Garment Maker Wants to Turn Into An Oil & Gas Player?

Yes, this is the story of Baneng Holdings. Baneng Holdings a garment maker wants to transform itself to an oil and gas player!

And how nice, our local press decides to promote this incredible story!

Published on Business Times: Baneng plans to ride on oil and gas boom

• Baneng plans to ride on oil and gas boom
  
  Published: 2008/07/23
  
  The garments maker has explored this business for some time, and this will be a good opportunity for it to move into the oil and gas sector this year, says its executive director
  
  GARMENTS maker Baneng Holdings Bhd is mulling to venture into the oil and gas industry to expand its earning base, executive director Albert Lim Meng Hong said.
  
  "We are negotiating and finalising with several parties on our foray into this sector within the next few months," he said in a statement.
  
  Lim said some of the areas in which Baneng is interested in are bunker services, floating storage vessels, fabrication and engineering, and trading in marine fuel and petrochemical products.
  
  "We have been exploring this business for some time and this will be a good opportunity for us to move into oil and gas field this year," he added.
  
  The group is now engaged in the manufacturing, knitting and dyeing of a range of fabrics, apparels, garments and related products.
  
  "Venturing into the promising oil and gas industry is attractive for the group to ride the oil and gas boom and to expand its earnings base," Lim said.
  
  Shares of Baneng have risen 73.9 per cent this year, a stark contrast to the 23.2 per cent fall in Kuala Lumpur Composite Index over the same period.
  
  The usually thinly-traded stock has also seen some active transactions in the past few days.
  
  About 4.8 million Baneng shares changed hands on Bursa Malaysia yesterday. This is seven times the stock's average volume in the past 15 days, and 14 times of its 30 days average volume.
  
  Baneng closed 10 per cent higher at 76.5 sen yesterday.

And how the stock flew!

Truly surreal. The company is ONLY mulling and exploring opportunities in the oil and gas sector and yet the stock is up a whopping 79%!!!!

I wonder if being a garment maker is truly bad business for Baneng.

Let me check some of the more recent quarterly earnings from Baneng Holdings.

Quarterly rpt on consolidated results for the financial period ended 31/3/2008 : Net earnings 638 thousand!

Here is their balance sheet.

See their cash balance of only 4.914 million? And long term borrowings totals 36.486 million and short term borrowings is at a whopping 98.944 million!

Mountain of debt.

Look at the insanely high trade receivables of over 77 million. Why so high?

Here's the previous quarterly earnings.

Quarterly rpt on consolidated results for the financial period ended 31/12/2007: Net loss of 3.82 million!

Oh my, such quality! Do I even want to look at more details?

Perhaps one day I shall turn my barnyard into a luxury resort with cows singing some Elton John tunes.