You are here
Hot Stock: Trek 2000 shares soar after shares emerge from trading suspension
SHARES of mainboard-listed Trek 2000 International were hotly traded on Monday as it resumed trading almost 1-1/2 years after its trading suspension.
As at 1pm, the stock rose 5.4 Singapore cents or 29 per cent to S$0.24, with more than 2.5 million shares traded.
The thumbdrive maker had previously suspended the trading of its stock on April 27, 2016 after its auditors Ernst & Young (EY) lodged a report with the Accounting and Corporate Regulatory Authority (Acra) related to issues with some sale transactions between one of its subsidiaries and a customer.
The company is in phase two of a review conducted by forensic accountant RSM Corporate Advisory. The scope covered by RSM will include the sale of products by Trek's subsidiaries to T-Data Systems (S) and S-Com Solutions (Hong Kong) Co from FY2008 to FY2016.
Based on preliminary calculations by Trek, the identified transactions with T-Data and S-Com HK may have caused the group's sales to be overstated by US$1.85 million, and profits to be understated by US$272,615 from FY2008 to FY2014. Trek has assumed that these were "round-tripping" transactions, the company said, notwithstanding that RSM has not verified the transactions.
Trek returned to profitability in 2016 and has continued to remain profitable in 2017. The group's net profit recovered to US$6.1 million in 2016 versus a net loss of US$6.6 million in 2015, driven by increased revenues combined with cost containment measures.
For its second quarter ended June 30, 2017, Trek reported a 79 per cent increase in net profit to US$2.1 million compared to a year ago. The profit increase came even as revenue fell 39 per cent to US$29.8 million.
Higher profits were due to an improved product mix and better margins after the disposal of its 19 per cent interest in Racer Group, announced in March. Racer's principal business is manufacturing plastic products and components, which is non-core to Trek's electronics and technology business.