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AIM-China Grand Group – anything to see?

By Nigel Somerville, the Deputy Sheriff of AIM | Sunday 16 July 2017


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


I’ve covered AIM-China Grand Group (GIPO) a couple of times already but there is something fishy about the share price movement over the last few days. Surely even Marcus Stuttard’s oxyorons at AIM Regulation will view what follows with some interest. Remember, the company claims to have about £25 million of cash as a cash shell and the market closed on Friday with the company worth just £2 million.

On Monday I called for a statement as the shares collapsed by a third on no news. Why would a cash-shell with £25 million but with a market capitalisation of just £3.3 million following the collapse. The shares were then 9.75p.

Tuesday came and went, as did Wednesday and no statement. Meanwhile the shares continued to struggle. But on Thursday a statement did finally make it out of Grand Group Towers.

If that seems a tad tardy, the reaction was devastation and the shares closed on Friday at just 5.875p having put is a low point of just 4.5p. Given that the stock started the week at over 14p that’s pretty calamitous.

So the company lost a third of its value three days ahead of the RNS and since the RNS has nearly halved. Is there anything to see here?

For the record, the actual announcement (at 3.13pm on Thursday) was this:

Update on AGM:

The Board has also today resolved to hold the Company's AGM in early August and will be posting notices of the AGM to shareholders shortly.  At the AGM the Board intend to propose an enlarged investing policy for shareholder approval.    

Comment on Press speculation:

The Board noted there has been market speculation about whether funds will be returned to shareholders in the near term. The Board would caution investors against anticipating this, as this is not the current intention.  

Investors should be aware that if the Company cannot substantially implement its investing policy before the 30th of September 2017, the Company's shares will be suspended from trading on AIM under AIM Rule 40. This suspension would be for up to 6 months, after which time, should the Company not have substantially implemented its investing policy, the Company's shares will be de listed. 

The Board are also considering a secondary listing on an alternative market, as an alternative option to continue to provide shareholders a market for their shares during any prolonged period of suspension.

ENDS

So the company is to widen its investment remit, it might get suspended or even booted off AIM (but no worry, an “alternative” market is being considered) in the meantime.

For some reason, AIM investors considered that a company with £25 million locked away in China and considering being delisted a bit of a turn off.  I can’t think why.

But it seems to me that some investors may have got wind of this before others. I draw your attention to the volume on the chart below – before Monday, there was no volume at all!

Even on Thursday, there seems to have been a build-up to the release of news from 12.00 midday. 

So why did it take until Thursday to address the market? Why does it look as though people were selling on Monday and it just happens to turn out that there was something brewing which would knock the shares?

Will anything be done about it? Of course not. AIM Regulation will look the other way, deny all knowledge and pretend it hasn’t happened. And if that doesn’t work, it will say it isn’t them responsible anyway.

Move along please, nothing to see here.


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