Dataprep’s price bubble deflates as interest dies down

By ALIFAH ZAINUDDIN

DATAPREP Holdings Bhd’s share price rally from mid-February and mid-March is giving way to a sharp retracement with the stock’s plunge into penny stock territory last week.

After hitting a high of RM4.13 on March 16, Datarep’s share price has fallen to close at 89 sen last Friday, losing some 79% or RM3.24 lower as speculative interest on the stock died down.

The price fall erased early RM1.8 billion in Dataprep’s market value from its high.

“There has been no fundamental change in the company’s prospects, so the retracement in share price is not surprising,” said a chartist from a local brokerage.

Dataprep shares had soared over 2,194% to a 21-year high of RM4.13 on March 16 from 18 sen at the start of the year, which pushed the counter to reap nearly RM2.5 billion in market value.

At its share price peak, the company had a market valuation bigger than Mah Sing Group Bhd (RM1.97 billion), Duopharma Biotech Bhd (RM1.85 billion) and IJM Plantations Bhd (RM1.62 billion), among others.

Dataprep’s share price rally began after the company announced plans to acquire a 51% stake in Ridaa Associates Sdn Bhd, aimed at expanding the group’s multimedia and communication revenue stream.

The group, in its third-quarter ended June 30, 2020 (3Q20) report, stated the acquisition will allow the group to pursue opportunities to build, instal, operate, maintain and manage telecommunication tower assets in Malaysia.

Its venture into the telecommunication towers project is aligned with the National Fiberisation and Connectivity Plan for the foundation of the country’s digital infrastructure transition to 5G technology.

In addition to its takeover plan, Dataprep’s share price has also been boosted by developments linked to Widad Business Group Sdn Bhd (WBG).

WBG is owned by Tan Sri Muhammad Ikmal Opat Abdullah, who is also a substantial holder of Dataprep.

Muhammad Ikmal sold 11.11 million Dataprep shares on Feb 16 in an off-market deal before acquiring 200,000 shares via open market on March 1, which took his total stake to 54.21%.

He has also been actively trading his shares in Widad Group Bhd with the acquisition of some 366.96 million shares and disposal of 420.16 million shares.

Heavy trading and sharp rise in Dataprep’s shares led Bursa Malaysia Securities Bhd to issue a notice, advising investors to exercise caution and make informed decisions in the trading of Dataprep’s shares on March 10.

The counter was slapped with an unusual market activity query on March 1, after its shares jumped to RM1.44 from RM1.11.

Its share price continued to climb to a high of RM1.75 the following day, with the company saying it was unaware of any corporate development relating to its business that has not been previously announced that may account for the trading activity.

Dataprep last month announced a wider net loss of RM2.97 million for its 4Q20, due to the inclusion of a non-recurring professional fee of RM1.45 million and an employee share option scheme-based payment of RM1.64 million in its operating expenses.

Its revenue for the quarter, however, was 60.2% higher at RM12.59 million from RM7.86 million in 3Q20 on higher sales attributed to new projects secured by the company.