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.

Friday, November 19, 2010

Eric Cantona: Kill The Banks!

Hail the KING!

Regarding Xingquan's Cash And Dividends

From the posting: Quick Review On Xingquan's Earnings

  • mosea said...
    The bad thing is that they have yet to be able to deliver dividend which is a dampener.



  • snowball said...

    First, the receivables is up almost twice as much than the sales, which is worrying if it becomes a trend.

    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.

    Third, they have some advances from directors, which I am not sure whether it is needed since they have so much cash which prompt me to look at their cash and interest income. They earn an annualize interest rate of just 0.33% [(498*4)/((587000+631000)/2)], which is suspiciously lower than that of the current interest rate of China banks-0.36%. Here's the interest rate from ICBC :http://bit.ly/9hF5xN . I have check my computation a few times as it is really too low. It means that they are keeping a lot of money in their office to earn such a low rate. But, if so much of their money is in their office, do they need any advances from director? So, I can't resolve this inconsistencies. But, the advance from director is very low- RMB172k only. However, the interest they earn is surprisingly low, which is a bit worrying. If the money is kept as strategic cash hoard, I think, as a successful businessman like Xinquan owners are, they should be logical enough to put into higher yielding account. But, the current rate is even lower than that of the lowest savings account rate.

Snowball: Great point about the tax exemption and yes, I would fully agree with you that this could be a massive burden. And again, one might have to consider the 15% dilution (sorry mistake!) 12% impact caused by the TDR.

And the cash and dividend issue, which goes back to my first posting: Regarding Xingquan

Let me reproduce the following part..........


Some thoughts regarding its 'cash richness'.

Xingquan raised some 159.682 million from its IPO listing. From its last reported earnings in May 2010.

From the above table, apparently there's plenty of cash raised from the IPO still hasn't been utilised and then Xingquan had stated in the press about its capex plans.

And as per the latest earnings pdf file ( page 11 ), Xingquan reported that currently it had used only 111.058 million. So there's 'plenty of money' not used YET.

Yet, Xingquan had insisted it wants to do the TDR to raise another 76 million.

And naturally the 'confusing' part is that as per current earnings, Xingquan has some 291 million cash (and some 29 million in borrowings).

Ok, snowball has stated before that..

  • Small and medium Chinese company in general like to hoard a significant amount of cash. This is my general observation of S-chips, Red Chips etc. The cash hoard is for strategic reason because of the limited access to credit facilities in China.So, in Xinquan case, the management may want to keep some of the cash for strategic reason either to react to competitor actions or to face possible uncertain regulatory environment. That's why we are seeing chinese companies listed abroad raising doing so many rights issues despite being on net cash.

But the cash as stated by snowball are earning peanuts.

And then the lack of dividends mentioned by mosea.

And if one takes the company's plans into consideration as stated at the end of the posting Regarding Xingquan , then wouldn't it not suggest that the company's main focus is to expand, expand and expand.

Of course a company's plans to expand is not bad but then as a shareholder, one has to wonder 'apa macam ni'? Dividends mana? Somemore got future dilutiions in earnings caused by the TDR. Well, it's certainly not really attractive, yes?

And also, I have no idea in regards to the apparel footware industry in China but I would still question why such an industry requires such massive capital? Shoes woh. Needs millions and millions meh?

(The TDR progam had stated “The proceeds will be used for the expansion of sales and distribution network (RM44.55mil), point-of-sales makeover as part of the rebranding exercise (RM26.51mil) )

Thursday, November 18, 2010

Quick Review On Xingquan's Earnings

Here's Xingquan's updated numbers.


  1. Much improvement from it's Q4 numbers.
  2. Receivables. Increased a lot yes?

And that's about I can say.

Could I dare suggest Xingquan is lousy? Nope.

Could I dare suggest Xingquan is great? Can I?

Previous postings:

  1. 10 Aug 2010: Regarding Xingquan
  2. 16 Aug 2010: Quick Review Of Xingquan's Earnings
  3. 19 Oct 2010: Xingquan's TDR

The Oct posting has an interesting issue.

CIMB's earnings forecast.


Ahem... 2010, Xingquan is projected to earn some 150.7 million. In 2012, Xingquan is EXPECTED to earn some 170.4 million!

And Xingquan only earned some 25.556 million for 11 Q1.

Not very encouraging yes?

And then there is the potential 12% dilution from the proposed TDR......

More Chat On Green Packet

  • A Better PJ said...

    Fair reply Moolah. my take...

    Customer Acquisition Rates...
    I also notice that these slowed in the middle of the year which they explained as a result of reducing there A&P while they sorted out their network capacity issues.

    In their own announcements they are targeting the 280,000 during Q4 of 2010 on the back of a new A&P campaign...but you're right, its a tall order. However as you point out they have achieved 43,000 in a single quarter last year, on a much smaller/weaker network.

    The EBITDA Thingee...
    A critical measurement for investors, especially for a start up company, is to see whether an operation has the ability to generate cash. If it has you have many more options available for funding business expansion.

    Capital Expenditure, RM 534m and rising...
    that's what it takes these days...as a minimum. YTL have projected a capex of 2.5bn, it will take that for each of the mobile telcos to upgrade to a comparable 4G LTE.

    Institutional investors will take in interest in this stock after 1 or 2 profitable (EBITDA) quarters, at which time trading volumes and price would shift substntially.

    The opportunity for the private investor is to take a view on if/when this would happen and to get in just ahead of the institutions and to make that assessment you would need to be tracking the key numbers of EBITDA, revenue, ARPU and churn.

    You would also need to take a view on how it differentiates from the other wireless broadband competitors and whether the product range, packages and promotions can deliver their targets.

    That's why I would take a close look at their model, their strategy for differentiation and growth, and their management team, to see if there is an opportunity for a discounted investment

Some second opinion from me. I could be wrong, so do take your dose of garam.

  • Customer Acquisition Rates...

    I also notice that these slowed in the middle of the year which they explained as a result of reducing there A&P while they sorted out their network capacity issues. In their own announcements they are targeting the 280,000 during Q4 of 2010 on the back of a new A&P campaign...but you're right, its a tall order. However as you point out they have achieved 43,000 in a single quarter last year, on a much smaller/weaker network.

Let's consider the 43,00 new subscribers issue.

As you have pointed out, 43,000 new subscribers were added during a much smaller/weaker network. Now I assume that you are suggesting that now things are different and I would assume that Green Packet's P1 'had' improved to a 'bigger/stronger' network. I hope this is a fair assumption. But if this is the case, why the rather drastic slowdown in new subscribers growth rate? Remember it went from 43,000 new subscribers in 4Q09, 35,000 new subscribers in 1Q10, 21,000 new subscribers in 2Q10 and 22,000 new subscribers in 3Q10. I would be wrong but since if the network is bigger and stronger, than naturally P1 would be getting more subscribers?

Food for thought: Almost a year ago, Nov 2009, I posted the following: P1 Wimax: Honey Have You Cut It? Part II. I made the following exercise:

  • Ever tried google the phrase 'wimax problems' and limit your search to pages from Malaysia? (try this google search link: here )

Just now, I tried a new search. I search for 'p1 wimax problems 2010' or http://www.google.com.my/search?hl=en&q=p1+wimax+problem+2010&aq=3&aqi=g2&aql=&oq=p1+wimax+prob&gs_rfai=

Some 2010 posts of interests.

And the EBITDA.

  • The EBITDA Thingee...
    A critical measurement for investors, especially for a start up company, is to see whether an operation has the ability to generate cash. If it has you have many more options available for funding business expansion.

A crticial measurement? I am sorry but perhaps I am a lousy investor because what I feel is even more critical is the BOTTOM line. The moola. Yes, show me the money. End of the day, is the profit that counts and not the measurements. And what is more critical the I-T-D-A in that formula is a reality. The INTEREST is real. TAXES are real. DEPRECIATION and AMORTISATION of assets/plants/machinery are real. End of the day, these items matters to the investor. The profit is what's most important, for me. And yes, I beg to differ but it's rather pointless to talk about EBITDA. Not for me. And if anyone disagrees, well I would more likely to step back and say I am flawed. That's my opinion. Yeah, and it's not an important one, since many would be quick to point out there are many ways to make money in the stock markets.

Anyway, since you talked about the ability to generate cash, now that's an interesting issue.

Sep 2009, the following was posted: Would You Want To Invest In Green Packet?

  • As per Green Packet's report, it had 242.467 million then and no debts!
    A company which was flushed with cash.
    All 242 million! And this was for financial period ending 31/12/2007.

That was before Green Packet decided to dive into Wimax.

Now I would not use current Green Packet's earnings as a comparison because it's cash was boosted by SK Telekom 322 million Convertible Preference Share exercise. Instead I would use the numbers posted in Aug 2010.

And during this period...

  • Aug 2009. Green Packet raised some 98 million via rights issue.
  • Jan 2010. Green Packet raised some 69.176 million from a share placement.

So from a company that had cash of 242.467 million for the period ending 31/12/2007, the company turned into a company having 102.800 million cash and some 264.214 million by Aug 2010. And the company raised some 167.176 from corporate exercises like rights issue and share placement.

Well I might be wrong again but I just don't see how and where Green Packet was generating any cash at all.

  • Capital Expenditure, RM 534m and rising...
    that's what it takes these days...as a minimum...

And that's exactly the point.

The capital expenditure is simply mind boggling. And yes, I was shocked to read that another 40 million is said to be spend on advertising and promotion according to the Business Times article the other day.

So the simple question I would ask is if this Wimax business is even viable? Spending millions and millions to achieve how much profit?

I take a look at some of the big names.

Do they even have profits?

Perhaps one day Green Packet could make money. Yeah, never say never. :=).

However, the thing I would ask again is if the money made could ever justify all the money spent?

ps: If I am a potential investor, I would ask myself a simple question. Why insist on this one?

Another Week, Another Outflow

Just for the record, another 677 million outflow was seen in equity mutual redemption. Since 28th April, we have now seen a total 89 Billion withdrawn by Americans from their long term stock equity funds. That's 28th consecutive weeks of outflows!

Past postings:

Tuesday, November 16, 2010

Replies: A More Balanced View On Green Packet

Got the following set of comments from the posting: Green Packet: 11th Consecutive Quarters Of Losses, 33 Months Of Losses And....

  • A Better PJ said...
    For an infrastructure business GP are doing pretty well with some positive trends on EBITDA, revenues and very importantly customer churn rates of below 5% (below telco sector average) and P1 subscriptions growing by over 20,000 per quarter...without much A&P.

    All of this indicates good progress on service delivery, customer satisfaction and financials.

    Ebitda is validly a more relevant measurement of operational performance for a business in its infrastructure development phase because it indicates more accurately a business's ability to generate cash.

    Real success measurement for a mature broadband/telco p[layer would be the combination of market share (subscribers), churn (satisfaction levels), ARPU (customer value).

    P1 4G has maintained very impressive ARPU (RM 81) and churn (4%) particularly for a start up....so the tipping point will arrive when it reaches a critical mass of subscribers....as indicated by the ebitda positive target of 280,000 subscribers.

    I hope this will help with to balance the impression given by your article(s).

Many thanks for your valued comments and I certainly am more than happy to publish your comments for all to read.

Just a brief comment on the EBITDA thingee. I am sure you are aware that I had been blogging on Green Packet for a long time now. See the label for the rest of the postings. The point is Green Packet had been saying and saying and saying EBITDA positive since Feb 2008. It's now Nov 2010. Now of course, I am more than wrong, but if I were given a choice to make a feedback, I would dearly hope to see the management focus MORE on the company's performance than continuous shouts to the investing public that they are going to be EBITDA positive by such and such a date. To my flawed eyes, they are like desperately trying to sell their company. I would have preferred them to show more and talk less. That's my flawed view.

Now Green Packet had been stressing out loud they can be profitable IF they hit that 280,000 subscribers.

Now I am confused.

Seriously.

Let me use the following article dated Sep 2010, as a point of reference (I do hope the article data is correct): Green Packet: Stepping up subscriber acquisition. The following statement from it.

  • The acquisition of new subscribers slowed to 35,000 in 1Q10, after hitting a high of 43,000 in 4Q09, and declined further to 21,000 in 2Q10. This was partly attributed to the company’s move to focus on enhancing its network quality — including additional capacity for congested sites — and customer service in the last few months.

43,000 in 4Q09, 35,000 in 1Q10 and 21,000 in 2Q10.

Now that's a declining rate, yes?

In 2Q10, Green Packet said it has 196,000 subscribers. ( source: here ) On today's Star Biz article, GPacket aims to double revenue to RM400m, Green Packet said it has 218,000 subscribers. An addition of just 22,000.

Which means 43,000 new subscribers in 4Q09, 35,000 new subscribers in 1Q10, 21,000 new subscribers in 2Q10 and 22,000 new subscribers in 3Q10.

And Green Packet's target is 280,000 by the next 2 quarters.

Well, I am confused and I am asking myself if the 4 most recent quarters of new subscribers growth suggest that the target of 280,000 is possible?

How?

Well I guess it won't be a big deal because all Green Packet has to do is come out and say their target is delayed by another quarter or two.

And then on the Edge Financial Daily: Green Packet on track to be profitable by 1Q

  • Over the years, Green Packet has already incurred RM534 million in capital expenditure

WOW!

Over rm 534 million spent. Another 40 million is said to be spend on advertising and promotion according to the Business Times article this morning.

Huge numbers eh?

And if and when Green Packet achieves being profitable, I wonder when if they will ever recuperate their cost of investment.

Green Packet: 11th Consecutive Quarters Of Losses, 33 Months Of Losses And....

Green Packet had been making huge promises over the past couple of years. Here's the summary of remarks made.

  • Feb 2008: we expect the WiMAX business to be ebitda (earnings before interest, taxes, depreciation and amortisation ) break-even this year,"
  • May 2008: we are targeting EBITDA positive by end of next year.
  • May 2009: P1 will be EBITDA will break-even from next year.
  • Feb 2010: concurred that will be EBITDA positive in the second half of this year.
  • May 10: the company remained optimistic that it will be able to achieve an Ebitda break even
  • June 2010: Green Packet Bhd’s target to turn earnings before interest, tax, depreciation and amortisation (Ebitda) positive by year-end may be delayed to next year
  • Sep 2010: Puan added that Green Packet is maintaining that its Ebitda (earnings before interest, tax, depreciation and amortisation) will break even by the end of this year.

It's now Nov 2010.

Green Packet announced its earnings last night. Any EBITDA positive? Nope. ( Yeah, it's so incredible that it's now 2010 and Green Packet still talks about EBIDTA! )

Here's the facts. I will update the list. The numbers in blue represents the current data and strike out represents the past 'facts'.

Fact. It lost some 44 million 35.9 million 28.912 million for the quarter.

Fact. This is the 9th 10th 11th consecutive quarter of losses. 33 month of losses,

Fact
. Green Packet's total losses for last 27 30 33 months equals some 275 310.9 339.812 million!

Fact.
Green Packet raised some 98 million via rights issue last Aug. 2009.

Fact, Jan 2010. Green Packet raised some 69.176 million from a share placement.

Fact, Green Packet recently raised 322.910 million from issuance of Convertible Preference Share to SK Telekoms. ( see Sep 2010 posting: Update on Green Packet )

Fact. After tonight's earnings, Green Packet said it had some 111.699 102.800 280.756 million cash and some 256.376 264.214 237.010 million in borrowings.

Yeah, thanks to the convertible preference shares, Green Packet balance sheet improved.

So how?

11th consecutive quarters of losses, 33 months of losses!

Well... the following is what Green Packet has to say on Business Times.

  • Green Packet posts Q3 net loss but sees turnaround

    By Rupinder Singh Published: 2010/11/16

    BROADBAND service provider Green Packet Bhd (0082) posted a third quarter net loss of RM28.9 million but maintained that it will turn an operating profit in the fourth quarter or the first quarter of 2011.

    "We're confident of breaking even no later than the first quarter. Ebitda (earnings before interest, tax depreciation and amortisation) turnaround is really at the corner," chief executive officer C.C. Puan said at a press conference in Petaling Jaya, Selangor, yesterday.

    To meet the target, it aims to hit 280,000 subscribers and deliver up to 500,000 modems or WiMAX CPE (Customer Premise Equipments) by the end of this year.

    "The group is in very good shape. Ebitda margin continues to improve by the quarter with a 9 per cent improvement from the second quarter of 2010. We are closing in on our target of 280,000 subscribers and we have secured orders for everything our supply chain can deliver for the Solutions business," Puan said.

    Green Packet has put aside RM40 million for advertising and promotion activities this year and will add another 15 per cent for 2011.

    As at September 30, Green Packet's capital expenditure incurred stood at RM534 million.

    It would spend another RM500 million in the next two years to increase its broadband coverage to 65 per cent of the country.

    Its third quarter losses pushes its nine month cumulative losses to RM109.5 million.

    Green Packet said its operating expenses had risen to RM129.7 million in the third quarter from RM94.1 million a year earlier, mainly due to its planned investment to deploy fourth generation services.

    Revenue jumped 60 per cent in the third quarter to RM100.8 million, mainly due to more subscribers for the broadband business, new customers for the solution business and better revenue from the international wholesale voice business

OMG!

OMG! OMG! OMG!

PLEASE tell me that I am reading it wrongly!!!!!!

  • "We're confident of breaking even no later than the first quarter. Ebitda (earnings before interest, tax depreciation and amortisation) turnaround is really at the corner," chief executive officer C.C. Puan said at a press conference in Petaling Jaya, Selangor, yesterday.

SeriouslYYYYY!

What's the point of making such statements and then continously fail to deliver????

Yeah... let me update and repeat right here again....

  • Feb 2008: we expect the WiMAX business to be ebitda (earnings before interest, taxes, depreciation and amortisation ) break-even this year,"
  • May 2008: we are targeting EBITDA positive by end of next year.
  • May 2009: P1 will be EBITDA will break-even from next year.
  • Feb 2010: concurred that will be EBITDA positive in the second half of this year.
  • May 10: the company remained optimistic that it will be able to achieve an Ebitda break even
  • June 2010: Green Packet Bhd’s target to turn earnings before interest, tax, depreciation and amortisation (Ebitda) positive by year-end may be delayed to next year
  • Sep 2010: Puan added that Green Packet is maintaining that its Ebitda (earnings before interest, tax, depreciation and amortisation) will break even by the end of this year.
  • Nov 2010: "We're confident of breaking even no later than the first quarter. Ebitda (earnings before interest, tax depreciation and amortisation) turnaround is really at the corner," chief executive officer C.C. Puan said

Saturday, November 13, 2010

They Said BUY But Then They SOLD!

Saw the following posting at ZH:

  • Guess who, after on September 24 David Tepper almost screamed that he was "balls to the wall long" and EVERYTHING was about to go up on QE2, you were very likely buying shares Bank of America and Citigroup from? Why, David Tepper, that's who. In Tepper's just released Q3 13F, the Appaloosa fund manager disclosed that in the quarter ended September 30, one week after his pompous, self-serving speech on CNBC served as a reason to pump the market up by almost 2%, he sold 18% of his BofA holdings (his largest holding both at June 30 and September 30), 11% of Citi, 19% of Wells Fargo, 19% of Fifth Third, 19% of Capital One, 75% of his then $157 million Hartford Financial position, and lighten up on pretty much all of his other financial positions. And congratulations to CNBC for serving as the medium which David Tepper manipulated to his advantage

Source: David Tepper Dumps 20% Of Financial Holdings During Quarter Of Infamous CNBC Speech

Now who and what does this reminds me of?

Hmmmmmm.......

:P

Friday, November 12, 2010

Nov 12: Are Insiders Buying Or Selling?

Here's an update to the posting Nov 10: Are Insiders Buying Or Selling?

Firstly, the good news.

Since Sep 14, the value of the shares that the insider bought is the highest, at some 9.392 million.

The bad news. The value of shares sold by insiders soared to an incredible 2.796 billion!

The updated table...




On Bloomberg news: Insider-Selling Jumps to a Record as Stocks Climb to Highest in Two Years

  • Insider-Selling Jumps to a Record as Stocks Climb to Highest in Two Years

    By Nikolaj Gammeltoft - Nov 11, 2010 1:01 PM GMT+0800

    Insider selling at Standard & Poor’s 500 Index companies reached a record in the past week as executives took advantage of a two-year high in the stock-market to sell their shares.

    Executives at 125 companies in the S&P 500 unloaded shares between Nov. 3 and Nov. 9, while sellers outnumbered buyers by more than 12 to 1. The readings are the highest based on data going back to January 2004, according to Princeton, New Jersey- based InsiderScore.com, which analyzes insider transactions disclosed to the Securities and Exchange Commission. Total net sales reached $4.5 billion, helped by Microsoft Corp. Chief Executive Officer Steve Ballmer’s divestment of about $1.34 billion in his first stock sale in seven years.

    CEOs, directors and senior officers sold stocks as the Dow Jones Industrial Average last week rallied to its highest level since before Lehman Brothers Holdings Inc.’s September 2008 bankruptcy. The gauge closed at a 12-year low on March 9, 2009, before advancing 73 percent through yesterday. The S&P 500 has jumped 16 percent since the end of August, completing five straight weekly gains to close on Nov. 5 at the highest level since the week after the Lehman filing.

    “That they’re selling at the top of the market is not a good sign,” said Hank Smith, chief investment officer at Haverford Trust Co., which manages about $6 billion in Radnor, Pennsylvania. “It’s not necessarily a sign the market is popping, because insiders always have several reasons to sell and only one reason to buy: thinking the stock will go up.”

    Capital-Gains Taxes

    While insider selling may make investors more skittish because executives presumably have the best information about their companies’ prospects, insiders may have chosen to sell now because of uncertainty about whether the capital-gains tax cuts enacted under President George W. Bush will be extended, according to Smith. The law from 2003, which reduced the capital-gains tax rate for assets owned at least a year to 15 percent from 20 percent, will expire in January unless President Barack Obama and Congress extend it.

    Microsoft’s Ballmer, who took over from Bill Gates as CEO of the Redmond, Washington-based company in 2000, said on Nov. 5 that he plans to sell as many as 75 million shares, or $2 billion based on yesterday’s closing price, to diversify his holdings and help with tax planning before the end of the year. Ballmer has already sold about 50 million shares, according to a regulatory filing.

    Bull Market

    “We are in a bull market, which typically translates into more insider selling,” said Ben Silverman, the Seattle-based research director at InsiderScore. “Capital gains tax policy may change next year and that could contribute to the selling as well -- although insiders rarely say why they’re selling.”

    The end of earnings season may also contribute to the increase in insider selling, according to Silverman, as executives are prevented from buying or selling company stock ahead of announcements. Of the companies in the S&P 500, 426 have reported since Oct. 7, according to data compiled by Bloomberg.

    Insiders increased their disposals as profits for companies in the S&P 500 are forecast to rise 37 percent to a combined $84.92 a share in 2010, according to estimates compiled by Bloomberg. That implies a price-earnings ratio of about 14.4, compared with an average multiple of 20.6 since January 1990, according to data compiled by Bloomberg.

    Insider selling among 5,168 publicly listed U.S. companies reached a four-year high, InsiderScore data show. The number of sellers doubled to 419 from 195 in the week before as they outnumbered buyers by more than 4 to 1.

    Index Gains

    The S&P 500 rose 0.4 percent to 1,218.71 yesterday in New York. The Dow gained 10.29 points, or 0.1 percent, to 11,357.04.

    Insiders of S&P companies have been net sellers for 17 straight weeks, according to InsiderScore. U.S. laws require executives and directors to disclose stock purchases or disposals within two business days. The weekly data doesn’t include transactions related to options and so-called 10b5-1 programs, which allow executives to cash out a portion of their holdings when stocks reach predetermined prices.

    InsiderScore’s Industry Score metric also reached a record -3.6 in the past week, an indication of bearishness for investors who follow it. The gauge measures insider sentiment by recording buying and selling combined with the position of the insider, how the transaction impacts an insider’s holdings and whether the disposal or acquisition came while the stock was strong or weak, among other data.

WOW!

  • Insiders of S&P companies have been net sellers for 17 straight weeks,

Looks like I have missed out several weeks of data! 17 straight weeks of insider selling!

Hmm... stock mutual funds have seen net withdrawals for 27 straight weeks!

And yeah... markets went up sharply!

On sfgate:

  • .... 1 million shares daily

    Oracle chief Larry Ellison has been selling roughly 1 million shares a day every trading day since Sept. 17 for a total of more than $1 billion. Before that, his last sale was way back in February 2008, when he finished up a similar million-share-per day sales program that started in September 2007. That one grossed about $2.1 billion, Silverman says.

    Amazon.com chief executive Jeff Bezos sold $152 million worth of stock last week, his fourth sale of the year, bringing his total sales for 2010 to about $793 million. He sold only twice in 2009 for a total of $252 million.

    Analysts who follow insider trading put more emphasis on buying than selling. Because insiders are awarded tons of stock, when they dig into their own pockets to buy more it's often viewed as a vote of confidence in their company. But insiders sell for any number of personal reasons, such as to diversify their holdings, pay off a divorcing spouse, buy a house or a sports team, or raise money for charity.

    Many executives sell according to a prearranged schedule called a 10b5-1 plan, which allows them to avoid charges that they are trading illegally on inside information. These plans make it even harder to divine what insiders are thinking. Ellison's and Bezos' sales were part of such a plan; Ballmer's were not.

    No matter how you look at it, insider selling has been accelerating.

    "In the past week, the volume of Form 4 filings rose well above the five-year moving average," says David Coleman, editor of the Vickers Weekly Insider Report

    Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/11/10/BULM1G9K0T.DTL#ixzz151SKfQsz

Past postings:

Thursday, November 11, 2010

Scomi Squashes That According To Sources Article...

Posted yesterday: And According To Sources......

Well according to that piece...



  • Scomi Group Bhd was among the most active counters on Bursa Malaysia yesterday, with some 24.8 million shares changing hands.

    Market talk has it that there could be new substantial shareholders in the form of Indonesian investors and Middle Eastern funds surfacing in the company quite soon.

    The new shareholders, according to sources, have been accumulating Scomi Group shares on the open market for sometime now and are close to surfacing in the company.

    Details, however, were not available at press time....

It begs the question how this can be considered journalism.

Everything is all based on 'market talk'.

So what's market talk? Gossip? Rumours? Hot air?

And despite, the details, not available at press time... that reporter decide it was fit to be considered a financial news and published it.

And the end result?

On today's Business Times:

  • Scomi: No change in shareholding

    Published: 2010/11/11

    SCOMI Group Bhd has clarified that there is no change in the shareholding of its major shareholders or any change to the indirect interests of Datuk Kamaluddin Abdullah.

    Scomi also said there is no change in the shareholding structure of Kaspadu Sdn Bhd, its major shareholder which is controlled by Kamaluddin.

    It added that Kamaluddin’s effective stake in it continued to be 50 per cent that of Kaspadu, or 89.26 million shares representing a 7.65 per cent stake.

So how?

------------------------- update 5:22 pm --------------------------------

And just on the Daily Edge:

  • Scomi Group yet to receive notice on shareholdings
    Written by Jose Barrock
    Thursday, 11 November 2010 10:57

    KUALA LUMPUR: The Scomi Group Bhd counter continued its active trade on Bursa Malaysia yesterday with some 59.6 million shares changing hands, gaining four sen to close at 45.5 sen, its highest level for the day.

    An article from yesterday reported that there could be new shareholders in the form of Indonesian investors and Middle Eastern funds surfacing in the company, and also the possible exit of Datuk Kamaluddin Abdullah, who partly owns substantial shareholder Kaspadu Sdn Bhd. ( LOL! Yo Jose! How about the fact you wrote that article yourself?)

    Scomi Group yesterday said it has yet to receive any official notification on the matter
    . Under the listing requirements, shareholders have a grace period of up to seven days from the share transactions before they inform the company and the stock exchange. When queried by Bursa Malaysia, Scomi Group said “it has not received any notification of interest of substantial shareholders (Form 29A) from any party not presently a substantial shareholder of the company”.

    Scomi Group added it has not been notified of any change to the indirect interests of Kamaluddin and that there has been no change in the shareholding structure of Kaspadu, with Kamaluddin’s effective interest in Kaspadu at 50%, or 89.26 million shares representing 7.65% equity interest in the company.

    The company added: “In the event that there are any new developments in this matter, we will make appropriate and complete disclosure in a timely manner in accordance with the requirements of the exchange.”

    As at end of May this year, Kaspadu had 178.52 million shares or 15.44% equity interest in Scomi Group. In April last year, Kaspadu and its unit Onstream Marine Sdn Bhd had 34.23% or 345.33 million shares. However in September 2009, Kaspadu commenced selling small blocks of shares in the open market.

    Scomi Group has its mainstay in the provision of mud drilling fluids, a water-based drilling fluid used to reduce friction.

    Scomi Engineering Bhd, a 69.31% unit of Scomi Group, closed at RM1.10, gaining five sen, while Scomi Marine, a 42.71% subsidiary of Scomi Group, inched up one sen to close at 54 sen.

Too cartoonic!

Makes a whole mockery of 'journalism'.

Simple question: Why the need to jump the gun and publish this story when there is no confirmation of details?

ps: Where is JS? LOL!


More Fund Outflows Seen

Yet another week .........



Here's the score.

Since April 28th, according to ICI data, some 88.3 Billion have been withdrawn by Americans from the equity mutual funds. That's 27 weeks in a row babe! And if you refer to this earlier posting, it doesn't matter if the markets are going up or down, Americans simply wants out from their long term stock mutual funds.

Past postings:

Wednesday, November 10, 2010

And According To Sources......

I was reading the following article.

I LOL-ed like crazy!


  • New shareholders to surface in Scomi Group?
    Written by Jose Barrock
    Wednesday, 10 November 2010 14:03

    KUALA LUMPUR: Scomi Group Bhd was among the most active counters on Bursa Malaysia yesterday, with some 24.8 million shares changing hands.

    Market talk has it that there could be new substantial shareholders in the form of Indonesian investors and Middle Eastern funds surfacing in the company quite soon.

    The new shareholders, according to sources, have been accumulating Scomi Group shares on the open market for sometime now and are close to surfacing in the company.

    Details, however, were not available at press time.... ( rest of article: here )

I nearly felli off the chair when I got to that part!

Let me get this correct...

So 'according to dunno what sources' some 'new' shareholders have been accumulating Scomi Group.

However.... details were not available at press time.

Wakaka!

I suggest the Edge ask the reporter to submit this lovely piece of article to the journalism school.

:=)

Yeah... only in the financial world....

Changhuat's Audited Accounts Showed That Profits Should Be Losses

Posted the other day: What's Happening In Changhuat?

On today's Edge: Changhuat’s audited results turn from profit to loss

  • Changhuat’s audited results turn from profit to loss
    Written by The Edge Financial Daily
    Wednesday, 10 November 2010 14:23

    KUALA LUMPUR: Changhuat Corp Bhd, which produces rubber products, incurred an audited net loss of RM3.5 million for FY2010 ended June 30, compared with the unaudited net profit of RM1.78 million announced earlier in August, following some audit adjustments.

    Interestingly, Changhuat’s shares rose 11 sen or 10.1% to RM1.20 on volume of 1.76 million shares yesterday.

    The company announced yesterday the deviation of more than 10%, or -RM5.3 million, in its profit or loss after tax and minority interest between the announced unaudited numbers and the audited financial statements.

    It explained that the deviation was principally due to five items, namely:

    1) a net increase in revenue and other income due to late recognition of an insurance claim,
    2) an increase in cost of sales,
    3) a net decrease in administration and finance costs,
    4) an increase in tax expenses arising from deferred tax adjustments, and
    5) a loss reversal from a discontinued operation.

    These items led to a deviation of –RM5.3 million, reducing Changhuat’s bottom line to a net loss of RM3.5 million.

    The increase in the cost of sales was due to an adjustment to the depreciation of a subsidiary asset at fair value at the group level amounting to RM1.99 million, accrual for a rebate payable of RM1.3 million not taken up in the unaudited accounts, and recognition of additional operating expenses of RM578,000 including bunker fuel costs and insurance expenses not taken up previously.

    Changhuat had failed to submit its audited financial statements for FY10 to Bursa Malaysia within the stipulated timeframe under Bursa’s listing requirements.

    In Changhuat’s case, it was to submit its audited accounts by end-October. It then asked for an extension of time until Monday and explained that the delay was due to a change in auditors and unresolved audit issues.

    Changhuat submitted it audited financial statements on Monday. Trading of its shares would have been suspended had it not submitted the outstanding financial statements before yesterday.

Another nice one for my scrapbook.


Nov 10: Are Insiders Buying Or Selling?

Strange but there is no update on the weekly buying and selling by SP 500 companies from Bloomberg. I wonder why. :P

Anyway, here's the last updated table I had... (ps: rather extremely lopsided eh? :P )





However, I did notice a small commentary on CNBC: Insider Selling Spikes Post Earnings Season

  • Published: Tuesday, 9 Nov 2010 2:46 PM ET Text Size By: John Melloy
    Executive Producer, Fast Money

    After better-than-expected third quarter earnings reports pushed the S&P 500 to a new high for 2010, insider selling spiked to levels not seen since the previous high for the year reached in April. Executives fleeing their own stock prices could signal their lack of confidence in future growth prospects.

    “Last week, the volume of Form 4 filings spiked higher as the end of earnings season neared — freeing many insiders from trading restrictions
    ,” said David Coleman, editor of the Vickers Weekly Insider Report. “This ongoing pop in our Sell/Buy readings, coupled with a jump in the volume of Form 4 filings to well above the five-year average, seems to be a clear bearish signal.”

    There were more than six sales for every one buy in the last week
    , according to the report. The trailing eight-week sell-buy ratio — the preferred metric used by Vickers for timing the market — is now at almost five sell transactions for every buy, the most since April. The S&P 500 hit a new high for the year last week.

    Netflix [NFLX 170.46 1.33 (+0.79%) ], Salesforce.com [CRM 114.77 0.27 (+0.24%) ], Google [GOOG 624.82 -1.95 (-0.31%) ], Oracle [ORCL 28.74 -0.30 (-1.03%) ], Panera Bread [PNRA 91.82 -0.84 (-0.91%) ] and Imax [IMAX 22.20 -0.30 (-1.33%) ] are among the stocks most actively sold by insiders over the last 90 days, according to Vickers. This week, Microsoft [MSFT 26.95 0.14 (+0.52%) ] said in a filing that CEO Steve Ballmer sold $1.3 billion worth of the shares, his first stock sale in seven years.

    With about 90 percent of the S&P 500 having reported, one would think the spectacular results would spark an increase in insider buying, not selling. Earnings for companies in the S&P 500 jumped 31 percent in the third quarter, according to Thomson Reuters, up big from the 24 percent increase analysts estimated when the quarter ended.

    A look at the top line may give a clue as to why executives are cashing out. Revenue growth increased by just 8 percent last quarter, just one percentage point above the 7 percent growth expected by analysts at the end of the quarter. Companies have cut costs to the bone, so if sales growth is slowing the only way to beat fourth quarter earnings would be from good old-fashioned end demand.

    Still, many traders questioned whether insider selling is a good timing indicator for the market. After seeing this data, they argued that many of the insiders are just like everyone else and have been underwater since the Lehman collapse. They're now using the lifting of selling restrictions around earnings to take some profits.

    So if they’re doing it, why shouldn’t you?

Those aren't my comments, so don't flame me! :P

But I would dearly love to see last week's summary. It's a bummer that Bloomberg has not loaded any report on it yet. :(

btw... think for a moment... IF the market is on a downtrend (yeah IF).... and all these insider transactions were a BUY.... how then?

:=)

Past postings:

  1. Are Insiders Buying Or Selling?
  2. Sep 21: Are Insiders Buying Or Selling?
  3. Sep 28: Are Insiders Buying Or Selling?
  4. Oct 6: Are Insiders Buying Or Selling?
  5. Oct 11: Insider Selling Dominates Again
  6. Oct 18: Are Insiders Buying Or Selling?
  7. Oct 26: Are Insiders Buying Or Selling?
  8. 2nd Nov: Are Insiders Buying Or Selling?
  9. Summary Of Buying And Selling By SP 500 Insiders