THE Singapore Exchange (SGX) on Friday reprimanded YuuZoo Corporation over the use of a favourable report issued last year through SGXNet.
The IT company had put out in May 2015 a news release based on a report from Edison Investment Research that highlighted "the most optimistic valuation" of a S$1.83 fair value. Then, the stock was trading in the range of 21.5 Singapore cents to 23.5 Singapore cents.
Following the SGXNet announcement, YuuZoo's share price rose on two consecutive trading days on heavy volume.
"SGX is of the view that YuuZoo's SGXNet announcement and news release were not balanced and fair as the company presented the most optimistic scenario of a fair value of up to S$1.83 without sufficient qualification or explanation," the regulator said on Friday.
The target price was based on a weighted average cost of capital that would only be appropriate when YuuZoo's business matured, SGX added. "The presentation of the most favourable outcome without providing sufficient details for a proper understanding of the information could lead to the investing public not making informed investment decisions."