Regarding Bina Puri Article on Star Bizweek

My Dearest JL,

Regarding the article on Bina Puri taps overseas market to grow order book.

Yes, the stock has been on a tear! It is hot!

• The news has piqued investor interest; Bina Puri’s shares have been steadily rising and hit a 27-month high of RM1.18 on Wednesday. Year to date its shares have gained over 70%.

However, there are certain issues in the article that I believe you should address!

• As at end-March this year, the company had as much as RM18.1mil in cash and bank balances while its long-term bank borrowings stood at RM108mil.

That's a rather misleading statement.

Here is the link to that B.Puri's earnings notes as at-end-march (reported on May 2007). http://announcements.bursamalaysia.com/EDMS/annweb.nsf/8b25383a269fcce548256d79001af770/482568ad00295d07482572e9003141f9/$FILE/BPHB-1st%20Qtr%202007.pdf

1. "As at end-March this year, the company had as much as RM18.1mil in cash"

Well, B.Puri has 18 mil more in FD that the article failed to mention. Total cash is 36.386 million.

2. while its long-term bank borrowings stood at RM108mil.



Total group borrowings is 386.034 million.!!!

So let's look at the statement again.

• As at end-March this year, the company had as much as RM18.1mil in cash and bank balances while its long-term bank borrowings stood at RM108mil.

Based on that statement, it would appear that B.Puri is a company with a nett debt of 89.9 million only.

But if i were to account the corrected one, total cash should be 36.386 milllion, whereas total debts should be 386.034 million. Which means that B.Puri is a company with a nett debt of 349.648 million!

Wow!

Total net debts is mis-stated by the reporter by some 259.748 million!

Makes a whole lot of difference, yes?

So, do you think that such business news reporting is misleading?

And what chance does the normal investing public has when our business news are constantly filled with misleading information?

What if the normal investing public does not know how to check from the Bursa website?

Don't you think the investing public, the minority shareholders will lose out in the long run when our local financial journalist continues to publish misleading articles?

The reporter then paints the exciting prospect, the links between B.Puri and tycoon Tan Sri Syed Mokhtar Albukhary and with it the link to MMC Corp and the link to Saudi Bin Laden Group!

• In its notes, which accompany its financials, Bina Puri adds that is also likely to ink jobs in Vietnam, Thailand and the Middle East, which should augur well for the company. Presently, some 35% of Bina Puri’s revenue stems from abroad.
  
  Jobs in the Middle East could also be promising for the company particularly on the back of a commonly held notion that the company is linked to tycoon Tan Sri Syed Mokhtar Albukhary, not least because his flagship company, MMC Corp Bhd has tied up with the Saudi Bin Laden Group for a massive US$30bil project to build the Jizan economic city in Saudi Arabia.
  
  Feisal, largely deemed to be in “Syed Mokthar's circle”, sits on the board of two other companies also believed to be linked to Syed Mokhtar. They are Gula Padang Terap Bhd and Aliran Ihsan Resources Bhd.
  
  Feisal holds a direct stake of 6.5% in Bina Puri. Other substantial equity holders in Bina Puri are its managing director Tan Sri Tee Hock Seng, who has 16.7% shareholding in the company held in his own name and via his vehicle Tee Hock Seng Sdn Bhd, and company director Tony Tan Cheng Kiat with about 11.2%.
  
  The largest shareholder of Bina Puri is privately-held Jentera Jati Sdn Bhd with a 25.2% interest.
  
  According to the company’s annual report 2000, Syed Mokhtar has a 7.3% interest in the company via Vickers Ballas & Co Pte Ltd, while Jentera Jati owns a 18% stake.

That massive US$30bil project to build the Jizan nicely mentioned makes the stock sexy, yes?

And then what amazes me is the last two paragraph.

• For the quarter ended March this year, Bina Puri posted a net profit of RM1.4mil on the back of RM104.7mil in sales, an improvement of some 27% and 5% respectively from a year ago. Kenanga Research attributes the improvement to higher profit contribution from associates and lower tax expenses.
  
  In a recent research report, TA Securities forecasts Bina Puri raking in as much as RM11mil in net profit on the back of RM550mil in revenue for the current financial year – an improvement of about 116% in net profit with revenue gaining by an estimated 10%.

So two research house reports were mentioned by the reporter.

The issue for me is that the reporter highlights TA Securities forecast of 11 million.

Firstly, it's great to see the reporter GOING GREAT LENGTHS and research what's been said and mentioned by research houses.

However, it would be nice if the reporter highlighted Kenanga Research forecast too, right?

Why highlight one without highlighting the other?

So I dig around. Kenanga Research can be found on Bursa website. http://eresearch.bursamalaysia.com/download.aspx?id=5719&type=research

This is what I found.

Kenanga Research forecast for the said current year 2007 for Bina Puri is only 7.5 million!

Yes, profit forecast is never easy nor is it precise but I am left seriously wondering here.

Why did the reporter left out Kenanga's forecast of only 7.5 million and only mentions TA's much higher forecast of 11 million?

I wonder if there is an intent to mislead?

How?

Same if the cash and debts issue, yes? Reporter highlights it BUT understates the total debt by some 259.748 million, and then the reporter chooses to highlight TA Securities net earnings forecast of 11 million, which is just about some 46.7% higher than Kenanga Research forecast!

How?

Here is the link to Bina Puri's last fiscal year Q4 earnings posted on feb 2007. Quarterly rpt on consolidated results for the financial period ended 31/12/2006

Bina Puri earned some 5.2 million for fy 2006 only.

Which means TA Securities earnings forecast of 11 million is rather hugely optimistic, yes?

And just for the record, Bina Puri last traded at 1.26 up 11 sen on Friday 22nd 2007.

And here is the NICE chart of BPuri.