WHY Mudajaya shares fall more than RM1?

Mudajaya Group Bhd's shares fell by more than RM1 yesterday as investors were spooked by a poison pen email sent to sectorial analysts and investors over the last few days.

Analysts covering the stock said the hordes of selling pressure wiped out some RM415 million of its market capitalisation yesterday.

Mudajaya's shares fell by as much as RM1.18 a share yesterday, but recovered somewhat to end the day down by RM1.01 to close at RM3.92.

The fall was partly cushioned by Mudajaya buying its owns shares in the market yesterday.

Mudajaya informed the stock exchange late yesterday that it spent RM4.38 million to buy some one million odd shares at between RM4.55 and RM3.80 per share.

In total, some 11.66 million shares traded hands yesterday.

Analysts said that there was random forwarding of the poison pen emails, and hinted that there was nothing new to the emails than what was widely reported in the media earlier.

They added that the forwarding of the emails and uncertainty over the outcome of the Securities Commission (SC) probe created fertile ground for the rumours to take a life of its own.

"The company has to come out and assuage investor concerns as poison pen emails are flying around everywhere," said an analyst who covers the stock on a regular basis.

This week, two major research houses had come out with reports on Mudajaya.

CIMB had a "buy" recommendation with a target price of RM7.94 while OSK Securities also rated it a "buy" with a target price of RM7.33.

Both the analysts who wrote the most recent reports on Mudajaya declined to comment.

Late last month, Business Times reported that the SC was "looking into the affairs" of the builder.

Recent reports suggested that the probe was centred on a complaint over Mudajaya's power plant operations in India, and its ability to book higher margins than even some of its bigger peers.