Hot stock: HPL falls 2.6% on news of CPIB probe into Ong Beng Seng

SHARES of Hotel Properties Limited (HPL) closed 2.6 per cent lower on Friday (Jul 14) after the company announced that its co-founder and managing director, Ong Beng Seng, had been issued a notice of arrest.

The hotel-focused investment holding company fell as much as S$0.27 or 7 per cent to S$3.59 at the opening bell.

It eventually climbed to its closing price of S$3.76, down S$0.10 or 2.6 per cent, after 407,800 shares worth S$1.5 million changed hands.

No married deals were recorded during the day, ShareInvestor data indicated.

Prior to the open, HPL said Ong was asked to provide the Corrupt Practices Investigation Bureau (CPIB) with information on his interactions with Minister for Transport S Iswaran, who has been put on a leave of absence as he assists in investigations into a case uncovered by the anti-graft agency.

Ong will be travelling from Jul 14 and will surrender his passport to CPIB upon his return to Singapore.

HPL said he is “cooperating fully with CPIB and has provided the information requested”.

DBS Credit Research analysts on Friday said any downward pressure on HPL’s bond prices is likely to be short term.

Their view is that this potential “knee-jerk effect” is attributed to a “sell first, ask questions later” approach, given that investors dislike uncertainty.

“Unknown unknowns breed uncertainty. While speculations are rife, we are unable to ascertain if the purported actions of Ong Beng Seng is in his capacity as HPL’s managing director (which could have an impact on HPL fundamentals) or in his personal capacity,” said the analysts.

DBS continues to rate HPL’s 3.75 per cent bonds due May 2028, and 4.2 per cent bonds due March 2027, as “attractive”. It remains “neutral” on the company’s 4.4 per cent perpetual bonds, and 3.8 per cent bonds due June 2025.