LandMark White’s Data Breach Update: Stock Tumbled By 10.588% Upon Trading Suspension Lift

The shares of LandMark White ( ASX: LMW )pressed a pause button on ASX on 14th Feb 2019, after the company requested for a trading halt to gather some clarity around the data breach incident that the company disclosed on 5th February 2019. The company’s shares have resumed trading on the ASX as of Monday 18 February 2019. The shares of LMW last traded at A$0.380, down by 10.58% (as at 18 February 2019) with massive volumes of 250,366 shares changing hands vs average trading volumes of 39,440.

What exactly led to this wild hammering of the stocks of LMW?

To answer this question lets first quickly understand LMW's business model. LMW is an Australian property valuation and consultancy firm which was founded in 1982, providing independent valuation services to Australia's leading banks and financial institutions, corporates and individuals and employing 450 staff across Australia. The company is involved in gathering client data and providing valuation services based on the data collected.

One of the primary risks of holding on to a large data bank like client data is a breach of data security and the data landing in the hands of the bad actors on the web AKA hackers. LMW's security vulnerability was tested with the reported data breach, and an unknown third party posted the data on a dark web forum on or about 11.57pm GMT, 31 January 2019. The company is not aware as to how many people got access to the dataset throughout the time frame of ten days while it was available on the dark web.

LMW's investigations had unfolded that the dataset contained: (1) About 137,500 unique valuation data, and approximately 1,680 documents of supporting in nature. (2) Circa 250,000 individual records in total however major part of files are duplicates. (3) The date of the documents being compromised ranges between 4 January 2011 and 20 January 2019.

To give a measure of scale consider this, the 12th largest city in Australia, Hobart has a population close to 226,884 (as on June 2017 census) and the individual records compromised are 250,000 albeit the files were duplicates as reported by the company.

The company declared that the dataset contained property valuation and some personal contact information of borrowers, lenders, homeowners, residents, and property agents. The company confirmed that no loan application details, including financial and identity documents, were contained within the dataset. The company also confirmed that no date of birth data, payment or credit card information, personal bank account records, username, and password or other credentials, or additional sensitive data existed in the dataset.

The company had taken measures and notified the Office of the Australian Information Commissioner about the data breach incident apart from internal actions. The company has engaged leading external cybersecurity and privacy experts to undergo a forensic investigation to investigate the incident, and to fully understand the circumstances of the disclosure of the dataset.

However, the market seems to be jittery about the measures taken by the company, and the shares of LMW last traded at A$0.375 at its new 52- week low (as at 18 February 2019). It comes with the backdrop of company management predicting a tightening of property market. The reasons behind the tightening of property market were stated in the company’s 2019 outlook which included lending limits imposed by APRA resulting in sharp drop in loans to investors as well as limiting interest-only lending. The other reason was its adverse effect on the Sydney and Melbourne market due to housing affordability and most cities experiencing unit oversupply.

The company has been trying to mitigate its risk of reliance on capital cities by keeping its sales growth going by taking corporate actions like acquiring Taylor Byrne, as announced on 9 October 2018. It led to garner a broader exposure to the property cycle in regional Australia and hence partly offsetting downturn experienced in the capital cities.

LMW recognizes that the cyber breach event had affected many of its valued clients, who have been in association with it for over 35 years. Some lenders have, based on abundant caution, suspended its services while LMW works through this challenging time.

Will these steps taken by LMW temper the fears of investors? Only time will tell.

Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.