Wednesday, June 30, 2010

Update On Analabs Earnings

Analabs reported its earnings. It made a net profit of 3.640 million for the quarter, giving it a total earnings of 15.389 million for its fiscal year 2010.

Which is very impressive when one starts comparing it versus what it had achieved the previous year.

But then... on a q-q basis, the earnings was terrible.

Ah yes, yet another interesting issue. Should one look at a y-y comparison or should one look at the q-q comparisons?

On a y-y comparison, its 3.640/15.389 million earnings was very impressive. Last year, Q4, it made only 1.376 million and had a total earnings of 9.373 million for the fiscal year. Bravo.

On a q-q comparison, last quarter, it made 5.639 million. So the 3.640 million is rather a shocker yes? Why such a big decline?

Balance sheet comparisons.

1. Cash. This quarter 9.949 million. Last quarter 11.848 million. Last year 32.272 million.
2. Receivables. This quarter 26.924 million. Last quarter 25.275 million. Last year 7.812 million.
3. Investments in quoted securities. This quarter 14.544 million. Last quarter 14.863 million.

As mentioned before, the huge shrinkage in cash was because it bought a stake in its subsidiary for 32 million! Yeah... subsidiary.


From the company's earnings notes:

  • For the quarter under review, the Group recorded a revenue of RM36.7 million, which is an increase of 173% compared to the revenue of the corresponding quarter of the preceding year. This increase was contributed by the newly acquired business of manufacturing and sale of resin impregnated papers by RM25.2 million but was set-off by the lower contribution from the other business segments due to the weak prevailing operating environment vis-à-vis the corresponding quarter of the preceding year.

    As a result of the positive and substantial contribution in turnover mainly from the business of manufacturing and sale of resin impregnated papers and relatively lower raw material prices, profit before tax for the current quarter recorded an increase of 154% as compared to the corresponding quarter of the preceding year

This was the previous posting on Analabs: A Look At Analabs Earnings


jitseng said...

Analabs bought over Coveright and became a subsidary.What we are worry is the management is not focusing on core business.They strated as waste recycle,and bought a fertiliser co and venture in aquaculture too.After 3 years close down the prawn rearing business.Now heavy investment in laminating business.

Moolah said...

Yes, as stated in the March 2010 posting A Look At Analabs earnings this investment cost 32 million.

32 million is a lot of ringgit and sens!

And there's no doubt at all, it's a justifiable concern.

Another point, before the acquisition Analabs had that extra 32 million in its piggy bank, which makes its cash per share yardstick look extremely attractive.

And once more, this Analabs example has proven that basing one's investment on cash per share yardstick has its risks.

Note: I am not saying it's BAD that a company have tons and tons of CASH, I think it's great but there's limitation. And one of the limitation, as shown in Analabs, the company can embark on an acquisition, which is beyond the company's core business.

Now would this acquisition turn sour for Analabs? I think still way too early to pass judgement.

random said...

but still it's a worrying sight if the company does not use the cash for its core biz but instead on buying out other businesses

grahamsmun said...

Coveright is a superb buy !
An investment of Rm 32m giving a return in investment of Rm 11m a return of 34% p.a.
We hard the find such buy giving such a good return.
On top of this analabs still got Rm 9m cash and Rm 12m of securities with no borrowings !
Tribute should be given to Analab's management increasing dividend to Rm 0.05 tax exempt also !