NationGate’s core business viewed as ‘sound’

PETALING JAYA: NationGate Holdings Bhd’s subsidiary has been raided by the Malaysian Anti-Corruption Commission (MACC) over alleged scrap metal smuggling.

NationGate, in a filing with Bursa Malaysia yesterday, stated the anti corruption watchdog raided the premises of its wholly-owned subsidiary, NationGate Solution (M) Sdn Bhd on Monday, as part of an ongoing investigation into alleged scrap metal smuggling.

In its latest annual report, the group noted NationGate Solution is involved in the assembly and testing of electronic components and products.

The news triggered heavy trading of NationGate shares yesterday with Rakuten Trade head of equity sales Vincent Lau saying the selling was likely driven by a “sell first, ask later” reaction among investors.

He opined that NationGate’s share price should stabilise at current levels.

“The group’s data centre prospects remain intact for now, with reputational risks stemming from the MACC raid rather contained,” Lau said, adding NationGate’s core business “remains sound” and the company’s partnership with Nvidia Corp is unlikely to be affected by the raid news.

NationGate closed the trading day at RM1.49, down 12 sen, with 160.5 million shares traded.

Intraday short selling of NationGate shares was suspended by the local bourse after a 15% plunge following the company’s announcement of the event to Bursa Malaysia. The suspension will be lifted today.

The Penang-based tech company’s shares had tested a high of RM1.70 and low of RM1.35 in intraday trade.

NationGate is one of only four elite Asian original equipment manufacturer partners of Nvidia. It serves as Nvidia’s only contract manufacturer in South-East Asia, specialising in building artificial intelligence (AI) servers equipped with the US tech goliath’s high-performance graphics processing units, which are mainly deployed in AI-based data centres.

“I believe Nvidia would have done its due diligence and recognised NationGate’s capabilities, which is why NationGate was appointed in the first place. I do not think this issue would cause Nvidia to switch to another partner,” Lau said.

NationGate stated it views the allegations with “utmost seriousness” and has taken “proactive steps” to ensure full cooperation with the MACC and to “safeguard the integrity of the investigation”.

“Our company remains steadfast in its commitment to the highest standards of corporate governance, accountability and transparency,” it said in the filing.

NationGate also assures stakeholders that the board will use its “reasonable endeavours” to ensure business operations remain unaffected, and “appropriate interim measures” have been put in place.

“This (scrap metal) is just a small part of its business, and even if it’s stripped out, it would not affect NationGate’s earnings in a meaningful way,” Lau said.