IGM, the London-listed provider of mobile phone services in China, has lost its CFO.
That by itself would make investors jittery but the resignation was
also accompanied by a profit warning, so investors headed for the exit.
The Guangzhou-based company's share price was down 25% in mid-day trading today.
The cause of IGM's woes was China Mobile's new tougher rules on wireless value-added services (WVAS) providers, introduced back in July. Although IGM has tried to find new revenue streams, it has been unable make up for the lost revenues and expects to generate a net loss in the second half. As a result:
IGM is taking actions to restructure its operating cost structure which will include a reduction of its workforce and salary adjustments affecting all senior management members and directors."
The bad news was hardly unexpected, as it was flagged in IGM's results last month -- see our earlier post. Several of IGM's rivals in China's WVAS market such as Monstermob have also been hard hit.
For a company have its CFO resign within five months of listing on London's AIM market, should be cause for some concern at Libertas Capital, the nominated adviser and broker (nomad) that brought IGM to market .
Hopefully, the news will cause private investors in the west to take a long, hard and more critical look at all small China-related stocks, as I suspect the sector holds more shocks in the future.
