KUALA LUMPUR: DRB-Hicom Bhd’s shares were trading in the red this morning following confirmation that its subsidiary, Defence Technologies Sdn Bhd (Deftech) is being investigated by the Malaysian Anti-Corruption Commission (MACC).
At 9.44 am, its stocks lost six sen or 3% to RM1.95.
Deftech, which is 100% owned by DRB-HICOM, manufactures, assembles and supplies military and commercial vehicles, among others.
Following the probe, AmBank Research today, downgraded DRB-Hicom to “underweight” from “hold” with a lower fair value of RM1.74, based on a higher discount rate of 30% in its sum-of-the-parts valuation from 20%, previously.
The downgrade was due to potential negative sentiments arising from the arrest of the group’s executives by the MACC and the uncertainties to the group’s ability to secure future government contracts.
Yesterday, MACC arrested a chief executive officer and a chief financial officer of a company for suspected corruption over a project worth RM17 million to supply equipment for military vehicles.
Both are suspected of receiving bribes amounting to hundreds of thousands from several companies for the supply of equipment for the AV8 and Adnan armoured carrier vehicles between 2015 and 2017.
MACC also seized RM100,000 in cash and documents related to the project.
The case is being investigated under Section 16(a)(A) of the MACC Act.