A couple of months ago I wrote an article about ASX-listed companies with questionable announcements, either listing announcements as market-sensitive when they weren't, or seemingly spamming useless announcements.
I've added Aconex Ltd (ASX: ACX) to that list, after today's announcement 'Fletcher Building Standardises on Aconex for All Projects'.
Essentially, Aconex's long-term customer, Fletcher Building Limited (Australia) (ASX: FBU) has agreed to use Aconex software across all of its divisions. This expands on a prior agreement between the companies.
Aconex paints it as great news, giving the announcement a 'market sensitive' tag, yet there is no mention of any financial benefit to Aconex from the new arrangement. In fact, we might even theorise that there is minimal financial benefit to Aconex at all, given that Fletcher has apparently used Aconex software for many years in New Zealand.
Is the announcement good news?
Undoubtedly. A long-term customer has decided to increase its use of Aconex's software. That's a vote of confidence and should help shareholders evaluate whether the company's software really adds value for its customers. It's useful information.
It's not market sensitive information, however. To me, it seems as though the company has found some reasonably positive but fiscally unimportant news – associated with a client with highbrand recognition – slapped a market-sensitive sticker on it, and released it to the ASX.
This procedure was used heavily by fallen market darlings Reffind Ltd (ASX: RFN) and 1-Page Ltd (ASX: 1PG), among others. I'm not suggesting Aconex is anything like those two businesses, by the way, but I am wary of companies trying to draw attention to activities that they should be doing anyway.
Short-seller interest in Aconex has been growing rapidly in recent times and now tops 14%, up from 12% just three weeks ago. With Aconex's lofty valuation, the upcoming retirement of its CFO, recent share sales from management, and todays' fluffy announcement, circumstantial evidence is mounting against the company.
Growing earnings (or not) will prove the value in the business over the long term, but for myself I'd like to see a few more cards on the table before considering a purchase in Aconex.
