Just wanna share some of the previous posts by forumer 'houseofaz'. Maybe we should take some note of his post? Well,
I just searched back his posts on P&O and somehow.... he did have some info.....

I suppose we should avoid low volume stock? My senior teach me

Can share how you know the % foreigner holding on certain stock??ya good to know this data

then buy MAYBULK.. haha also MAY ma

From blue chip to ace. Aww. Small knife cut big tree. 

auntie, unker, brother and sister,

got any stock pick... hand very itchy liao!!!!!!
holding cash too long... must buy must buy..
ride the WAVE!!!
Keywest.. comeone ... faster limit down
i want to see it suspend today... everything up and keywest down... i am going to laugh and roll... laugh @ the speculator!!

thanks for pointing that out! yum yum yum can't wait to eat my drbhcom peking duck
psst.. i think sharks read this thread.. psst..

You mean this? 

Wrong liao, it defy Newton law. 

Go up, yes can go down.

Go down, stay at bottom, not moving..... typically happened in stock market.