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Raffles Education’s Oriental Century confirmed fraudulent accounts
Raffles Education’s share price is expected to be badly hit once its trading halt is lifted at 2pm despite management’s assurance that associate, Oriental Century’s accounting woes would not have a material impact on the Group. As mentioned this morning, Raffles Education will write off about S$35m should the 29.9%-owned associate fail. This is equivalent to S$0.015 per share while book value will fall to S$0.1496 a share from S$0.1646 a share. Share price fell 11.3% to S$0.315 before the trading halt was implemented. We downgrade the stock to Neutral from Outperform and cut target price to S$0.30 from S$0.72.It is confirmed that Raffles Education's 29.9%-owned associate Oriental Century (ORIC) had fraudulent accounts. ORIC's management has said that the company's financial statements are not reliable, with the cash and sales inflated. In FY08, associates accounted for S$2.5m of pre-tax profits with ORIC contributing almost all, with ORIC carried at S$34.6m on Raffles Education's books. Raffles Educati
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