Case Study: Liang Huat Aluminium Ltd (Share Consolidation)

Listed on SGX Mainboard since 17 June 1994, Liang Huat Aluminium Ltd manufactures aluminium extrusion and glass processing, distributes metal and glass products. The Group is also engaged in property development.

27th August 2007: Currently Trading @ $0.04 . Executing Share Consolidation on 28th August (Every 10 shares become 1). So automatically, the price would become $0.40 tomorrow.
28th August 2007: Market opens at $0.25 instead of $0.40, eventually it closes at $0.12.

So, assuming you had 100 lots @ $0.04 before consolidation, you had $4000 in Liang Huat.
After consolidation, you are suppose to have 10 lots @ $0.40, which is $4000.
But when market ends at 28th August @ $0.12, your net worth is now $1200.

Conclusion: Share Consolidation does not mean it is an advantage. In fact, at today's unstable market with the US subprime issue, prices that fell after consolidation is a very terrible outcome.

Could the management of the company be encountering some problems?

Good Luck to those who invested in it.