Friday, December 31, 2010

And Silver Bird's Net Profit Soars... err... err... err...

Here's another great article...

Silver Bird Group 4Q net profit up 36.6% at RM835,000

Up 36.6%.... wow ... wow .... wow ... wow....

But ... it's ONLY at 835,000.

  • Silver Bird Group 4Q net profit up 36.6% at RM835,000
    Written by Surin Murugiah at theedgemalaysia.com
    Thursday, 30 December 2010 19:31

    KUALA LUMPUR: SILVER BIRD GROUP BHD’s net profit for the fourth quarter ended Oct 31, 2010 rose 36.66% to RM835,000 from RM611,000 a year ago mainly due to the sales growth in its core business of consumer food division.

    Its revenue for the quarter rose 6.75% to RM153.92 million from RM144.19 million in 2009. Earnings per share were 0.22 sen while net assets per share was 53 sen.

    Reviewing its performance in 4Q, Silver Bird said on Thursday, Dec 30 that its consumer food division’s revenue rose by 4% year-on-year from RM46.2 million to RM48.2 million due to sales channel expansion.

    Meanwhile, its telecommunication business recorded an increase in revenue as well by 8% from RM98.0 million to RM105.7 million, it said.

    For the financial year ended Oct 31, Silver Bird’s net profit surged to RM3.65 million from RM1.44 million a year earlier on the back of revenue RM593.51 million.

    On its prospects, the company said it would continue to improve the revenue of its core business of consumer food whilst containing its costs in order to further improve its bottomline.



LOL!

With such news reporting... all is certainly well!

Happy New YEAR!


And oh.... last blogged Silver Bird on July 2010: Silver Bird Wants To Raise More Capital

Berjaya Corp's Net Profit... err....errr...

The Edge Financial Daliy's version: Berjaya Corp 2Q net profit up 66.9% to RM86.54m


  • Berjaya Corp 2Q net profit up 66.9% to RM86.54m
    Written by Surin Murugiah of theedgemalaysia.com
    Thursday, 30 December 2010 19:03

    KUALA LUMPUR: BERJAYA CORPORATION BHD net profit for the second quarter ended Oct 31, 2010 jumped 66.9% to RM86.54 million from RM51.83 million a year ago.

    The better performance was due mainly to write-back of impairment in value of investment in associated companies and gain on disposal/partial disposal of subsidiary companies as well as gain arising on accretion of interest in an associated company and lower finance costs.

    BJCorp said on Thursday, Dec 30 its revenue for the quarter rose 6.2% to RM1.72 billion from RM1.62 billion in 2009. Earnings per share were 1.97 sen while net assets per share was RM1.39.

    It said the increase in revenue was mainly due to higher revenue contribution from the direct selling, retail and distribution business, higher property sales reported by the property development and investment division and higher agency sales registered by the general insurance business in the current quarter.

    For the six months ended Oct 31, its net profit rose 231% to RM212 million from RM91.73 million, while revenue increased to RM3.46 billion from RM3.23 billion in 2009.

    BJCorp said barring unforeseen circumstances, the company’s operating performance for the remaining quarters of the financial year ending April 30, would remain satisfactory.

The Star Biz version: BCorp Q2 net profit up on write-back of impairment

  • Friday December 31, 2010

    BCorp Q2 net profit up on write-back of impairment

    KUALA LUMPUR: Berjaya Corp Bhd's (BCorp) net profit for its second quarter ended Dec 31 surged 67% to RM86.54mil from RM51.83mil previously.

    It told Bursa Malaysia the higher profit was mainly due to RM32.64mil write-back of impairment in value of investment in associated companies and gains on disposal/partial disposal of subsidiary companies as well as gains from accretion of interest in an associated company and lower finance costs.

    Revenue for the period rose 6.2% to RM1.72bil.

    In a separate statement, BCorp announced that it had appointed Datuk Robin Tan Yeong Ching as chief executive officer effective Jan 1, 2011.

    He replaces his father, Tan Sri Vincent Tan Chee Yioun, who has been redesignated as chairman.



Belated Comments Received Regarding Mudajaya

Ah.. here's a reply to a OLD post, SC Article On Mudajaya Reveals Serious Allegations Made Against Mudajaya

Best I highlight it.

  • Eric said...

    The cost of IPP depends on the specifications and quality so as motocar. All cars with same cc will cost differently. Just compare proton 1.8 litre with continental car with 1.8 litre. The price difference is huge. Using cost per/MW as argument is just lame justification.

    By the way, has anyone considered the possibility of Indian Partner reducing their investment price in order for Mudajaya to increase theirs. Then there will be no inflation of cost for the plant. CIMB, pls do your homework!

    Companies recover their investment thru profit from contract awarded back is to a certain extend normal but must be arms length and it must be done without round tripping. I mean investment must be paid up first then only recover your investment over time. In Mudajaya's case it is earn a bit from procurement contract and then pay for the capital in IPP also by a bit. The process is repeated over and over. Any donkeys also can raise capital in that manner.

    How much Mudajaya was given profits to recover their basic/original investment cost is unknown. However, it is certain that they are given the profits to pay for portion of investment that has been inflated, the same portion of investment value that the Indian partner has deflated, I guess.

Do see also last month's posting Quick Look At Mudajaya's Earnings

Thursday, December 30, 2010

May 2011 Be A Year Of Plenty Of Good Luck!

Nothing original here.

Just love this piece of cartoon. XD

And We Have A Stop In Outflows!

Congratulaions!

Here's the good news.....

The streak of consecutive outflows from stock equity mutual funds by Americans ends at 33 straight weeks babe!

Yes, last week there was an inflow recorded!

Americans have put money into their equity funds.

How much?

Err... just 335 million.

Here's the score. From 28 April 2010 to 22 Dec 2010, Americans withdrew some 100.898 Billion (yeah.. that's no typo and it's Billion) from their stock equity mutual funds.


*** 13 Jan 2010. This posting is rendered pointless! LOL!

Do refer this new posting: New Year New Outflows From Equity Funds

Past postings:

Thursday, December 23, 2010

The Baltic Dry Index (BDI) Is Not Too Happening

It has been a real long time since I blogged on the Baltic Dry Index.

The BDI last closed at 1830!

It's now to happening.

Some recent commentary:

  • The dry bulk market isn’t exhibiting a “festive” behavior, thus cheering ship owners and investors alike. Instead, the industry’s benchmark has been falling this week, with the Baltic Dry Index (BDI) retreating yesterday to 1,886 points, close to its 2010 lowest. Both the capesize and the panamax segments were among the main losing sectors yesterday. During the course of the previous week, the Baltic Capesize Index managed to put a halt in its demise, by posting a marginal increase of 1% on a weekly basis. According to a weekly report from shipbroker Barry Rogliano Salles (BRS), the improvement was mainly due to a surge in demand from the big miners in the Pacific in the later part of the week. However the Capesize 4TC is now hovering around US$25,000 per day, the lowest point since the summer and well down on the average for the year. In India, Karnataka ore sellers will have to wait until mid January to hear a decision on their bid to overturn the state’s export ban. This week India’s top court gave the state additional time to respond to the miners’ legal petition. The Federation of Indian Mineral Industries has already estimated the ban will reduce India’s ore exports by 38% to 66m tons in 2010. The Karnataka High Court earlier upheld the provincial government’s decision to halt shipments overseas” said BRS. (source: here )

Shipping stocks fall...

  • Shipping stocks on the Indian bourses have lost between 11 and 23 per cent in the last one month as Baltic Dry index slumped to a four-month low. Overcapacity because of new vessels and expectation of fleet additions plunged the Baltic Dry Index, barometer of shipping business, to a four-month low of 1,955 points, down 2.2 per cent (44 points) from its previous close. (source: here )

Excess blamed...

  • The Baltic Dry Index, a measure of commodity-shipping costs, fell to the lowest level in more than four months on a surplus of ships.

    The index declined 19 points, or 0.9 percent, to 2,076 today, according to data from the Baltic Exchange in London. That’s the lowest since Aug. 6. Declines were led by rates to hire capsesize ships, the biggest in the gauge. They fell 2.1 percent to $24,852 a day.

    “The dry bulk market is showing no signs of improvement,” Shalini Shekhawat, a Gurgaon, India-based analyst at Drewry Shipping Consultants Ltd., wrote in a report. “The remainder of the year will be no better, with iron ore and grain trade being insufficient to absorb the over-supply of tonnage in the market.”

    Shipping rates have fallen 31 percent this year as new vessels entered the fleet. Capesizes will expand 24 percent in 2010, driving overall dry-bulk fleet growth of 17 percent, Clarkson Plc, the world’s largest shipbroker, estimates. Demand will grow 10 percent over the same time, Clarkson said. Capesizes mostly carry iron ore, used to make steel.

    Source: here

Past postings on BDI: here

What Does 33 Straight Weeks Of Fund Outflows Mean?

It's now 33 straight weeks that Americans have withdrawn money out from their stock equity funds.

And what do you get?

Just more than 100 Billion during this period.



Past postings:

Friday, December 17, 2010

Can You Say No Class?

Got the following set of comments.

  • neno said

    dali called to buy jcy @1.60, proof here >

    http://malaysiafinance.blogspot.com/2010/02/jcys-new-pricing.html

    Darlie singh call buy on JCY @ 1.60 :-
    Thursday, February 11, 2010
    JCY's New Pricing

    JCY looks likely to slash its IPO price to RM1.60 from an earlier indicative RM2.00. At RM1.60, its a good price level to get in. I still think its fair value is at RM1.80. Enough said.
    Posted by Salvatore_Dali at 1:41 PM
    Labels: JCY, Rannes Man

Hmmm....

Dear neno or whoever you are ( yes, it's so easy to create a name many times and post countless 'comments') .

Darlie Singh???? ( Hmmm.... where have I heard this name before? Where ah?)

Take a good look at yourself. Are you proud of what you are doing here? Name callings at other blogs? Don't you have any class at all? Or perhaps you are simply rude? Tsk! Tsk! Tsk!

So apparently JCY has gone down.

Yeah... so what?

Does Dali owe you anything all? Does he get paid by for what he blogs? Are you paying him for any investment advice? Did he point a gun to you and force you to buy whatever he posts?

So Dali blogs a posting and the stock tanks.

Yeah.. naughty and bad Dali for blogging such a stock.

But wait just a minute.

Why on earth are you dragging that posting to this blog of mine?

Do I owe you anything?

Does my blog look like a complaint department?


Yeah... get burned in a stock by following what's written on a blog posting and just forward all your grumblings and rantings here?

WTF?

Grow up lah and be a real man.

Thursday, December 09, 2010

And According To Sources, DRB Might Be Privatised

The stock is having a fantastic run. Perhaps fantastic is an understatement. :=)





And guess what?

The local press decides to jump on the bandwagon to spice up the stock.

Err... sometimes don't you wonder about our press?

Yeah.. what's their objective?

To spice up the stock market? To add fuel to the stock? Yeah, 'kar yau' babe!

Let's send the stock to the up and beyond. :=)

Yeah, babe. I buy the local business newspaper because I want to find out which stock will be stir fried ala Paul style babe!

You be the judge. On Business Times:

  • Syed Mokhtar mulls DRB-HICOM buyout

    By Francis Fernandez Published: 2010/12/09

    Tan Sri Syed Mokhtar Al Bukhary is believed to be considering taking auto and banking group DRB-HICOM Bhd (1619) private, people familiar with the plan said yesterday.

    It is further believed that the tycoon is being advised by Maybank Investment Bank Bhd on the plan which could cost him close to RM2 billion.

    Sources said the offer will be comparable to DRB-HICOM's net tangible asset (NTA) value. As at end of September this year, DRB's NTA stood at RM2.50.

    There has been speculation that Syed Mokhtar could offer anywhere between RM2.20 and RM2.70 for the DRB-HICOM shares he does not own.

    As at July 21 this year, Syed Mokhtar holds a controlling 55.92 per cent of DRB-HICOM, via privately held Etika Strategi Sdn Bhd.

    "The plan is being considered, but a firm decision has yet to be made," said the source. DRB-HICOM's group managing director Datuk Mohd Khamil Jamil declined to comment.

    DRB-HICOM's stock closed 11 per cent higher at RM1.70 yesterday, giving the group a market value of RM3.3 billion. It was also its highest close in 52 weeks.

    The stock has gained 68 per cent so far this year, much better than the broader market's 19 per cent gain in the same period.

    Mohd Khamil has been instrumental in changing DRB-HICOM's fortunes over the past couple of years. His cost-cutting measures have kept the conglomerate keep a keen focus on its bottom line. The group nearly doubled its revenue over the past five years to RM6.31 billion in 2010 from RM3.52 billion in 2006.

    After suffering a pre-tax loss of RM196.74 million in 2006, Mohd Khamil, a close confidant of Syed Mokhtar, has steadied the ship, helping the group post four years of healthy profits.

    In the financial year ended March 31 2010, DRB-HICOM posted a pre-tax profit of RM657.89 million.

    For the six months ended September 30 in the current financial year, its pre-tax profit stood at RM409.64 million, more than two times its pre-tax profit of RM163.65 million in the same period a year ago.

    DRB-HICOM assembles foreign marques like Mercedes Benz, Honda and Suzuki but it also has steady income from its Islamic bank, insurance and power plant maintenance business.
    It is also building up its property business in the Klang Valley and Johor.

    As for its motor vehicle business, DRB-HICOM aims to sign a definitive agreement with Volkswagen AG (VW) this month.

    VW had in August signed a memorandum of understanding with DRB-HICOM to produce VW cars from 2012 at the group's plant in Pekan, Pahang.

    Eventually, the deal may include the export of VW cars to Asean countries, among other things.

    Read more: Syed Mokhtar mulls DRB-HICOM buyout http://www.btimes.com.my/Current_News/BTIMES/articles/darbo8/Article/#ixzz17ZVnhODh

Wednesday, December 08, 2010

Is There Value In London Biscuits?

London Biscuits reported its earnings recently and according to the management, the performance was within expectations.


  • The Group achieved a profit before income tax after minority interest of RM6.715 million on the back of RM56,922 million in turnover, as compared with the profit before income tax after minority interest of RM3.516 million and a turnover of RM46.656 million, respectively, reported in the preceding year corresponding quarter. The Group’s result is within management’s expectation.

London Biscuit was blogged several times before. See . Here's the updated numbers.


Looking decent but the issues mentioned before, still persist.

The balance sheet issue mentioned in the posting Review Of London Biscuit and Regarding London Biscuits Borrowings

  • Yes, that's London Biscuit's balance sheet and seriously, from my flawed point of view, I really think it's awful!

    That's no way how one would grow a business. I know I wouldn't if the business was mine
    !

Here's the updated numbers. Look at the spike in debts and receivables. Cash increased due to bank overdrafts.


In regards to its 'investing activities' mentioned in the posting Review Of London Biscuit and I guess one should not forget how London Biscuit 'shot' itself in the foot via its investment in Lay Hong, London Biscuits Disposal Of Its Stake In Lay Hong


And in regards to the Property, Plant and Equipment (PPE) issue mentioned in the posting Regarding London Biscuits Again. In that posting, in my flawed opinion, I felt that 'the company is wheeling and dealing in PPE (Property, Plant and Equipment)!!!'

Well, London Biscuit now only reports a summarised cash flow statement in its quarterly earnings. So sadly, one has to wait for the annual report.

Tuesday, December 07, 2010

K-Star Attempts To Explain Its Plunging Shares

Now K-Star shares have been doing 'poorly' lately.


On the Edge Financial yesterday: http://www.theedgemalaysia.com/in-the-financial-daily/178118-k-star-tdr-listing-beneficial.html

  • K-Star: TDR listing beneficial
    Written by Kathy Fong
    Monday, 06 December 2010 14:22

    KUALA LUMPUR: The management of K-Star Sports Ltd is still puzzled by the big plunge in its share price as it soared to a record high only to tumble to its lowest ever in just a matter of one week.

    “We are surprised with the selling on K-Star shares. We are not aware of any corporate development that will affect the share price movement, other than the proposed TDR (Taiwan Depository Receipts) programme that we had announced to the stock exchange,” K-Star’s chief financial officer Lim Yeow Eng told The Edge Financial Daily over a phone interview.

    “We don’t want to speculate what the reason is behind the selldown,” he commented when asked about the heavy selling of K-Star shares recently.

    Lim said the proposed TDR programme should be positive news to the company.

    “Most companies’ share prices go up when they announce their plan to undertake the TDR programme,” he said. Lim also reiterated that the company’s operation was intact and was performing up to expectations.

    The China-based sports shoemaker had on Nov 27 unveiled a proposal to seek a second listing in Taiwan. It is the second company on Bursa Malaysia to do this after XingQuan International Sports Holdings Ltd. K-Star intends to float 100 million shares, equivalent to 29.24% of its enlarged share capital, comprising 75.6 million new shares and 24.4 million existing shares, on the Taiwan Stock Exchange via the proposed TDR programme.

    In Singapore, there are a growing number of companies seeking dual listing in Taiwan via the TDR programme, for instance Super Group Ltd, United Envirotech Ltd, Yangzijiang Shipbuilding (Holdings) Ltd and Osim International Ltd, the latest to jump on the bandwagon.

    Share prices of these companies rallied after announcing the TDR listing. For instance, instant coffee manufacturer Super Group’s share price soared 40% after announcing its TDR programme.

    Similarly, news on the dual listing exercise lifted United Envirotech’s share price by over 60%. Usually there is a price disparity between the shares that are listed in Taiwan and Singapore. Shares in Taiwan tend to trade higher than those listed in Singapore.

    Lim said the proposed TDR programme is a positive move as the company could raise fresh capital for expansion at lower costs.

    However, there have been concerns over shareholding and earnings dilution since K-Star will issue 75.6 million new shares, which are equivalent to 28.4% of its existing issued share capital, compared with XingQuan’s 15%. On this, Lim said with the new capital, raised at lower costs, would be invested to expand K-Star’s operations to enhance the company’s earnings in the future.

    The latest results announcement showed that K-Star’s net profit rose 27% to RM14.3 million for 3QFY10 ended Sept 30 from RM11.3 million a year ago. Revenue grew 25% to RM88.36 million against RM70.4 million. For the nine-month period ended Sept 30, its accumulated net profit amounted to RM30.3 million or 0.39 sen per share compared with RM29.9 million or 0.5 sen per share previously.

    Lim added that the dual listing in Taiwan would also help to increase the liquidity of the stock and raise the company’s profile and its brand name further. K-Star’s share price surged to a record intra-day high of RM1.21 on Nov 30 but the stock succumbed to intense selling, subsequently plunging to end at 45.5 sen last Friday — the lowest close since its debut on Bursa.

    Trading volume surged to 27 million shares last Thursday. Over the last three trading days, some 70 million shares or 26.3% of K-Star’s issued capital changed hands.

    According to Lim, the moratorium which was applicable to 83% of the company’s shareholding expired last Saturday. K-Star International Ltd is the major shareholder controlling a 58.4% equity stake. Some pre-initial public offering (IPO) investors hold the remaining 24%.

    “The moratorium (on K-Star shares) is one of the highest on Bursa Malaysia,” said Lim.

    However, under the proposed dual listing scheme, pre-IPO shareholders who have held shares in the company for over 12 months could sell part of their stakes via the TDR programme in Taiwan.

    Among the pre-IPO shareholders who can dispose their shares in Taiwan are Skylitech Resources Sdn Bhd, A1 Capital Sdn Bhd (former Golden Eagle Resources Sdn Bhd), Yap Son On and Fortune United Investment Ltd.

    This article appeared in The Edge Financial Daily, December 6, 2010.

Ah yes... K-Star the share SOARED recently before it's 'tumble'.

The bigger picture shows it...


The 1 for 3 stock split done at end Oct gave the share 'Kar Yau' factor!!

Posted on 7 Sep 2010: K-Star Wants To Split To Enhance Liquidity And Marketability. Let me reprooduce the entire posting in full here:

>>>

Posted on 25th Aug 2010. A Look At K-Star Sports

It was a simple posting, highlighting the rather optimistic earnings growth projection made by OSK.

What was also interesting was that K-Star appeared in the local news saying it wanted to raise more funds. I found it amusing and I wrote...

------------
According to that OSK report, K-Star raised some 32.9 million for its IPO and K-Star was listed on the 4th June (postponed from 31 May 2010).

It's now 24 Aug 2010 and on today's Star Biz, there was an article on K-Star: K-Star looks to raise funds

  • It is looking at options such as rights issue, share placement and even a dual listing in Taiwan
K-Star wants to raise funds???????????????????????

Errr.... is the Malaysian investing public an atm machine?

------------------

Yesterday, K-Star made an announcement. Instead of the rights issue. share placement or dual listing talk mentioned earlier, K-Star said it wants to do a 1 into 3 stock split!

oO

It's reasoning... enhance liquidity and marketability....

  • The Proposed Share Split is expected to enhance the liquidity and the marketability of the K-Star Shares on the Main Market of Bursa Securities and will indirectly encourage a wider spread of public shareholders, ranging from different and diverse type of investors. The Proposed Share Split will also enable the existing shareholders of K-Star to hold a larger number of ordinary shares in K-Star while maintaining their equity interest.
This means that K-Star number of shares would be enlarged from 88,800,000 to 265,400,000 shares.

This is how K-Star had performed since listing...



Yeah... the 'chart' shows that it's 'stock' performance had been rather lacking!

Can a stock split 'improve' and 'enhance' the stock?

LOL! LOL! LOL!

They cannot be serious can they?

Perhaps K-Star should ask some of Mr.Sotong's deep fried associates if they could comment a culinary chef.

Or perhaps K-Star should look at their own earnings performance for the clue why their shares lacks marketability!

As mentioned in the earlier blog posting: A Look At K-Star Sports
  • Now K-Star reported its earnings on the 20th August 2010.
    It was K-Star 2nd quarter earnings and K-Star only managed to make 5.94 million, giving it a half year earnings of only 16.467 million. ( see K-Star posts lower 2Q net profit at RM5.94m )

Yes, prior to the listing, K-Star made the following earnings announcement on 31 May 2010. Quarterly rpt on consolidated results for the financial period ended 31/3/2010

It said it earned some 10.542 million.

Then in Aug 2010, after being listed, K-Star's earnings came in at 5.94 million! ( See Quarterly rpt on consolidated results for the financial period ended 30/6/2010 )

Yup!

You said it WALOEHHHHH!!!

And best of all OSK's said in its IPO notes for K-Star listing was that K-Star is projected to earn some 52 million! Yup, OSK based its fair value for K-Star at rm 2.63 based ON that rather optimistic earnings projection!

Apparently, the market currently disagrees with such a valuation!

No wonder... K-Star 'feels' its shares lack marketability!

LOL!

-------------------------------------------------------

Yeah... thanks to the share split and of course the bubbly market, K-Star the share got all the marketability it wanted. It received the 'Kar Yau' factor and the stock soared up, up and away.

But the company was not 'satisfied'.

Perhaps it was aware that...

  • Share prices of these companies rallied after announcing the TDR listing. For instance, instant coffee manufacturer Super Group’s share price soared 40% after announcing its TDR programme.

So it too, joined the bandwagon!

But K-Star's TDR involves a massive dilution in earnings!

  • K-Star will issue 75.6 million new shares, which are equivalent to 28.4% of its existing issued share capital

Ahem... 28.4% dilution.

Err..... seriously!

What on earth are they even thinking about???? How could they ever possible come up with such a proposal?

Monday, December 06, 2010

Update On Ogawa

Posted last Aug 2010: Ogawa World: Investing In Turnaround?

One of the issues in regarding to investing in turnaround is the 'sustainability' of the turnaround.

  • Spotting a turnaround, investing in the turnaround and profiting from the turnaround, is exteremly difficult. The biggest stumbling block is usually the sustainability of the turnaround.

Ogawa reported its earnings recently. It suffered some minor losses. Now this could be tricky. The 'turnaround investor' is now left wondering if the current result is a minor blip or if the turnaround simply could not be sustained...

Here's the updated numbers...


And the balance sheet..



Recent news clip on the Edge.

  • Ogawa targets Thailand and India, dips into red in 1Q
    Written by Daniel Khoo
    Friday, 26 November 2010 11:32

    KUALA LUMPUR: Ogawa World Bhd, which fell into the red with a net loss of RM135,000 in 1QFY11 ended Sept 30, will expand its market to Thailand and India by the end of its current financial year ending June 30, 2011.

    “Yes, we are in talks with distributors in those countries. Our style is to appoint one main distributor who will then in turn appoint the sub-distributors,” its executive director Louis Chong tells The Edge Financial Daily.

    The company, which mainly sells massage chairs, is aiming to increase its overseas revenue to 60% of total sales in three years from 45% presently.

    Ogawa currently sells its products in China, Hong Kong, Australia, Singapore, Indonesia, Vietnam and Saudi Arabia.

    “I see very bright prospects in the Middle East because the lifestyle there is such that they do not have massage parlours unlike here in Malaysia. We see the opportunity there,” Chong said.

    “Our (massage) chairs are very popular in Saudi Arabia and we are planning to move into Syria, Bahrain, the United Arab Emirates and Kuwait which will be done by the coming year,” he added.

    Chong also said that all their overseas investments are profitable to date and are positively contributing to its bottom line.

    He said the company is expected to spend more on advertising and promotion for the coming financial year from about 5% of its revenues to about 8% of its total revenues to gain the upper hand in the competition.

    Ogawa does not manufacture its products but instead licenses them out to contract manufacturers based overseas such as in China and Vietnam.

    In its 1QFY2011 ended Sept 30 results released yesterday, Ogawa reported a net loss of RM135,000 from a net profit of RM84,000 a year ago.

    Revenues for the 1QFY2011 however, inched higher to RM38.24 million from RM35.21 million. Basic loss per share was 11 sen versus 7 sen in the same period a year ago.

    Net assets per share as at Sept 30 stood at 53 sen.

    The group’s last quarter of loss was 3QFY09. For FY09 and FY08, it recorded net losses of RM12.43 million and RM8.37 million respectively. In FY10, it climbed back into the black with net profit of RM8.3 million.

    Quarter-on-quarter, revenue fell 19.8% from RM47.7 million in 2Q to RM38.24 million in 3Q. The group registered a profit before tax of RM120,000 compared with RM5.18 million in the immediate preceding quarter as a result of lower sales and lower margin.

    The company said the decline in performance was due to higher operating expenses which resulted in lower operating profit.

    “Every first financial quarter, we will usually see slowest growth, then it will usually pick up in 2Q and will remain flat in 3Q and our 4Q will usually be the best performing,” Chong said.

    He attributed this to the seasonality factor of its products which will usually see good sales during Father’s and Mother’s Day celebrations.

    “Some kids who are already well established usually buy our products for their aging parents as well. That is why we usually see good growth in sales during these times”.

    In the notes to its financial results, the company said that retail market conditions remain difficult for the time being and that it will be cautious in managing these challenges as it focuses on executing its medium to long-term growth strategies.


    This article appeared in The Edge Financial Daily, November 26, 2010.

Saturday, December 04, 2010

A Look At AirAsia Stellar Earnings

Back in early Aug 2010, I gave AirAsia credit. Yeah I did. LOL!

In the posting Positive Move That AirAsia Defers Their AirBus Order, I said the following...

  • However, let me say this, I have to give AirAsia some credit for eating the humble pie and for successfully persuading AirBus to allow them to defer the delivery of the air crafts and more so, this move really gives them a fighting chance to survive and to overcome their insanity of building a company which was clearly over burdened by the immense corporate debts they took upon to finance the building of their business.

    Yeah.. AirAsia should be ok for the next one year or so... yeah.. this is a POSITIVE CORPORATE exercise... it's certainly extremely crucial that AirAsia made this postponement of delivery.... but... deferring is only a postponement.... and in regardless, these air crafts order still needs to be delivered!

And AirAsia the stock had done fairly well since then. (LOL! That would be some major understatement for some)



Air Asia announced its earnings last week.

Was it good?

Everyone thought it was fantastic.

But... but... was it really spectacular for me?

Now since Air Asia had 'borrowed' or perhaps the more elegant word to use is 'financed' its success via massive borrowings, I for one, thinks that it's rather crucial to pay attention to its balance sheet and observe the cash/debts level. And also, since Air Asia had committed itself to a massive aircraft order, observing the capital commitment level is just as crucial.

( * for the record: AirAsia became the world's biggest customer for the Airbus A320-200 after placing an order for 175 aircraft in December 2007, with an option for 50 more. *)

Mentioned in that Aug posting...

  • Anyway... a postponement is a postponement is a postponement. Come 2014 (last August AirAsia deferred 8 AirBus to 2014) and 2015, these air crafts still needs to be delivered. Which means, from now till then, AirAsia still needs to ensure that it builds up its cash flow to ensure it can accept delivery of these air crafts that they had ordered. Unless of course, AirAsia can pull off another miracle by asking AirBus to allow them to defer yet once more. :P
    ps: yeah, AirAsia X listing would indeed help AirAsia financials. It too is required. And it is the ONLY OTHER logical and sensible option for AirAsia to rescue its dire balance sheet

Here's AirAsia updated numbers.. (the format of the table would be the same as in the posting Just How Profitable Is AirAsia Since Listing? )


* fy 2007 numbers is a mess because AirAsia changed its financial year end *

Now I may be wrong but I would NOT discount the following from AirAsia earnings. Yes, the earnings table above includes all of these...
  1. Forex translation gains
  2. Derivative gains/losses in oil hedges
  3. deferred tax benefit granted to AirAsia
  4. I am lazy! :P

( the forex translation gains is a lot for this quarter, yes? )

So AirAsia 'total earnings' for fy 2010 Q3 stood at some 327.286 million. How impressive is that?

The cash/debt level, has it improved?

The c.c or capital commitment column 'improved'. Would I pay attention to the value? Or should I pay attention to the number of aircraft to be delivered?

To put this capital commitment into simple perspective, on June 2010, from the posting How Good Is AirAsia's Latest Earnings?

But some would compare current Q3 cash/debts versus end FY 2009 numbers. Yes, some would compare the current balance sheet versus what AirAsia had end of last fiscal year and when one makes such comparison, AirAsia balance sheet certainly had improved, yes?

But.... then.... one should also take into consideration that AirAsia raised some 509.217 million from its share placement sale done end FY 2009.

And then the Amount Owed By AirAsia Subsidiaries! issue.

The current Q3 earnings notes showed that there is certainly much improvement in this area. Yeah, its subsidiaries is paying back the money owed...

The financial (cost)/income table is certainly interesting eh? ( see page 25 of AirAsia's earnings notes)


Friday, December 03, 2010

KN Downgrades P&O To A Hold!!

They said the stock was cheap. It was trading only at 3x earnings only.

They said the stock had potential because 'the owner was contemplating a divestment in P&O in a deal that could reap proceeds that were well above P&O’s implied stock market valuations.'

And so with all these 'right' ingredients, the stock flew up, up and away. ( Chart belows shows P&O when the posting, Regarding P&O: The Stock That Flew Into Orbit, was made on 31st July 2010)


The local media added more fuel by publishing the following article. Prudential UK eyes P&O takeover

Since then... the Prudential deal was discontinued without much explanation. ( Here's P&O announcement: Proposed divestment of an equity interest in Pacific & Orient Insurance Co. Bhd. )

And the cheapness in earnings?

KN blasted out loud that P&O could earn some 32.87 million for fy 2010, when the company was sitting on half year losses of 1.4 million. However, it did not based P&O target price based on its earnings estimate of 32.87 million but it based it on fy 2011's earnings estimates of 43.47 million!!!! And KN based the 3x earnings cheapness on that 43.47 million! ( See Regarding P&O: The Stock That Flew Into Orbit , And So P&O Earnings Are Said To Be Inline With Expectations and For which fiscal year did P&O earned more than 30 million? )

P&O reported its Q4 earnings last week. Its 2010 earnings came in at some 21 million.

KN's estimate again? 32.87 million for fy 2010 and 43.47 million for fy 2011.

So naturally, the earnings was way, way below estimates.

Meanwhile the stock....



Ahem...

How?

And not forgetting in the middle of all this.... a 10% private placement was done...

Some 'interesting' comments from KN from its reported dated 1st Dec 2010.

  • Disappointing quarter with full year net profit of RM21.3m (65% of our RM32.9m estimates) due to a huge set back from unexpectedly high effective tax rate of 50% thus dragging group’s performance. During the quarter, the group took a RM8.7m reversal of it’s deferred tax assets that saw DTA down to RM5.8m from 3QFY10 of RM14.5m and hence contributed to higher than expected tax expenses. However, pretax profit of RM42.3m was inline with our forecast of RM43.8m.

Ahem... 65% of our RM32.9 estimates...

  • We are taking conservative stance after a dismal FY10. FY11F is reduced 21% to RM34.6m and 28% for FY12 PAT of RM37.7m as we reduce our premium sales assumption to 6-8% from 15% previously.

Conservative stance? FY2011 is reduced 21% to rm34.6million??!!! LOL!

  • Target price is reduced to RM0.84 (from RM1.15 previously) based on 6x FY11 while recommendation is also reduced to a HOLD from BUY previously. This values the group at 6x revised FY11 EPS of 14.06sen, which is at the low end of the 6-15x 2010/11 PER of Malaysian general insurers.

Target price is reduced to rm 0.84?!! LOL!

Actually, by itself, P&O performance for this year had been incredible. I have to say that. Take a look at the posting For which fiscal year did P&O earned more than 30 million? again.

P&O 2010's earnings of 21.3 million is the best ever performance from then since 2000.

But the way KN declared the cheapness in the stock was really something else.



Thursday, December 02, 2010

Quick Update on JCY's Earnings

Update to the posting Regarding JCY International

On 25th Nov 2010, CIMB 'warned' the potential glitch in earnings...



JCY reported its earnings on 30th Nov 2010.


It wasn't just weak it was horrific!

Yesterday, 1 Dec 2010, CIMB gave it a huge downgrade!

JCY's target price which was 1.88 on 25 Nov 2010 was lowered to just 0.92!!!!!!!!!


Holy cow!

Err.... well on one hand it's certainly GREAT to see CIMB Research realising the potential humongous shortfall in earnings from JCY and forewarned its readers on the 25th but....... the size of the downgrade is certainly difficult to swallow!!!

CIMB yesterday lowered its forecast for JCY's 2011 earnings to just 168.8 million

Lets compare and refer to the posting Regarding JCY International
  1. During IPO or April 2010: JCY earned some 207 million for its fy 2009. CIMB says times are good in 2010, so JCY should earn some 359 million! And 2011, JCY earnings will be even more super. JCY should earn some 441 million by then!
  2. 21 May 2010 - Target price lowered! fy 2010 earnings is now lowered to 297.3 million and fy 2011 earnings is now lowered to 370.8 million
  3. Monday, 23 Aug 2010 - CIMB to earn some 263 million for its fy 2010. And ....... for fy 2011, JCY is now projected to earn only 304.7 million

How?

Incredible isn't it?

During IPO, April 2010, CIMB valued JCY target price of 2.68 based on 2011 earnings estimate of 441 million.

It's now only Dec 2010. CIMB has slashed JCY target price to just 0.92 based on 2011 earnings of just 168.8 million.

Is Debt Bad For QL

From the posting: Regarding QL Again


  • K C said...

    Is debt bad?
    Corporations borrow money to do business and investors earn amplified returns from the financial leverage. There is an option value of a leveraged business. Hence borrowings is not a bad and in fact it is good thing provided that the borrowings is not excessive and it earns a return higher than the after tax cost of borrowings and that EBIT is able to pay the interest costs comfortably. In QL Resources case, with a relative high leverage of 2.35, QL obtains an excellent ROE of 22% (>15%). ROIC is about 13.5% (>12%), showing a good utilization of capital. Times interest earned is 10 and with good cash flows from operations. Hence I think the management of QL has done a good job in growing the company with proper utilization and management of debt.
Many thanks K C for sharing your opinions.

Let me just share it here so that everyone can have a more 'balanced view'.

It's 30 Consecutive Weeks Of Fund Outflows

More outflows seen...



And that's 30 weeks of continious fund outflows seen. Americans are simply taken out more and more money from their domestic equity funds.

Does it matter?

Does 94 billion taken out since 28 April 2010 matters?



Past postings:

Wednesday, November 24, 2010

Gone fishing...

Ya... will be on a trip. No more postings till 2 Dec 2010

Is The Stock Market A Fair Game?

On CNBC:







The clip was highlighted on ZH: Channel Checker Confirms On TV That All Wall Street Does Is Traffic In Borderline (And Often Blatant) Inside Information
  • Channel checking firm Broadband Research CEO John Kunnican was on CNBC earlier and summarized in a few simple sentences the whole topology of precisely how Wall Street works: "It's impossible to be an analyst on Wall Street unless you have an expert network. I know that my contacts at these private companies are having lunch on a regular basis with analysts from Jefferies and Morgan Stanley and Goldman Sachs and what not and I get forwarded the research reports from these banks, and frankly it's a little bit intimidating. I say- geez, i thought i had pretty good contacts but I can't compete." And there you have it - a quid pro quo world, in which inside information (in some case blatant such as when dealing with Phase 1,2,3 trials, or borderline, such as aggregating channel check launch data contemporaneously from all Apple stores) is bartered among the "informational arbitrage" elite on Wall Street, and in which the retail investor has zero chance of competing on a fair basis. And this does not even touch on any of the much more discussed "high barrier to entry" topics such as High Frequency Trading. If after all the disclosures on Zero Hedge over the past two years (which eventually tend to be picked up by the MSM no matter how crazy at first they sound) investors still believe they have a chance to make an honest dollar, when everything is stacked against them, even and especially the regulators, they sure have our blessings and condolences. As for John, good luck finding a new career. Hopefully the clients to whom you showed such exemplary allegiance will put you on their payroll for at least a few months. Furthermore, now that the expert network business model is finally in the open, expect ultra low margin Indian companies to outsource the rolodex offshore, where it is even less regulated, providing their consultants even greater commission, and putting all existing "expert networks" out of a job. That is, of course, unless the SEC, the FBI, or the DA do so first.

Quick Look At Mudajaya's Earnings

Here's the updated numbers.


The receivables again increased. (See posting: SC Article On Mudajaya Reveals Serious Allegations Made Against Mudajaya )

The cash is depleting and the main reason is the 'investment in associates'.


Tuesday, November 23, 2010

Are Insiders Buying Or Selling?

Update on Insider Buying and Selling by SP 500 companies:



Last weeks data showed the total valued purchased by SP 500 insiders was 150,673.

Yup... that's one hundred fifty thousand....

!!!!!

Total value of the shares sold by insiders? 1.247 Billion!!!!!

Regarding QL Again

Posted 30th Aug 2010: Oh, that stock called QL

Firstly the nice chart of QL. It flew didn't it? :=)


QL reported its earnings last night. Here's the quick numbers.





How?

Earnings growth still there but the balance sheet issues mentioned earlier in the posting Oh, that stock called QL still prevails.


Let me reproduce that posting in full here......

-----------------



Dedicated to BB.

  • bullbear said...
    Financial Datas on QL: here
    QL is yet another company with good revenues (8% annually) and earnings growth (>20% annually). Its ROA was around 9% to 10% and with judicious leverage through debt and borrowings, its ROE was around 21% to 22%.

    At its present price, its PE is at its higher end of its historical range. The company has been selling its treasury shares recently. Of course, QL hogs the limelight with its recent purchase of Lay Hong.

Yes, QL is one of the stocks which had an incredible growth and the stock markets, they tend to really love them growth stocks to the death and yes, there are some who believe that growth is one of them market holy grails. Yeah, what's your holy grail? Mine? My flawed view of course is not being stupid and silly and needless to say, knowing when I am the silly jackass should be sufficient enough to make great money.

The charts - charts are not bad a tool for the kiasu leh. You know a stock market kiasu player is one who does not want to be in a stock when the stock is at its peak. Yeah, buying high and selling higher does not exist in their world. :P.



And this is how QL - the stock has performed since 2002. (Chart is provided by Chartnexus.com and it's price adjusted to account for all the bonus and splits. Hey if it's inaccurate - don't shoot me on this issue! :P )

The financial track record.


The earnings growth is clearly there to be seen.

Some 'purist' - they love to be precise and they like to use stuff like CAGR to check out the growth.

Let's have some fun. :P

Using ttm earnings of 111.673 as the end number.

1. Since 2002 or a time span of 9 years, QL's earnings had a CAGR of 22.33%!
2. But since 2006 or a time span of 5 years, QL's earnings had a CAGR of only 18.01%

Yeah.. as mentioned once before in the blog, the starting point of reference is always crucial and sometimes when one 'handpicks' the starting the point, the CAGR numbers could look seriously impressive. :D

But then... the purist would insist that that simple result is rather significant because it does indicated the growth rate is slowing the most recent 5 years compared to the last 9 years. And there's probably some sort of logic here because growth rate does not last forever and ever and especially for a company's earnings, growth could simply 'peak'.

And yeah.. for the stock market, there's so many approaches and there's so many different techniques and no, I do not think it's a sin if one misses out on a so-called opportunity because they feel that they are uncomfortable with the strategy.

And of course, there are some, who have noted the rather 'thin' margins for QL Resources.

Would this be an issue? For some yes. For some no. As long as the growth remains strong, the 'thinner' margins are acceptable.

And for some, those numbers alone are not sufficient.

Well if the above passes one's test, one would probably want to know what's the driving factor. Yes, if one does 'more' research, QL is a diversified company and it would make sense to have a look at the company's segmentals.

As indicated, marine-based manufacturing and integrated livestock farming are the driving factor behind QL's current success and if one is really interested in this company, it would be sensible to understand more, yes? Yes, do spend some time researching.

Wah.. some smart ass would say 'Walaueh! so much work to do meh? Much easier if the just follow a stock tip and punt on it!

Very true. :D

Of course, it's much easier.

I don't deny it but I for one, like to 'invest' in a stock from a business perspective. That is, I only invest or be a business partner in the stock ONLY when I fully understand what's happening.

Seriously. Say Auntie Susan comes to you and ask if you are interested in joing her in a business ventrue to open a toe massage center. Would you just say yes, because it's Auntie Susan (:P) or would you take the time and do some careful research? Well if the answer is the latter, then why is investing in a stock any different?

Now assume one has done the research ( LOL! I am lazy to do the research! :P) and one is satisfied, then perhaps one should look at the company's balance sheet.

Yes, sometimes to read that a company's making money, is simply not enough.

Remember Megan Media issue? Company at one time kept saying there's profit, lot's of profits but its debts and receivables kept on growing at insane rate. Well not insinuating anything but just saying that it's much better to know a bit more than not knowing anything at all. :P

The Balance Sheet.



How?

Clearly the balance sheet is NOT as nice as the company's earnings.

The clear debt build up is very clear.
But some would argue that cash recently has 'grown'...

Now this is QL's Q4 earnings reported on May 2010: Quarterly rpt on consolidated results for the financial period ended 31/3/2010. Open the Excel file attached and look for the Cash Flow statement. Do you like what you see?



I am sorry but I don't.

As mentioned in a discussion back in 2007, "there is no breakdown of how and where the money went... see how everything is just lumped as investing activities? So what's the investing activities? " And what's the financing activities?

Yes, I do feel QL ranks poorly in the issue of being transparent in its disclosure of it's cash flow!

The cash flow is so important to the investing public. The investing public needs to know where the money is coming from and it needs to know where the money is flowing out!

To not explain is not respecting the investing public at all!

hehe... these comments are as it is. It's my flawed thinking and if you think I am wrong, then I am wrong. My opinions are a dime a dozen. :D ( LOL! Some say 'Talk is cheap because supply more than demand! :P )

So how?

The most recent fiscal year, cash balances 'improved' to 106.112 million. Surely this is impressive, yes?

But... but.... butttt.....

The cynical would also be quick to point out that DEBTS as 'improved' to a whopping to 412.330 million!

How?

Perhaps the cash balances 'improved' because of a drawdown in the company's borrowings.

Not possible?

Yeah... how unfortunate that QL does NOT want to disclose properly what's happening in their cash flow statement. :(

And the numbers 'purist' would be quick to draw out their financial calculators and compute the CAGR of QL's debts!!!!

In 2002, QL's debts was 156.240. 9 years later, the debt is now 401.424 (and as the earnings CAGR, the ttm numbers is used as the 9th year). And the debt CAGR is some 11.05%.

Now for some, this is acceptable because the earnings growth rate was some 22.33% ( see earlier part of this posting).

But for some, such debt build up is a no-no.

And for some, it's way too complicated. :P

Here's perhaps a more simplier perspective.


Now if one sums up the earnings since fy 2002, one can see that since 2002, QL has earned some 601.407 million.

Nice.

But at fy 2002, using the simplistic net cash approach (net cash = total cash - total debts) , one saw that QL was in a net debt of 136.727 million.

Now remember, since fy 2002, QL resources had earned some 601.407 million.

Now as a businessman or business lady, what do you want to see?

Don't you want to see the company is able to generate some sort of wealth from this 601.407 million?

And in terms of wealth, won't it be logical that the company's net cash position improve?

601.407 million woh!

And how did QL's most recent quarter earnings showed? Total cash stands at 70.720 million. Total debts is at 401.424 million! Or a net debt of 330.704 million!

As stated in a discussion back in 2007, "So the issue is simple. As an investor, one probably should be weary that the company is not able to retain some sort of wealth from all the earnings it had earned."

Ah... but some would insist that such a perspective is flawed. :D

How?

ps: If u ask me, I would suggest you asking BB. He's the expert. Not me. :D

ps: LOL! The Star Biz have an article on QL: Is QL Resources in for more M&As?

Disclaimer
1. I am a nobody.
2. I am not responsible for anyone's investments.
3. I am not a sotong. :D
4. I am certainly not an independent investment advisor.
5. Since I am not an in dependant investment advisor, I cannot guarantee that you should lose money.
6. Most important, I find no motivation to talk about stock price movements. Yeah, I do not indulge in guessing what a stock price will or will not do. So please spare me all the chats that you think this stock will go down by so much or this stock will soar by so much.




Xingquan: Growth Or Dividends And Some Unbalanced View

So much supporters for Xingquan under the posting: More Balanced View On Xingquan

The latest one: Growth OR Dividends

  • KLSE investor said...

    Labour only constitute around 8-9% of their cost. Their staff salary has already incorporate the hike since beginning this year. Average salary is around RMB2.0-2.5. So assuming they hv 3,000 worker, it only work out to RMB6-7.5 million per month only.

    Xingquan are one of the few lucky one that have manage to switch from Sports Wear to Outdoor Casual Wear, probably these Chinese Ah Pek went to Blue Ocean Strategy classes. Small players are starting to feel the competition from the BIG local and foreign brand starting from Lining, Anta, Xtep, 361, Peak (these 5 have more than 6,000 shops EACH) follow by Qiaodan, Hongxing Erke, Dongxiang Kappa, Deerway (these 4 brands have 3,000 to 4,000 shops) and the foreign boys like Nike, Adidas, Reebok, Asic, New Balance. Smaller brand will suffer within the next 1-2 years as this 15 brands march into smaller cities. I believe smaller sport brands will likely move into what Addnice is doing or probably do Casual wear, Leather wear & etc.

    If you walk into any departmental stores in big cities in China, u will have all the 10-15 Sports brands in there and smaller local China brands will not be able to enter as it is too crowded, where as there is only a few Outdoor Causal Wear companies like Camel, Jeep and Addnice. So, that is why Addnice can expand fast in departmental stores in highly populated cities in China, and according to their IR Guy, they are given priority to enter compare to Sport brands because there is few brand in this categories.

    Notice their cost is close to RMB290 million for the 3 months (July to September) and they have the balance of the new factory cost to pay (RMB150 million), expansion of sales of network & marketing (easily RMB80-100 million), buying part of their existing plant (RMB60 million) - announcement made today, rebranding exercise (due to the change from Sports to Outdoor Casual Wear) (easily another RMB50-RMB100 million), shoe sole machinery (RMB40-50 million). Guess they have a lot of expenses and that is why they need to raise funds next year to fuel their growth or they will be left behind when our smaller brands join them in Outdoor Casual Wear.

    Guess they question we have to ask ourself is whether you want to take this ride which has full of expansion and expansion and the benefit is we can ride along the China Growth Story and hopefully Renmimbi will appreciate too. Guess this stock is not a dividend play stock like Nestle.

    Your choice, guys - Growth or Dividend

Here's the unbalanced view, if you do not mind. :=)

Many thanks for you detailed view. You have made an justification to why Xingquan need the massive capital requirement. I am not here to argue if your justification is right or wrong.

I raised the following questions in the posting More Balanced View On Xingquan

ps: how many quarterly earnings has Xingquan reported since listing?
ps/ps: how has Xingquan reallly fared?
ps/ps/ps: has Xingquan's perfomance so far being up to par? Has it beat 'expectations'? or has it grossly perform below expectations.

The updated numbers again.






Seriously? There's only 5 quarters of earnings. Now I will be flawed and I will not use any pre-listing numbers from Xingquan. That's history. If I were forced to judge Xingquan, I would judge it based on its performance as a listed entity. And with 5 quarters of earnings, seriously? I rather NOT make any conclusive decisions on whether Xingquan is a good or a bad company.

But there's so many opinions on this stock, let's look at the bare facts.

Xingquan's audited earnings for fy 2010 is some 105 million.

Now since the audited numbers are not reflected in its quarterly earnings, I will just use the un-audited numbers for simple comparison sake.

Xingquan's fy 2010 unaudited earnings is 108.256 million.
Xingquan's current unaudited earnings for ONE quarter is only some 25.556 million.
Xingquan's annualised earnings should be 102.224 million.
Xingquan's unaudited trailing earnings (last 12 months) is 110.401 million.

Does this suggest to me that I am seeing earnings growth?

And folks from CIMB was expecting earnings of some 150 million for fy 2011. Well with a 1Q earnings of 25.556 million, the earnings is well below their forecast. CIMB had this to say.

  • Maintain OUTPERFORM despite 1Q misstep. Xingquan’s 1QFY6/11 results were out of step with our expectations (consensus numbers not available) as annualised core net profit was only 68% of our forecast mainly due to profit margin erosion.

Only 68% of its forecast. CIMB of course, quickly lowered their numbers.

  • "We are scaling back our FY11-13 EPS forecasts by 8-13% to reflect a margin squeeze from the sharp rise in raw material prices."

Fy 2011 forecast is lowered from 150.7 million to 137.7 million.
FY 2012 forecast is lowered from 170.4 million to 149.4 million.

Their valuation.

  • Keeping our 6x CY12 P/E target basis, we arrive at a lower target price of RM3.04 (RM3.49 previously).

Oh yes, the stock is valued based on fy 2012 numbers.

Which means Xingquan is valued so highly based on the expectations if should earn some 149.4 million.

And I guess this is the expected earnings growth from Xingquan.

And the current numbers? Does it suggest Xingquan can produce such explosive growth? Here's Xingquan's unaudited quarterly earnings since listing again:

  • 10 Q1: 23.411 million
  • 10 Q2: 30.611 million
  • 10 Q3: 32.743 million
  • 10 Q4: 21.491 million
  • 11 Q1: 25.556 million

Does it suggest to me that Xingquan have the explosive growth?

Sorry, I just don't see it based on current data.

Ah.. I am well aware that anything can happen. Perhaps the numbers could start rolling in and that the explosive growth is possible.

But at this moment, I wouldn't dare make such assumption.

And in the meanwhile, despite the huge cash in the bank, Xingquan did no dividends, and it wants to engage in the TDR to raise even more money. And oh yeah... the 12% earnings dilution that comes with the TDR.

Would it be wrong to say 'so much money used but at this moment the result does not justify the spending?' Would it be wrong?

And not forgetting that snowball mentioned

  • "Second, their tax exemption on a major entity, addnice sports which produces 80% of its revenue will ends on 1 Jan 2011, so, on the 2HFY2011, Xinquan need to make 10% (80%*12.5%) just to make up the lose ground"

And last but not least...

  • Your choice, guys - Growth or Dividend

Err... what about gals? Gals have no choice?

Hmm... growth or dividend?

Well...... what about the other alternative? ie... why insist on this stock? Are the choices so limited in the stock market?

Saturday, November 20, 2010

More Balanced View On Xingquan

From the posting: Regarding Xingquan's Cash And Dividends

  • ch said...
    Dear All,Yes, the issues brought up by Moolah, Mosea and Snowball are primary concern(s) if one is invested into Xingquan. The dynamics of Chinese stocks and business community are always tinged with mysterious circumstances. Be that as it may, the Chinese are rapidly becoming the world economic superpower. One thing I know about Xingquan is that a shrewd investor by the name of Koon Yew Yin is a minor majority shareholder. Please refer to Bursa Malaysia under change in shareholdings column. This is the same man who has years of experience in stock investing and the same person who pledged to donate RM30 million to UTAR (but was turned down by MCA for reason(s) best known to them. He is a smart share investor and invested a sizeable amount in Xingquan. Guess he should know something about Xingquan that we don't.

    You have hit the right note i.e. we should not follow the herd mentality but then again, this news which was fished out from the Bursa website goes to show that a multi-millionaire has invested into Xingquan. He is rich for his smartness in stock-investing or other reason(s) but one thing placed right in front of us is that he has sizeable amount of money in Xingquan. As I have said earlier, is it that he knows something about Xingquan which we don't? I am not saying that your observations and of those of Mosea and Snowball's on Xingquan were wrong nor neither I am trying to convince others to buy Xingquan but the emergence of Mr. Koon as a major minority shareholder is something we should try to understand. Surely, he is not considering to donate the RM30 million turned down by MCA to Xingquan. Or is he? And I believe philanthropist like him has some reputation to live up to. It is like Francis Yeoh is now into the Wimax biz which might be foreign to him 10 years ago but surely he is not investing in the biz just to keep him busy. It is all for making money. Similarly, I believe this is true to Koon Yew Yin too on his foray into Xingquan.

  • xinzhang said...

    I guess we should look into Xingquan in a more perspective manner. Snowball was right that the interest rate regime in China is low and it is something which no one could argue or debate. So, in other words, the Chinese is encouraging people to take money out and invest and spur the economy.

    The apparent higher receivables reported by Xingquan is definitely a cause of concern but not to an extent where we should just ignore the prospect of investing into this company. Question like is the receivables are within its credit term? I have no idea as to its ageing list but surely they are not selling on cash basis. Do they have any bad debts? If no, then the high receivables are not a concern as you will have higher receivables as business grow. The important thing is to check if they are within credit limit and term.

    Xingquan is lacking on dividend as correctly pointed out by Mosea. Yes, for any investor, dividend is something that they are looking up to apart from price appreciation. But Xingquan has caveat this by presenting to all and sundery that they are paying from 10% to 20% of its PAT.

    Xingquan should be paying up for the expansion completed recently. And the issue is how much business have they managed to get for this new plant.

    And my last advise is will there be more funds interested in this counter apart from Mr. Koon Yew Yin. Having Koon Yew Yin on board is a good thing boosting investors' confidence.

more...

  • panaceaasia said...
    Dear Moola,Thank you for your excellent blog. I too note that Mr Koon has a substantial stake in Xingquan. Mr Koon is Malaysia's Warren Buffett. He invested in Supermax about 2 years ago at rock bottom prices before analysts went mad on the rubber gloves sector. It appears Mr Koon has made millions investing in shares. My money is with Mr Koon. You can spend your time arguing about the low returns on cash, which I applaud as higher than market returns would indictae a higher level of risk. Xingquan offers an undervalued exposure into the second largest economy in the world. I followed Mr Koon by buying Supermax and am now buying Xingquan. I bought a new BMW 523 with half of my Supermax profit. It's lovely, indeed the Ultimate Driving Machine.

*** these are comments received and they are highlighted for the BALANCED view only since I had already made some comments in earlier postings***

*** I know nothing what will happen the stock or the markets. ***

21/11/10

Past postings:



22/11/10

And from the other side...

  • snowball said... .
    Dear all,

    Yes. Mr. Koon may be a savvy investor, but, Mr. Buffett can make mistake, too. Some say TTB is also the "Warren Buffett of Malaysia", but to those who follow him into Meico, you will probably be still losing your money. Unless you are a good friend of Mr. Koon and he can tell you what is inside his portfolio, you could not replicate his above average return.

    The cash is not just earning a low rate, which I would not bother as it is the Chinese company way of doing things, regardless whether we like it or not. It is earning a suspiciously low rate, that's the concern.

    Mr.Koon would have probably been there or at least sent someone there to check out the place and found the place is in proper order. But, the shoe business in China, is still extremely competitive. If I were an investor, I would probably study the competitve dynamics of the Chinese shoe market and how their addnice brand stack up against others.
    Shoe is a very labour intensive business. Xinquan as well as other shoe makers are churning out very decent margins. But, investor always need to consider the labour cost. I think it forms at least 20% of Xinquan cost structure. Whether a Chinese wage increase will hurt their margins, I think investors should find out. There are a lot of pressure on lifting the minimum wage in China. Based on analyst report, the wage that Xinquan workers is earning, I feel is not out of line with the general numbers in China, which means, a revision is likely. But, with such a competitive sector, can they pass on the increase? Some may argue that the increase would likely to bring about increase in demand, but, I would add that you need to build a new plant to support such demand increase,so, more money there.

    Xinquan is pursuing some massive distribution channel expansion, whenever there is something new going on, investor should be wary about their expansion plans and see how it goes. Even starbucks got it wrong with their expansion. There are very little information out there on how the rate of expansion is going and etc, whether the incremental investment actually brings about good returns. If this company is based in Malaysia, we would probably be able to figure out whether the expansion works or not, but, it is too far away, so, there is much more problem when it comes to lack of information.

    There are a lot of good story out there about the integrity of this company owners, but, story is story. A good manager can bring you so far, you still need to study the industry dynamics. You need to know how addnice stack up against more established names like Li Ning, anta and hongxing etc Plus, all the things that we hear about this company is all hearsay, we do not know the person.

So much interest.

Well... for the record...







ps: how many quarterly earnings has Xingquan reported since listing?
ps/ps: how has Xingquan reallly fared?
ps/ps/ps: has Xingquan's perfomance so far being up to par? Has it beat 'expectations'? or has it grossly perform below expectations.