THE recent run-up in penny stocks on the local bourse has prompted three directors of recent Sesdaq debutante, MFS Technology, to cash in their reserved shares at a handsome profit.

Shares of MFS Tech, which closed unchanged at 39 cents yesterday, have surged 44 per cent since the company was listed on Jan 16.

As the price soared, two of the company's directors, Mr Pang Tak Lim and Mr Khoo Lee Meng, unloaded all 100,000 shares allotted to each of them during the initial public offer (IPO) period at 27 cents apiece.

Mr Pang sold his shares on Jan 24 at 37.5 cents each and Mr Khoo unloaded his stake on Monday at 39 cents apiece. They would have pocketed a cool $10,500 and $12,000 respectively, excluding brokerage and taxes.

A third director, Mr Chris Yong, has cashed in half of his 100,000 reserved shares at 38 cents each also on Monday, making a profit of $5,500 excluding other costs.

All three cashed in their shares within two weeks of the company's listing. These shares form part of the 7.9 million units that have been reserved for directors, employees and business associates.

MFS Tech, a unit of mainboard-listed WBL, issued 51.6 million new shares to raise some $12.3 million for expansion and working capital during its IPO period from Jan 8 to 15.

In addition to these reserved shares, the company's directors also own vendor shares which they cannot sell yet under the exchange's listing requirements.

After the sale, Mr Pang will be left with 169,000 shares, Mr Khoo will own 637,000 and Mr Yong will hold 50,000 shares.

The directors' move to sell their reserved shares came as dealers cautioned investors to remain prudent in putting their money on penny stocks.

"Some of these second-liner stocks have risen too fast and investors should take that as a cue to remain cautious as these could just be speculative play by stockists," said a dealer at a foreign brokerage firm.

The gains in the penny stock segment have boosted the UOB Sesdaq Index by 20.4 per cent since the start of the year.