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Hot stock: 8Telecom's 10.5% surge prompts SGX query

SHARES in mainboard-listed 8Telecom International Holdings jumped 10.5 per cent in early morning trade on Tuesday, prompting a query from the Singapore Exchange (SGX) for its "unusual price movements". 

In response to SGX's query, the firm requested a trading halt on Tuesday afternoon, pending the release of an announcement. 

As at 12.05pm, the counter was trading at 20 Singapore cents apiece, up 1.9 Singapore cents from its closing price of 18.1 Singapore cents apiece on Monday. 

The last time the stock reached this price was on Aug 13, when it hit a high of 20.3 Singapore cents, before closing at 18.4 Singapore cents. 

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On Monday night after market close, the company announced that it has received in-principle approval from the Singapore Exchange Securities Trading (SGX-ST) for the listing and quotation of consideration shares in relation to a proposed acquisition. 

The company had in March announced that it intends to issue up to 16 million consideration shares at nine Singapore cents apiece, provided always that such price shall not be at a discount of more than 10 per cent to the stock's volume-weighted average price (VWAP) on the last full market day preceding the signing of the agreement. 

The deal involves taking up a 51 per cent stake of the issued and paid-up capital of China Commodity Market, and China Commodity Centre. Both target companies are engaged in the supermarket business. 

Separately, 8Telecom has also entered into two agreements to place out 5.44 million new shares at 16.74 Singapore cents each, the firm said in an exchange filing last Thursday. This subscription price represents a 10 per cent discount to the counter's VWAP of 18.6 Singapore cents on Aug 15. 

Following the share subscription, investor Cai Miao will own a 2.7 per cent stake in the firm's enlarged share capital, while investor Peng Yun will own a 1.17 per cent stake in the firm's enlarged share capital. 

Both investors were introduced to the company by business associates of executive director Wang Zhejun, and are taking on the shares for investment purposes, according to 8Telecom.

For the three months ended June 30, the group posted a second-quarter net loss of S$308,000, more than tripling its net loss of S$88,000 from a year earlier. This was mainly due to an increase in the business operations of its subsidiary Arete M, 8Telecom said. 

Revenue for the quarter also fell 63 per cent to S$145,000, while loss per share came in at 0.27 Singapore cent, versus a loss per share of 0.08 Singapore cent in the year-ago period. 

The counter was placed on SGX's watch list under the minimum trading price (MTP) criteria last year.

As at Aug 20, 8Telecom has a market cap of S$20.36 million, and a six-month VWAP of 12.1 Singapore cents.

It has 36 months from June 5, 2017 to raise its six-month VWAP to at least 20 Singapore cents, and to raise its six-month average daily market cap to at least S$40 million, or risk being delisted.