The Securities and Exchange Commission (SEC) is considering imposing a penalty on executives of JKN Global Media (JKN) for publishing a Facebook post to promote its hemp business and encouraging followers to buy shares, but only if the stock regulator determines the company acted intentionally to boost its share price.
The Stock Exchange of Thailand (SET) plans to conduct a preliminary investigation into JKN's intentions to determine whether it manipulated its share price.
The SET then passes the case on to the SEC if it finds sufficient evidence to support the accusation.
The market believes the investigation may uncover evidence that JKN was guilty of stock manipulation, according to a stock market source who requested anonymity.
Details of the legal process would not be made public until a decision has been made, the source said.
A memorandum of understanding (MoU) between JKN and DOD Biotech (DOD) has not yet gone into effect and could be in peril, said the source.
In light of this situation, investors must constantly monitor and analyse various projects in JKN's investment plans to determine whether to invest, said the source.
The company filed the information regarding its MoU with DOD to the SET on March 8.
The MoU refers to the development of 10 hemp-infused supplement and cosmetic products, and air time on the New18 TV channel to sell the products.
However, despite the latest news, an analyst at Country Securities Group who requested anonymity still recommends investors buy JKN shares as the firm is expecting 25% profit growth this year, helped by a rapid increase in the health and beauty sector last year.
The health and beauty sector is expected to generate 300 million baht in revenues this year. This does not include anticipated future revenue from hemp-related businesses, which are set to begin production in the fourth quarter.
Revenue from the hemp business in its first full year -- 2022 -- are expected to reach 200-400 million baht.
In relation to JKN's air time rental with New18 TV channel, the firm said it will serve as a sales channel for its products and it intends to provide a variety of content.
JKN also expects the rental cost to be reasonably low.
Shares of JKN rose 0.1% yesterday to close at 11.70 baht in trade valued at 1.56 billion baht. During trading it fluctuated between 11.40-12.70 baht.