Tuesday, July 10, 2007

NextNation III

Posted previously: NextNation II

And of course their receivables concern again should not be discounted as mentioned earlier. Frankly I do not see what the receivables should be so high!

Flashback to what was written earlier (
NextNation )

  • The biggest concern for me is that NextNation has an issue with its receivables and because of this, one do not really see wealth being generated in the company's cash flows despite its very impressive earnings.

On today's Star Business, there was a huge write on NextNation and its receivables: Nextnation receivables surge to RM67m

  • Chief executive officer Tey Por Yee, however, says the amount is not alarming.

    “The large receivables are mainly due to long collection period, which is about 200 days.

    “We are trying to reduce it to below 200 days,” Tey told StarBiz.

    He said the growing receivables were not really a concern, given the company’s cash flow was not straggled by the slow payment.

    “It is actually a norm in the telco-related industry, which has a long collection period.

    “The industry average in the region is about nine months,” said Tey, who is also managing director

Here's my thinking.

How could the receivables not be a problem? The trade receivables is at 67 million. A year ago it was a mere 39.6 million.

Note the following sentence.
  • Yesterday, the company announced to Bursa Malaysia its wholly-owned subsidiary, Nextnation Network Sdn Bhd, had accepted a credit facility of up to RM10mil granted by Malaysia Debt Ventures Bhd for overseas expansion.

And if the receivables is not a problem, why accept a credit facility of 10 million??

And if it's a norm that the teclo-related industry has such a terribly long collection period, then this looks like a rather rotten industry to be invested in!

Just my ramblings!