By: Our Correspondent

Anonymous Equity, the mysterious gadfly organization that a fortnight ago released a devastating report on the troubled Thailand-based hire purchase lender Group Lease, has issued a new report saying it expects the share price to drop to zero and that it will be wound up.

The Stock Exchange of Thailand and the country’s Securities and Exchange Commission suspended the stock on Oct. 16 and filed a criminal complaint against Group Lease’s CEO Mitsuji Konoshita for fraud.  Trading in the shares resumed on Oct. 20, then was suspended again and resumed on Oct. 24. However, Anonymous Equity said in the new broadside that “while a ‘burn-down’ of Group Lease’s book value indicates that the company might still have some value, in reality the risks are stacked to the downside, and include: misappropriation of cash, lawsuits and inability to produce an audited set of accounts.”

Nonetheless, Group Lease itself, in a statement following the removal of Konoshita, a tennis buff, as CEO and Chairman of the Board and replacement by Konoshita’s brother Tatsuya, said it “has sufficient cash flow and a strong balance sheet will allow to the company to operate as usual.” In an Oct. 20 statement, it said Group Lease “will fully comply with the laws, regulations and orders from the SEC,” including restating its financials as soon as possible.

However, Anonymous Equity said, “the only thing that might be able to save GL’s shareholders now is a rescue by another company.  As far as we can see, the only entity within the immediate Group Lease/APF Group which might theoretically attempt a rescue is J Trust, the Japanese company which already had GL on life support by virtue of their 7.8 percent stake in the company and the US$180 million-odd in GL’s convertible bonds they own [representing about 60 percent of GL’s liabilities.”

Group Lease has been an investor favorite for several years as its share price has steadily risen, built on an impression that given the rising sales of motorcycles across Southeast Asia, it faced a rosy future. But as Anonymous Equity said in the current report, “we would also like to suggest that the regulator might wish to investigating those parties – be it brokers, fund managers and/or stock operators – who appear to  have been involved in manipulating the stock price of GL during the melt-up period in 2015 and 2016. We have seen the same pattern in various Thai mid-cap stocks over the past two-three years; strong earnings numbers [predicated on aggressive – if not fraudulent – accounting], accompanied by breathlessly-optimistic sell-side analyst reports and rapid issuance of covered warrants by the same brokers, while insiders who have already loaded up on the stock – stock operators and fund managers alike – then promote the company heavily in public.”

In reality, as Asia Sentinel has reported in a series of stories since 2015, J Trust and its affiliated companies may well be an enormously expensive house of cards. And, as Anonymous Equity pointed out in the current report, “J Trust has been subject to various allegations of malfeasance regarding money laundering in connection with its acquisition of a scandal-ridden Indonesian bank in 2014.”

One key question, the report asks, is “How much does J Trust know about GL’s malfeasance, why have they supported GL, and are J Trust’s investors aware of what is happening?” Its investors “should consider seriously what the implications would  be for the value of their stakes in J Trust are even partly true, as this would mean that one or both companies may have been involved in routing stolen money to Cyprus from the former Bank Century/Bank Mutiara in Indonesia.”

J Trust and its own affiliated companies Showa Holdings Ltd. and Wedge Holdings have reportedly indulged in a frantic attempt to keep their shares afloat, purchasing as much as US$75 – 21 percent of J Trust’s market capitalization – following the SET’s action against Group Lease.

“In a way, it is amazing that Konoshita got away with the scam for so long, as the fraud was not particularly well-hidden,” the report says. “Perhaps Konoshita thought that eventually he would be able to use the currency of his own stock to by legitimate businesses and thereby to ‘wash’ his own reputation and that of GL.”

For Konoshita himself, now kicked out as CEO and facing prosecution, “perhaps the ultimate personal tragedy of this incident is that he didn’t turn out to be very good at hiding his tracks – it would probably have been better if he had just stuck to playing tennis.”