The news: Hiap Seng Engineering’s board of directors announced that certain key management
personnel of the company have assisted the Corrupt Practices Investigation Bureau (CPIB) in
CPIB's investigations in early Jul and mid Aug 2011. To the best of the board's knowledge, there has been no summons issued against any of the management personnel of the company.
Our thoughts: While the nature of the investigations is not known, the board understands that the investigations mainly concern contractual arrangements between Hiap Seng Engineering and certain sub-contractors relating to the provision of accommodation, meals and transport services by these sub-contractors. The board is unable to provide more information at this point in time as CPIB have requested that the details of the investigation remain confidential. Some of Hiap Seng’s peers include Rotary Engineering, PEC and Mun Siong Engineering. Hiap Seng is currently trading at 6.9x consensus earnings, in line with its peers’ average of ~7x. With this piece of news, Hiap Seng Engineering shares may dip today. We do not have a rating on this stock currently.
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