By Mak Yuen Teen
Addvalue Technologies has just posted an announcement after close of trading on February 20 about another “exciting” development. You can read it here:
https://links.sgx.com/FileOpen/AVT-PR_Addvalue_Avionica_formalised_significant_design_agreement_200219.ashx?App=Announcement&FileID=544229
Before anyone gets too excited, they may wish to read this excerpt from our forthcoming report called “Avoiding Potholes in Listed Companies” which includes a short writeup about this company.
“On 17 October 2018, Addvalue Technologies announced that it had received queries from two shareholders through its website asking about the value of its intellectual property (IP) and urging the company to make the value public so that the market will have a better idea of what the company is worth. Addvalue has a market capitalisation of $48 million [actually it’s now $41 million]. The company said that it engaged Everedge Global (NZ) Limited, “an intangible asset specialist recognised by the Intellectual Property Office of Singapore (IPOS)”. It said that after taking into account the IPs of the group, and excluding the company’s human capital, Everedge valued the business of the group at $123 million as at 31 May 2017 – or nearly three times the company’s current market capitalisation. Addvalue’s share price had been steadily declining and closed at $0.027 as at 17 October 2018 [it’s now $0.022]. Following the announcement, the company’s share price increased as much as 7.8% the following day. Some questions that investors should consider include: Were the shareholders who urged the company to disclose the value of its IPs related to management or major shareholders? Why did the company engage a NZ valuation firm? They should also note that the company did not disclose the valuation report.
A few years earlier on 25 March 2014, Addvalue had announced that it had entered into a conditional sale and purchase agreement with an unrelated third party buyer from PRC for the entire ordinary share capital of its subsidiary, Addvalue Communications Pte Ltd, for a cash consideration of S$330 million. This would increase the NTA of the group from US$0.004 to US$0.203, an increase of 5,108%. Following the announcement, the company’s share price increased from S$0.062 to S$0.155. More than four years later, the deal has not been consummated.
The track record of an issuer is relevant when assessing the credibility of its announcements.”
In this case, the track record of the company speaks for itself.
