STARK: Profit Trick..!

The share price of Stark Corporation Public Company Limited (STARK) 2 days ago (Oct 28) collapsed more than 21% after reporting a big lot transaction. The major shareholder “Mr. Vonnarat Tangkaravakoon” had distributed 2,250 million shares equivalent to 9.45% to domestic and overseas investors at an average price of ฿1.40/share worth 3,150 million baht.

 

The distribution of ordinary shares was aimed to increase the shareholding ratio of minority shareholders or Free Float from 11.40% to 20.85% in compliance with the free float proportion required by the Stock Exchange of Thailand’s regulations of more than 15%, and also in support of listing on the SET50 index and MSCI afterward. 

 

STARK had indirectly entered the stock market through the backdoor listing of Siam Inter Multimedia Public Company Limited (SMM) in the end of 2018.

 

After that STARK announced capital increase through private placement (PP) by issuance and allocation to 3 shareholders consisted of “Mr. Vonnarat” of 16,500 million shares, Mr. Rewin Petaibunlue of 666 million shares and Stark Investment Corporation Limited of 5,000 million baht at a price of ฿0.60/share.  

 

Later in August 2019, “Mr. Vonnarat” and Stark Investment Corporation Limited have conducted the tender offer at ฿0.60/share. The tender offer was completed by acquiring 989,88 shares, representing 4.40%. As a result, “Mr. Vonnarat” and Stark Investment Corporation Limited held more than 90%, leading to Free Float increment. 

 

 “Mr. Vonnarat” was expected to record a profit from a big lot transaction as high as 1,800 million baht. 

 

However, it was not the first time that “Mr. Vonnarat” conduct a Free Float increment. As of prior on May 28, 2020, “Mr. Vonnarat” has disposed a big lot of 402.50 million shares equivalent to 1.69% at an average price of ฿1.85/share worth 744.62 million baht. Estimating a profit of 503.12 million baht from a cost of 241.50 million baht. 

 

Despite having a solid fundamental, the continued share disposal from major shareholders brings to question why do they have to sell their shares if the business is healthy and doing well!? Right..!?