A steady rebound in shares of Malaysia’s Transmile Group Bhd was interrupted by a research report that questioned the number of planes it has, a claim the air transport firm said was inaccurate, the Business Times reported.

The stock, which last month fell to its lowest in two years on news of accounting irregularities recently, was down by as much as 13 percent at the end of May.

Dealers said the fall was sparked by a report from Macquarie Research, which said the actual number of aircraft Transmile operates does not tally with figures in its 2005 annual report. Transmile said the report was not accurate.

According to Macquarie Research, the actual number of aircraft operated by Transmile could well be eight B727s and not 10 as reported in its annual report. It downgraded the stock to “underperform” from “outperform”, and cut its target price to RM6.85 from RM14.60.

“We downgrade our rating on Transmile … following a search of online aircraft registries that raised our concerns about the actual number of aircraft being operated by the company,” Macquarie Research wrote in a note to investors.

Transmile said in its 2005 annual report that it has 10 B727s, four B737s and four MD-11s.

“Our search thus far has found the existence of only eight B727s, four B737s and four MD-11s as at end-December 2005. Further, one of these B737s appears to have been idle at least since 2005.”

Macquarie Research was also concerned that the annual report did not highlight that one of Transmile’s B727s had caught fire on the tarmac in Bangalore, India, on May 4 last year. Transmile clarified that Macquarie Research’s report contained inaccuracy on the B727 fleet size. However, it acknowledged the fire incident in India.

“As at the end of December 2005, as published in Transmile’s annual report, Transmile had eight B727s in service and another two purchased but not delivered, bringing the fleet total to 10,” Transmile told Business Times via e-mail.

The ninth purchased aircraft was delivered in November 2005 and put into service in July last year. However, the tenth aircraft did not meet company requirements because the seller did not repair a storm damage. Hence, the deal was cancelled in February 2006.

Transmile added that in May 2006, one B727 in India suffered a left wing implosion, causing the aircraft to be scrapped and deregistered in November last year.

“Thus, this brings Transmile’s current fleet of B727s to eight in service. One additional aircraft purchased in August 2006 will be delivered for service in August 2007.

“A second additional aircraft bought in August 2006 is currently on hold pending commercial requirements for this aircraft,” it said.

Transmile, which is controlled by tycoon Robert Kuok, said that its current fleet includes three B737s, four MD-11s and one Cessna Grand Caravan.

“One B737 is currently on maintenance to be scheduled for passenger to freighter conversion in the fourth quarter of 2007. The single Cessna is currently on sale,” it said.

The Macquarie Research analyst who did the report declined comment when contacted by Business Times. Earlier last month, Transmile’s shares were suspended from trading as company directors said there were doubts on the accuracy of its 2006 unaudited accounts.

“The company’s auditors have not been able to obtain relevant supporting documentation from the management on certain transactions relating to trade receivables and related sales and additions to property, plant and equipment,” Transmile said in its filing to the stock exchange.