Saturday, July 24, 2010

Hirotako: Could It Be A Hero Of A Stock?

The following news article caught my attention:

  • Saturday July 24, 2010

    hirotako acquires stake in PA Resources

    PETALING JAYA: Automotive components maker Hirotako Holdings Bhd has been allotted 24.41 million shares and 24.41 million warrants in PA Resources Bhd, an aluminium billet manufacturer via the latter’s rights issue exercise. Hirotako told Bursa Malaysia the company now had a 15% stake in PA Resources for a cash consideration of RM15.79mil

Ahh... an automotive parts maker stock. :D

Now this could be interesting. LOL!

Firstly, the stock chart.


Yet another hot stock. Wasssap! Surely I cannot be insinuating that perhaps one should grab as much as possible a stock that is clearly shooting for the moon! Can I? (ps: the cow did jump over the moon, no?) (ps: I did write on Jan 2010:
The Next Hot Stuff? )


Anyway... let's leave the above acquisition alone for the time being.

I am rather interested to know what's happening in Hirotako. Aren't you interested? Why is that stock so 'geng'? :P



Those are great numbers yes?

Let's have a look at how the stock is faring on the 5 year time frame.

Not bad eh? Comeon.. it's really beh pai mah. :D

The company has also a buyback program (not too aggressive.. LOL! ... yeah.. it's not like those company who use their share buybacks to send their stocks to Jupiter! :P ) Here's Hirotako's most recent quarterly earnings announced in May 2010.
Quarterly rpt on consolidated results for the financial period ended 31/3/2010 (ps: I really have to take my hats off to Hirotako's management for what they are providing in their earnings notes. It was rather clear and precise. No messing around. :D )

Here's Hirotako's report on their share buyback posting in their quarterly earnings notes.

And what to they do with these treasury shares? Well they return it as dividends to its shareholders.

  • On 8 February 2010, the Group announced a distribution of treasury shares as share dividends to the shareholders on the basis of two (2) treasury shares for every twenty-five (25) shares held on 2 March 2010.

And the company do give dividends too. For example, here's one announcement: First Interim Dividend

Ok.... so that's about a brief picture of what and how Hirotako is and I guess it's not a shocker that the stock is doing so well.

Now back to the issue....

Feb 2010: Quarterly rpt on consolidated results for the financial period ended 31/12/2009

Hirotako decided to plunge into the share market!!!!!!!!!!!!!!!! (MMM HAI GUA!)


Ahem.. as you can see after Hirotako purchased some 3.364 million worth of 'quoted shares' by 31st December 2009, the value of the share at market value fell to 3.146.

Hmm... you know... or rather... do you know of some superstitious Aunties? :P

Well, if you do, you know, they say it's very not so good luck (ONG!) when the very first share you buy, you sit on paper losses. (yeah.. 'sway' is the four letter word they use. :P)

Anyway... the minority shareholder or the investing public would have absolutely ZERO idea what the 'quoted shares' are. (issue highlighted many times in this blog)

Three months later, May 2010: Quarterly rpt on consolidated results for the financial period ended 31/3/2010

See? The Auntie ONG theory was correct! (no? )

The 'paper' losses got bigger. :P

And today or rather last night, the investing public and the minority shareholder found out what these quote shares investments are!
hirotako acquires stake in PA Resources !

Here's the word file attached on Bursa website. Acquisition of shares.doc

  • Rationale for the Transaction

    The Board is of the view that the acquisition represents a good opportunity for HHB to diversify into the aluminium industry. This will provide another avenue for profits in future and should contribute positively to the future earnings and growth of the HHB Group.

    Prospects of PA

    PA is principally involved in the manufacture and trading of aluminium extrusion and its related products. As such, the future prospects of PA are closely related to the Aluminium Industry and are dependent on the outlook of the global and Malaysian economy.

    Given the improving and positive outlook of the global and Malaysian economy, and coupled with the encouraging underlying growth in the Aluminium Industry, the Board expects the prospects of PA to be favourable. The Board believes that the demand for aluminium extrusion will continue to remain healthy

Now, ok... perhaps the aluminium extrusion industry might have a good future prospects.. yeah.. who am I to say NO, yes?

But why PA Resources lah.

Not a good looking stock chart, yes?

( See my first dummy question would be.. why this stock chart so... 'chey kai'? )

And then a brief quick look-see at PA Resources quarterly earnings...

Some of PA Resources quarterly earnings...

May 2010: Quarterly rpt on consolidated results for the financial period ended 31/3/2010
May 2009:
Consolidated results for the financial period ended 31/3/2009
May 2008:
Quarterly rpt on consolidated results for the financial period ended 31/3/2008

From PA's quarterly earnings reported in May 2010.

(cash depleting.. but.. it 'could' improve since PA is having the rights issue exercise)

Ok.. PA Resources is NOT the absolute horror stock... but... certainly... many would question if this would be a stock to 'invest' in... yes?

And with the subscription of PA Resources rights issue, Hirotako total investment in PA Resources would amount to some 15.9 million!

15.9 million woh.

Not a small change yes?

So if you are a minority shareholder in Hirotako, how would you feel?

Or perhaps Hirotako reckon it has some culinary chefs would are able to stir fry some Sotong very crisply!


ps: I am not SOTONG and this is not a stock tip, so I clearly would NOT know if you could lose all your money if you decide irrationally to place a wager on this stock! :P


solomon said...

Mooolah, another plate of sotong after MFCB subscribed to JADI rights??

Personally, I reckon Hiro as one of the political stock. PA being another stock accumulated by our ex-transport minister when he steps down. The purchase to a certain extent will stretch my imagination to believe that these 2stocks are linked to the same cook...

Hero cannot cross the beautiful girl hands, will the stock suffer the same faith??

hhc1977 said...


what should i as a minority do? vote with my feet?

Moolah said...

LOL! You do know my answer, yes?


Mun Wai said...


A thought over share buy-back exercises.

By engaging in such activities, do you agree that listed issuers are diverting their attention from managing the business to managing their share prices?

What good does it do to the company?

Moolah said...

Yes and that's why I am not a fan of share buy-backs.

there are other examples of poor share buybacks posted on this blog.

Mun Wai said...

All text book "advantages of share buy-backs" are lousy.

Why the need to buy back if the fundamentals are good? would have been reflected in the share prices.(save for general market weakness hor)

If the core business of a company is lousy, even more valid reason not to bother. Why bother.

Should this be disallowed as well? CEOs could use this as a basis to boast about themselves, yes? Managing share price so well-aligned with managing own pocket.

So reluctant to write text books reasons of share buy-back.

P/S: Like your orange-coloured car so much!

Moolah said...

Worst ever one was KNM.

The CEO sale was forced sale .. and there KNM was... doing share buybacks!

Mun Wai said...

Goodness me! Like that ah!

Another example of how bad if the Management does not focus on managing the business.

I remembered that they once proclaim an MBO.

Too bad SBB can only be done on market. If not arrange for a DBT la.Save time save cost.