Saturday, May 27, 2006

Move Over Who?: Part IX

I received some new comments in the following blog posting Move Over Who?: Part VIII

  • I just downloaded the Q1/2006 report and noted that Karensoft had actually reported a Q1/2006 profit. Perhaps their strategy of focussing on ERP4Auto is paying off ?

  • However, I am puzzled why you did not mention that Karensoft reported a Q1/2006 profit ?

    I downloaded the Q1/2006 and the 2005 accounts and running through the GN3 Guidelines, I cannot understand why Karensoft was clasified as a GN 3 company as they pass all the tests as a Group and should not be classified GN 3.

    The only thing that could hit them would be 2.1 (b) & (c) where the accounts of the listed company alone are considered. I noticed that there was an impairment loss of about 9 Million charged to the P/L of the holding company and not the group. As far as I know, FRS 136 on Impairment of Investments should only be efffective 1/1/06

    Could it be that Karensoft has been penalsied for early compliance with FRS 136 ?

Yes, by not posting a new follow-up article on Karensoft probably might leave some readers thinking that I am truly biased against some stocks and more so biased against Karensoft since it did report a profit recently.

Anyway, I do hope very much that you do understand that this is a mere personal blog of mine, mumblings of my opinions and views on stocks from an investing point of view. It's really a general blog, hence unless there is an request, I do not feel I have the need and the obligation to follow-up on every issue of every stock I have mumbled on before. Some has even posted ugly comments that I sound like a broken tape recorder when I have kept repeating blog postings on a same stock.

Firstly, for some strange reason, I could not open the pdf file attachment from their latest quarterly earnings posted on Bursa website.




Could someone confirm if they can open the above pdf file attachment link?

Anyway, I will have to rely on Karensfot's Investion Relation (IR) website: here

Now Karensoft was listed back in 2003. Karensoft has been losing money each single year since it was listed. ( see here )

  • FY 2003: Loss 0.595.17 million
  • FY 2004: Loss 3.930 million
  • FY 2005: Loss 10.809 million

The latest earnings, 2006 Q1 saw Karensoft reported a profit. A new year, a new beginning. So how did Karensoft do?

  • A sales revenue of 0.593 million.
  • A net profit of 0.101 million.

A profit of 101 thousand from sales revenue of 593 thousand???

Hardly impressive at all!

Considering its past torrid history and also the incredible chain of events when Karensoft was proudly proclaimed by a local brokerage house that its Execsuite software could rival the mighty M'soft's Office Suite software and how the stock tumbled dramatically a couple of months after that recommendation, its performance wasn't too impressive, yes?

And the following issue is even more mind-boggling. Have a look at the following screen-shot of this webpage, http://ir.wallstraits.net/karenSoft/page.php?id=profit_loss

Simple exercise.

Add Karensoft total sales revenue since listing in 2003.

Add Karensoft's sales revenue since listing in 2003 and you will get total sales of 12.627 million.
Add Karensoft's total losses since listing in 2003 and you will get total losses of 15.334 million!!

And consider the fact that Karensoft stated that these losses were derived from provision of doubtful debts.

So how does a business accumulate so much doubtful debts?

Now I do reckon that this is one really interesting issue for all. Any conspiracy theories?

How?

Anyway, had you not request commentary on this stock, perhaps some might even accuse me for promoting the stock and making insinuation that perhaps Karensoft is on its way in turning around its business.

But of course, one can argue Karensoft has made a profit and no matter how small that profit is, a profit is still a profit. And since it has made a profit, there is a chance that this could very well be the start of a brand new Karensoft.

True, very true but surely one of question how sustainable is such earnings. A profit of 101 thousand from a sales revenue of 593 thousand is really peanuts and such performance is really shockingly poor considering the fact that Karensoft is a listed company!

And from its IR website, Karensoft's current balance sheet shows a cash balance of 2.943, while its total borrowing totals some 5.453 million (net debt 2.510 million) with accumulated losses of 15.371 million!

Isn't Karensoft in such an appalling state?

And consider this issue. Based on a quarterly profit of 101 thousand, it would require 152 quarters of similar earnings to erase that accumulated losses of 15.371 million in its balance sheet!!! And 152 quarters equates to some 38 years!!!!!!!

See why I had not made an effort in making a blog posting stating the fact that Karensoft reported a profit for its latest quarterly earnings? Should I make a positive blog posting? Or should I make yet another cynical posting on Karensoft? Well if I had made a positive posting on Karensoft based on these facts, perhaps some might get some wrong idea that perhaps I am trying to pull a funky stunt here and promote Karensoft based on some personal vested reason!! And on the other hand, if I was cynical again, some might even accuse that I have some real serious personal hatred against Karensoft!

How?

Regarding the GN3 thingy. Does it even matter? Say Karensoft has been wrongly classified as argued. Does Karensoft even have any investment merits at all?

* past blog postings can be found here:

Karensoft
Karensoft: Part II
Karensoft: Part III
Karensoft: Part IV
Karensoft: Part V
Karensoft: Part VI
Karensoft: Part VII
Karensoft: Part VIII

5 comments:

TheChargingBull said...

hi moola,

My blog address has been moved to www.thechargingbull.net. I would appreciate it if you could update my blog address link.

You are welcome to pay a visit.

Thank you.

Anonymous said...

moola san,

gee.. thanks for all your comments, can u help me to check whether BJTOTO is a buy or not... its the only valuable n money making machine in the VTCY stables... everybody know VTCY is a money sucker... wat u think of BJTOTO's future... can this be something u can keep for long long term... their dividends are appealing... care to tell me wat u think about it... maybe u can enlightened me... thanks

Moola said...

Hi Anon,

So sorry but I cannot help you on BJToto since I have not been following the happenings in the stock for a long time already.

Hope you understand,

12invest said...

hey moola,

didn't see you post for a while already. Now only can revise the old postings. They are all yummy and full of insights.

By the way, heard that you one run an investment forum, care to share with me why you didn't carry on then? I believe quality investment forum is too rare in our country.

Moola said...

Hi,

I have been rather lazy lately.. :p

Actually, there is not much I really WANT to write at this moment of time. Market hasn't been too happening and I do not want to add salt to other sufferings. I am sure you know what I mean.

Yeah, surf thru the map of mumblings on this site, and you probably might a few nice stuff.

And yes, I do own an investment forum at delphi forums but I have shut it down for the time being mainly due to lack of interest and participation, plus several other personal reasons.

Yeah, sadly, good quality forums are a rarity for most simply do not understand the true meaning of the word 'forum'.

rgds