Wednesday, January 30, 2008

Mae, I hope I am not WRONG!

I received some interesting comments on the posting A look at MaeMode again.

Before I start, I wrote the following:

  • Back in 2004, its receivables was a mere rm67.475 million. Some 3+ years later, the receivables have blown to an incredible rm271.231 million! This is a massive warning sign, yes?

Sometimes, I do NOT like to write too direct. I see a massive issue with Maemode's receivables. In my opinion, it's an issue and I reckon that it should be a massive warning for investors of MaeMode.

If you had look at the numbers, you would note that the company's net debt position has been rising. And to compound the matter worse, the receivables ballooned in a even more alarming manner.

And in my opinion, no well managed company runs their company in such manner. You do not borrow more money, while you return do not collect your trade receivables. And this was one clear indicator seen previouslyu in Megan. (See The Receivables Issue And Megan ) .

Simple commonsense reasoning is why borrow when you should be collecting what is due to you. Yes?

And yes we all know trade receivables that could not be collected could be re-classified as doubful debts? That's a possibility, a risk.

However, in the market, the unexpected can always happen!

Although the trade receivables is a massive problem, at the end of the day it is only. Just like the possibility of it blowing up badly, there's still a chance it could always be solved. (Though I got I strong feeling that it could blow up!!!)

Why is why I ended the posting saying "I hope I am not WRONG!".

Yes, I could always be wrong.

Anyway here are the comments received.

  • Double negatives can be tricky. I think you mean to say "I hope I am wrong" because "I hope I am not wrong" means "I hope I am right"! Which would be to twist the knife in the side of those who hurt from maemode investments. :)
  • your analysis is backed by numbers. As long as your numbers are correct, you CANNOT be wrong. This company is like a time bomb. People call it TIME bomb because it is not the matter of IF, the question is WHEN will this stock takes its turn to plunge!

I hope this comments clarify my stance on MaeMode. I see a stock with decent, impressive earnings but I do not like what I see underneath. The debts bother me, the receivables scares me! And for me, as an investor, I shall call this a pass for I deemed this as a rather extremely risky investment.

And yes, I could be wrong here but missing an opportunity is never a sin to me or my money.

5 comments:

hsunl said...

I agreed with what you said. Maemode is in danger. But there is always a hope in here as well. Try to check recently WHO is the big fellow swallowing such a big amount of share in off market. Yes ! from Sandakan ! Dato ! Up to 8%. Why? Is this should we consider ? Is this Dato stupid ?

Moola said...

Hello,

Everyone has their own perspective of the stock market. For me, what's always important is what one believes in and not what others believe in.

So someone buys a huge chunk of a stock. Maybe they see value. Maybe they might be wrong in their judgment.

But.. do we want our investment to be based on a strategy where one follows others?

Have we not seen some BIG, BIG names making a mistake in their stock market investment?

For them, they can afford such mistake(s), but can we?

Wouldn't it better to base our investment on our own decision?

I would.

If investment means following others.. well perhaps investment in a fund would be much, much better.

But that's just my views.

I could be WRONG!

Moola said...

BTW, if you feel that I am WRONG here, fear not what I have written!

Cheers!

hsunl said...

Of course i am scare ! Maybe you are right as well...
I am willing to take this risk :))
To me i like the Int. Value of this counter. Wish me good luck.


Well, how do you think of wellcal, Yspsah,uchitech, asiafile, insbio, DXN, QL.
If you are kind enough...could you please rank them...
Thanks a lot

hsunl said...

BTW, i hope i can share something different here. I hope you dun mind this. //Knowing people and trusting people is an art//

NON-INDEPENDENT NON-EXECUTIVE DIRECTOR OF NPC
Dato' Koh Kin Lip

Dato' Koh Kin Lip , a Malaysian citizen, aged 58, was appointed as the Non-Independent Non-Executive Director of NPC on 13th July 2007. He received his early education in Sabah prior to his pursuit of higher education in Plymouth Polytechnic, United Kingdom. Upon completion, he was awarded a Higher National Diploma in Business Studies and a Council’s Diploma in Management Studies. He returned to Malaysia in 1977 and joined The Standard Chartered Bank. In 1978, he joined his family business principally involved in Administrative and Finance Matters. In 1985, Dato’ Koh assumed the full responsibility of a Chief Executive Officer for the family businesses and formed Rickoh Holdings Sdn Bhd in 1987 which engaged in various core business activities ranging from properties investments, properties letting, securities investments, oil palm plantations, sea and land transportation for crude palm oil and palm kernel, IT, property development, hotel business, trading in golf equipment and accessories, and quarry operations. Dato’ Koh is also involved in similar enterprises in his personal capacity with some of his business associates. He is holding numerous directorships in most, if not all, of these companies.