Noble is down 0.5% at $1.075 and Wilmar is off 0.3% at $3.17 amid sluggish volume, with an analyst saying the declines are likely due to peer Olam’s trading halt as it defended its integrity after Bloomberg reported short-seller Carson Block of Muddy Waters LLC research questioned the company’s accounting methods.
Olam is “heavily” indebted and aggressive in how it reports what it calls biological gains on investments, the report quoted Block as saying at the Ira Sohn Investment Conference in London. “It’s a leap of faith to think the company is being honest with its valuation” gains, he said, according to the report.
In an SGX filing, Olam said it is “dismayed at the nature and lack of substance of these assertions and opinions about Olam’s financial position,” noting the company wasn’t contacted by anyone from Muddy Waters.
“We’re all kind of a little bit in the dark on it,” the analyst says. “A lot of the stuff he’s talking about doesn’t really sound like new stuff to me.” The analyst notes the company is highly geared, as Block reportedly said, and also does record biological gains.
He notes Olam does use fair-value accounting, as do its peers. But the analyst notes “(Block) has had some success with this in the past.” He’s awaiting more details.
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