Ingress Corporation

Published on the Business Times: Ingress gets RM400m overseas auto parts orders

My very first impression was that this company was doing fantastic. Huge orders, great potential. Perhaps a potential investment?

• AUTO parts producer Ingress Corp Bhd has secured more than RM400 million of orders from now till 2012 from automotive players in Thailand and Indonesia, and could expect more major contracts by the year-end.
  
  Ingress also hopes to be big in power engineering and rail electrification operations, having submitted a bid for electrification jobs of the Ipoh-Padang Besar double-tracking project awarded by the Government to the Gamuda-MMC consortium.
  
  The company also plans to vie for the same sub-works under the double-tracking project linking Seremban to Gemas that is given to Ircon of India and the KL-Singapore high-speed train proposed by the YTL group, senior company executives said.

The news article then continues:

• Executive vice-chairman Datuk Rameli Musa said Ingress had received "lots of requests" for quotations of various auto parts from some global players.
  
  "The (quotations) value is huge. We expect some (orders) to materialise in the next few months. We have received visits to our plants in Thailand and Malaysia from Toyota, BMW and General Motors," Rameli told reporters after Ingress' annual general meeting in Subang Jaya yesterday.
  
  Ingress expects strong revenue growth for the year ending January 2008 on continued sterling showing by its Thai operations in particular.
  
  "We have done well in terms of revenue growth last year and are confident that this will be sustained in the next few years, despite the global downward trend especially in Southeast Asia.
  
  "There's a drop in the Thai domestic market but this is compensated by its exports," Rameli said.

Getting interesting, eh?

• Ingress expects strong revenue growth for the year ending January 2008 on continued sterling showing by its Thai operations in particular.
  
  "We have done well in terms of revenue growth last year and are confident that this will be sustained in the next few years, despite the global downward trend especially in Southeast Asia.
  
  "There's a drop in the Thai domestic market but this is compensated by its exports," Rameli said.
  
  Ingress' revenue soared to RM358.77 million in the year ended January 2007 from RM289.71 million revenue previously. Net profit stood at RM2.3 million in the last financial year.
  
  Ingress gets slightly over 80 per cent of revenue from automotive parts manufacturing, while the balance comes from the PER division. The Malaysian operations contributed 46.5 per cent to Ingress' ACM turnover last year, Thailand's accounted for 51.3 per cent, while Indonesia made up the balance of 2.2 per cent.
  
  This year, company executives still expect a large part of the revenue pie to come from the Thailand operations, given the consistently strong orders from the likes of Honda, Mazda, Ford and Mitsubishi.

Hmm.. this part got me thinking: "Ingress' revenue soared to RM358.77 million in the year ended January 2007 from RM289.71 million revenue previously. Net profit stood at RM2.3 million in the last financial year."

If revenue has been soaring, why is the net profit only 2.3 million?

It's like despite all the optimistism mentioned in the news article, a net profit of only 2.3 million sounds rather dismal.

So I decided to do some checking. Time to check out Ingress earnings report on Bursa website.

Let's look for year ended Jan 2007.

Quarterly rpt on consolidated results for the financial period ended 31/1/2007

Ok. revenue was at 358 million BUT did you note the whopping loss of 11 million for the financial quarter?

And if you open up the pdf file attached to the earnings, page 16, the company said the following:

• The Group recorded a 32% decrease in revenue in comparison to the immediate preceding quarter. Loss before tax for the quarter amounted to RM11.34 million in comparison to the profit before tax of RM8.59 million in the immediate preceding quarter.
  
  Overall ACM recorded a flat growth in revenue. ACM Malaysia ecorded a 3% decrease in revenue where most models recorded decreases in volume except for Perodua Myvi model.
  
  ACM Thailand registered a 6% increase in revenue where new models recorded increases in volume.
  
  For PER, revenue decreased by 80% due to a major project which was completed in the immediate preceding quarter.
  
  For units under Others, revenue decreased by 89%.

Err... how come? Why the earnings notes defers so much than what's published in the media?

And here is the latest quarterly earnings reported last month: Quarterly rpt on consolidated results for the financial period ended 30/4/2007. Ingress reported a loss of 436k. (Note the decreasing revenue!)

How?

Don't you agree that it's rather misleading what's published on our financial news?