Sevak stuck on SGX watch-list until June

Singapore

IT solutions company Sevak will stay on the Singapore Exchange's (SGX) watch-list until at least June 2019, after the market regulator deferred its review of the company's application to exit the list.

Meanwhile, SGX has granted Sevak a three-month extension on the original March 31, 2019 deadline for it to cure its watch-list status. It will not be forced to delist while the review is being deferred.

After three straight years of pre-tax losses, which triggered its entry into the watch-list, the company is once again profitable with a net profit of S$3.7 million for fiscal 2018. Its latest market capitalisation is about S$44 million based on data from SGX StockFacts, above the S$40 million threshold. Hence, it appears to have met the conditions to cure its watch-list status.

But SGX's regulatory arm (SGX RegCo) recently raised concerns on Sevak's stock trading activity that drove its share price - and market cap - above watch-list requirements. On Jan 31, SGX RegCo urged investors and potential investors to exercise caution when trading Sevak shares. SGX RegCo noted that the company's share buyback programme and a number of trading accounts believed to be connected to one another were behind the majority of activity and interest in the stock in the months leading up to the regulatory notice.

One day after SGX issued the caution, Sevak said its controlling shareholder Smart Co Holding intends to make a partial offer for Sevak's shares directly or through its concert parties, resulting in a 51 per cent shareholding.

Sevak added that Smart Co Holding emphasised that there is no assurance any transaction will take place and there are no definitive agreements as yet.

Sevak entered the watch-list on March 4, 2015 and was previously granted two 12-month extensions to cure its watch-list status.

The stock last traded at S$3.71 on Feb 20.