MOL Global, Deutsche Bank's Buy recommendation

One reader has drawn my attention to a Buy recommendation on MOL Global from Deutsche Bank (dated 20 November 2014) with a 12 month price target of USD 12.

MOL's share price currently hovers around USD 0.24, 98% below the target price, in other words the price has to multiply by a factor 50 to reach the target. With the company being soon delisted, that looks rather unlikely.

It should be noted that Deutsche Bank was conflicted, but at least the company did announce that in the appendix:

Another example why readers should not take broker's research too serious. Although there might be interesting information in their reports, I personally never follow their specific buy/hold/sell recommendations.

Mol Global delisted from Nasdaq

I wrote before about Mol Global, the first Malaysian company to be listed on the Nasdaq exchange.

The company will be delisted, less than two years after its IPO. It's last traded price was USD 0.30, a 97.6% decline from it's IPO price of USD 12.50.

A good write-up including a chronology of the events that led to the delisting can be found on the website of Digital News Asia: "MOL Global’s short and bumpy Nasdaq journey".

Of interest is the last paragraph:

April 13, 2016: Announces delisting plan. Shares close at US$0.30. (Closing price on April 15: US$0.23). At such a level, this gives MOL Global a market capitalisation of US$15.5 million. In contrast and to recap, about US$75 million of the IPO proceeds went to selling shareholders.

MOL Global: class-action suits are filed

Four US law firms have filed class action suits against MOL Global, according to this article in The Star.

One complaint can be found here, the most important paragraphs:

Another complaint can be found here:


The Complaint alleges that defendants made false and/or misleading statements and/or failed to disclose to MOL Global investors that: (1) MOL Global was overstating the revenue and profit derived from the Company’s business and operations; (2) the Company’s  actual business model could not sustain the growth trends described in the IPO offering documents; (3) MOL Global would not be able to report its third quarter 2014 financial results on November 21, 2014, as previously stated; and (4), as a result of the foregoing, the Company’s financial statements were materially false and misleading at all relevant times.


I guess we need to wait for more specific information how things will unfold.

I am not a lawyer, although a big fan of TV-series like "Suits" and "Boston Legal". Are we going to see Harvey Specter and Alan Shore cross examining Vincent Tan and Ganesh Kumar Bangah?

MOL Global is currently trading at USD 2.85, 77% down from its IPO price.

MOL Global's share price crashes 54% (3)

MOL Global just announced its results for the third quarter:

• Consolidated revenue increased by 5.6% to MYR47.7 million (US$14.5 million) from MYR45.2 million in the corresponding period of 2013.
• Profit attributable to shareholders of MOL Global Inc. decreased 61.5% to MYR2.4 million (US$0.7 million) in the third quarter of 2014 from MYR6.3 million in the corresponding period of 2013.
• During the course of the Company's review of its financial results for the third quarter of 2014, the Company's auditor discovered that its Vietnamese subsidiary, Nganluong Joint Stock Company ("Nganluong"), which was acquired by the Company in March 2013, reported revenue from its payment business on a gross basis, and accounted for the corresponding fees payable to merchants being included in direct cost and other ancillary expenses. However, the Company's accounting policy is to account for such transactions on a net basis because the Company acts as an agent with respect to these revenue arrangements, such that the corresponding fees payable to merchants should have been netted out of revenue and not included in direct cost and other ancillary expenses.
• Two putative class action complaints have been filed against the Company and certain of its officers and directors alleging certain untrue statements and omissions in its registration statement and prospectus for the Company's initial public offering and seeking unspecified damages and other relief.

Sounds not good.

MOL Global's share price crashes 54% (2)

The nightmare of every analyst: posting a buy recommendation and immediately the share tanks due to some news.

On November 20, 2014 Deutsche came with a "Buy" recommendation for MOL Global:

And the next day already they had to come with an "Alert", although they did stick to their recommendation:

Deutsche was one of the IPO underwriters, according to SeekingAlpha.


The 40-day quiet period on underwriter analyses that began with the October 2, 2014 IPO of MOL Holdings Inc. will come to an end on November 13, allowing the firm's IPO underwriters to publish analyses of the of the company on November 14.

MOLG's share prices may see a brief rise, in response to the release of the underwriter opinions.

MOL Holdings IPO underwriters, including Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities, UBS Investment Bank and CIMB Securities, will seek to capitalize on the stock's recent growth through the release of positive reports beginning with the conclusion of the quiet period.


An insider informed me that the above research might have been outsourced by Deutsche to a third party research provider.

Valuation-wise, we can see from the above Deutsche link that at USD 8.86 the company was trading at an expected PE of 86 times. That has come down of course since the share price crashed.

But that would also imply that the company IPO-ed on a forward valuation of 121 times. That is if the company indeed makes a net profit of RM 21.2 Million, as forecasted.

The profit in 2013 was RM 12.2 Million, meaning that the IPO price on the realized profit was a whopping PE of more than 200 times. A sky-high valuation in which everything has to go perfect.

Good articles by "Serious Investing" on MOL Global, here and here.

I wrote before about Mark Chang (here and here), founder of Jobstreet. Mark is linked to MOL Global since he had agreed to be on the board of MOL Global.

For more information what MOL Global is doing, here is a presentation.

MOL Global's share price crashes 54%

MOL Global's share price tanked 54% to USD 4.09 after it announced that its CFO (who only joined three months ago) resigned and the company would postpone its quarterly results, both known red flags.

From Barron's Asia:


Malaysia-based Internet gaming services firm MOL Global (MOLG) said it would postpone its planned third-quarter results from today to Wednesday, December 3. This would be MOL Global’s first earnings call as a public company and the stock has risen over 10% since it went public a month ago in New York.

MOL Global also said its CFO Allan Wong decided to resign for “personal reasons.” Wong only joined MOL Global in August 2014. Jonathan Yoon, currently CFO of one of MOL Global’s business segments, will assume the post.

This is unfortunate timing for Deutsche Bank which just started their coverage with a Buy rating and a price target of $12. MOL closed at $8.86 on Thursday.

The bank analysts Alan Hellawell III and Vivian Hao rushed out a follow-up after the announcement, stepping back from their bullish calls:

MOL, as a relatively small company which spans more than 13 markets, could suffer from poor internal reporting systems, rendering a representation of the business challenging until the actual closing of books at the end of reporting periods. We also note that MOL, with 454 employees, has undertaken no less than 10 investment and acquisitions in five countries since 2009.

Reconciling differences in accounting standards across markets can be a real headache.


The US is a difficult country to list in, with tough laws and "hungry" lawyers. It seems the last category is indeed already on the prowl. How serious that is, I don't know at this moment, we first have to wait for the quarterly results.

MOL Global has come down a lot (67%) since its listing at USD 12.50 per share. One interesting paragraph from its prospectus under "Risk Factors":


You should not consider or rely on statements made by our major shareholder that appeared in a news report in June 2014.

In an article in The Business Times, a Singapore-based newspaper, dated June 23, 2014, information regarding us and this offering was published. This article quoted statements that were made by our major shareholder, Tan Sri Dato’ Seri Vincent Tan, to a reporter, during an interview relating to matters unrelated to us or this offering, and were published without his consent. These statements were also not made with the knowledge or consent of us or our directors, officers or employees. The article referred to statements by our major shareholder regarding the expected timing of our initial public offering and our projected market capitalization and value of our company. Portions of the article were republished by other news agencies.

These statements regarding market capitalization and value by our major shareholder were not based on any methodology, calculations or analysis undertaken by us or, we understand, our major shareholder. We understand these were informal, speculative statements made by our major shareholder that were not expected by him to become public. These statements should not be relied upon for any purpose whatsoever. We are unable to accurately project our market capitalization or the value of our Company because these will be based on many factors beyond our control. You should carefully evaluate all the information in this prospectus, including the risks described in this section and throughout the prospectus. You should only rely on the information contained in this prospectus in making your investment decision.

Neither we nor any of the underwriters in this offering, nor any of our or their respective affiliates, have confirmed, endorsed or adopted any of the information reported in the news articles referred to above, and all such information is disclaimed by us and the underwriters and our and their respective affiliates. Accordingly, prospective investors should not rely on any such statements or information in such news reports.

MOL Global down 35% at IPO

MOL Global among worst-performing IPOs ever

Malaysian e-payment company MOL Global produced one of the weakest US IPO debuts of all time, declining as much as 35% in its initial session even after reducing the size of the deal by as much as 40% and pricing the offering at the bottom end of the marketing range.

“If you are concerned about slowing growth in China what do you think is going to happen across the rest of Southeast Asia,” said one hedge fund source that participated in the deal.

“It was a case of first in, first out (in the aftermarket),” he said.

If MOL Global closes the session at current prices it would rank as one of the worst first-day performances on record for a US IPO.

One source close to the deal expressed concern that the company had an inflated view of its value in the wake of the highly successful Alibaba IPO, while a buyside source expressed concern that the book was low quality, including many orders from short-term focused investors.

MOL was targeting valuations of as high as 40-times 2015 earnings, deal sources said. That is far above above the 27.6- and 26.2-times multiples of Asian e-commerce companies Tencent and Baidu.


Above text is taken from IFRasia's website. MOL Global ended the day 35% below its IPO price.