Saturday, January 29, 2011

Update On MaeMode

Update to the posting: Reply To Comments On MaeMode

MaeMode announced its earnings last night.



At first look, the earnings looked interesting.

1. Sales. Improved.
2. Earnings Improved.

However, is the improvement good enough?

As stated in the previous blog posting, Reply To Comments On MaeMode

In 2007 it made 16.218 million.
In 2008 it made 20.418 million.
In 2009 it made 11.793 million.
In 2010 it made 6.940 million.
2011 Q1 it made 0.852 million.
2011 Q2 it made 1.965 million.

Remember back in 2008, it was making 20.4 million per year.

Now, its only making 2.817 million for the first half of current fiscal year. And net profit margins is a razor thin 1.28%.

Total loans to date stands at 324 million and the trade receivables increased to a dizzy 362 million!

Friday, January 21, 2011

How To Moderate Comments Without Reading What's Inside?

How does one moderate them sickening comments without even have to puke reading it?

Did you get them comments that you know are spam without even reading them?

Oh yeah, there's actually an option to delete without even have to read what's been written. Yes, one does not have to read any of the brain dead and utterly senseless and self degrading comments posted. Like those posted here: The Root Of All Hatred

Yes my dearest. There's no need to get all worked up and we can just save on them Sheltox.

Let them cockroach be.

Under the comments tab in blogger dashboard, click on COMMENTS.

Then scroll down and look for comment moderation.

  • We will email you at this address when a non-member leaves a comment on your blog. Leave blank if you don't want to receive these emails.
Enter your email.

Done!

Now if one used the normal way, one logs in Blogger and then clicks on Dashboard. This is what one sees.



As you can see, there are 32 comments that needs to be moderated.

Now if I know there are spam, why should I bother reading each one? Or if I know that the comments are simply GUTLESS AND POINTLESS comments posted by you know who, why should I bother? Yeah, some posts one line comments hoping that their senseless comments will cause some discomfort. LOL!

Now how do I know if there are any genuine comments in there?

Easy.

Remember the comments moderation from blogger now sends these comments to your email.

Here's a screenshot.




As you can see, known spammers comments are in bold, which means that they are unread. LOL! Why waste time? :=)

Those that are genuine comments, we read and we publish.

And we are done.

Ah.. time for my morning cup of coffee.

Tuesday, January 18, 2011

The Root Of All Hatred

I do attempt to read most comments posted in this blog seriously but then as we all know, there are some Malaysians who have utterly no class at all.

Gutter class is the phrase that comes to mind.

They post senseless comments with such hatred but sadly why the hatred?

And to make things more stupid, don't they realise that this is the stock market? Don't they understand that comments, views and opinions are worth 5 sen for a dozen?

And just because a comment doesn't align with their narrow thinking mindset, what divine right to post hatred throughout the net?

Comeon... can you show some class and can you grow up?

For example: That posting Can You Say No Class? was simply priceless. Blogger Dali post a stock on his Malaysia Finance blog and sadly the stock tanks. So what does this sad person do? Spams my blog and yes, other blogs too, posting hatred comments on Dali. No sorry, Darlie Singh is the name used.

A blogger, Seng, of Fusion Investor actually stopped blogging due to these nonsense. See Seng's postings. And The Spamming Blogger Strikes Again, Can you tell the difference? and Winds Of Courage for example. And until today, I still do not understand why the hatred towards Seng.

Is it because blogger Seng was more popular and better in the stock market?

I do not know. But when I take into consideration of the hatred postings towards Dali, I am afraid I am biased to that reasoning. Dali as we all know is of course very good in the stock market and certainly very popular.

Perhaps that's the root of all hatred.

Compare Can you tell the difference? posting and the postings made here: Yet Another Utterly Degrading Spam From Samgoss, Still So Proud Of What You Are Doing, Samgoss?, Are You Proud Of What You Are Doing Samgoss? Compare the style of the writings. Same person? You bet!

Posting hatred comments under multi nicks.

Yeah those were 2009 and even 2007 postings, It's now 2011. You think he would grow up.

Seriously, this is utterly childish.

And thank goodness that blogspot have comments moderation.

Yeah, I do not even have to read to the comments. All I need to do is see the name to reject their comments.

LOL! And this I wonder if he knows.

Seriously, why keep spamming when I don't even read?

Ah... I am sure I will be accused of lying here.

Lucky there's screen shots.

Here's one screenshot of the unread comments I received from that neno. ( LOL! I am sure I will still get many more comments after this posting. Oh, perhaps the creation of a new blogger nick! LOL! )





Yeah.. unread. lol.

Same goes with all these.



And to prove the utter childish hatred posted... let's take one peep.

Oh don't worry about me, I have taken some anti nausea pills just now.



OMG!!!! He's now picking an issue with Alex of nexttrade blog!!!!

And what's the point of that?

Trying desperately to prove he's better????

Doesn't this support my theory that attacks and hatreds are posted against bloggers who are BETTER and more POPULAR than him?

Rather conclusive, yes?

Get a life la.

And I guess I don't even have to read anymore of them unread comments, do I?

( ps: Seng if you are reading this, Hi! Drop me a line! :=) )



==========================

25 Jan 2011

Cannot resist this clip from yesterday's Star.

Friday, January 14, 2011

Executive Vice Chairman Dumps 100 million Shares Of Metronic

Read the following news article on Business Times:


  • Director sells 100m Metronic shares

    By Francis Fernandez Published: 2011/01/14

    Metronic's executive vice chairman Datuk Gani Abd Yusof had sold 15.75 per cent of the company at an average selling price of 6.63 sen apiece.

    A company director sold 100 million shares in the open market on Wednesday without prior notification to Bursa Malaysia, prompting the shares to be suspended midway in the first session of trading yesterday.

    Metronic Global Bhd's (0043)shares were suspended from 11.17am until 2.30pm to allow the company to clarify the situation.

    On Wednesday, dealers were surprised on the unusual amount of Metronic shares traded.

    A total of 173 million shares were traded in the open market on Wednesday, a steep volume for the company, whose average six-month daily volume was just around 2.77 million shares a day.

    Metronic informed the stock exchange yesterday that its executive vice chairman Datuk Gani Abd Yusof had sold 100 million shares, or 15.75 per cent of the company, at an average selling price of 6.63 sen apiece.

    "Pursuant to paragraph 14.09 of the listing requirements of Bursa Securities for dealing in securities, the company has received notification dated January 13 from Abd Gani of his dealing in Metronic securities outside the closed period," the company said in a statement to Bursa Malaysia yesterday.

    Under paragraph 14.02b of the listing requirements, closed period means a period of 30 days before the company makes an announcement on its finances such as issuing annual or quartertly financial reports.

    Metronic has suffered losses for the past two financial years. For the year ended December 31 2009, it posted a net loss of RM2.09 million, while in the year before, its net loss stood at RM7.26 million.

    For the nine months ended September 30 2010, Metronic's net loss stood at RM4.77 million.


    Paragraph 14.09, meanwhile, states that if a director trades in the shares during the close period, the director must then, within three market days after the dealing has occured, give notice of the dealing in writing to the company secretary.

    Despite the sale, Abd Gani still owns 61.66 million shares, or close to 9.8 per cent of Metronic.

    Abd Gani, when contacted by Business Times for comments on the sale, said he was busy in a meeting.

    He also did not return text messages seeking his comments on the share sale.

    Abd Gani started building his business base with Peremba Bhd, a company with a legendary reputation for being the training ground for some of Malaysia's top corporate highfliers in the 1980s and 1990s, including the likes of Tan Sri Halim Saad and Tan Sri Tajuddin Ramli.

    Abd Gani re-emerged in the limelight last year when he was appointed as a director in Kenmark Industrial Co Bhd after its Taiwanese controlling stakeholder James Hwang Ding Kuo abruptly left the country.

Here is how Metronic is doing since listing.



And as mentioned in the article, Metronic's financial history is rather poor!
  • Metronic has suffered losses for the past two financial years. For the year ended December 31 2009, it posted a net loss of RM2.09 million, while in the year before, its net loss stood at RM7.26 million. For the nine months ended September 30 2010, Metronic's net loss stood at RM4.77 million.

And the amazing thing in the balance sheet was the SIZE of the trade receivables.





It's amazing because last fiscal year, total sales revenue was around 59 million only. Current ytd. 3 quarters, sales revenue is only around 49 mil.

And so I cannot comprehend why Metronic is carrying so much receivables? Who's owing them money??? Who's not paying them???? Hmmm...

Can it even be collected?

Ahem... if it can't be collected... then..... won't the receivables have to be written off as bad debts!

At 6 sen, right or wrong, the market is only valuing Metronic Global to be worth some 38 million only.

!!!!!!!!!!

And how much is the size of the current receivables again? Just 95 million!

And then the company is losing money.

And now the Executive Chairman dumped 100 million worth of shares in the open market without giving the proper notifications!

Errr.....

Thursday, January 13, 2011

How Much Fine For Cooking Your Books? Part IV

This one?

In Chinese, if I am not mistaken, it says 'Big Pan'!

  • Directors jailed, fined over Suremax share manipulation
    Written by Financial Daily
    Thursday, 13 January 2011 14:23

    KUALA LUMPUR: The Kuala Lumpur Sessions Court yesterday sentenced Datuk Phillip Wong Chee Kheong and Francis Bun Lit Chun to 24 months’ imprisonment and a fine of RM3 million (in default six months’ imprisonment) and three months’ imprisonment and a fine of RM2 million (in default six months’ imprisonment) respectively for their involvement in the manipulation of Suremax Group Bhd shares.

    Judge Komathy SM Suppiah said: “The court has to set imprisonment terms as the new benchmark in securities cases. The securities market should be real and genuine. Market manipulation is a serious offence affecting the confidence of investors and thus an imprisonment sentence should be meted out.”

    In a statement issued yesterday, the Securities Commission (SC) said that on Jan 7, 2011, Wong, 48, and Bun, 41, were convicted under s84(1) of the SIA for creating a misleading appearance of active trading in shares of Suremax by trading in nine accounts without any change in the beneficial ownership of the shares on the stock exchange. They had been charged on Oct 25, 2005 with 38 witnesses called by the prosecution. Both accused testified when their defence was called.

    The SC stated that it would take whatever action necessary to protect investors and to maintain a fair and orderly capital market.

    “We will continue to proactively pursue market misconduct cases because such activities severely undermine investor confidence and tarnish the reputation of the Malaysian capital market,” it said.


    This article appeared in The Edge Financial Daily, January 13, 2011.

Err... "a fine of RM3 million (in default six months’ imprisonment) and three months’ imprisonment and a fine of RM2 million (in default six months’ imprisonment) "

Err... errr ...... liddis also can ah??????????????

So how brown cow?

Anyway, me still confuse hor.

The other case. The Mems case. How Much Fine For Cooking Your Books? Part III

  • MEMS was to rectify the financial statements by excluding RM49.183 million from its revenue for all the three financial statements.

    The basis of the SC's directive was that the amount was derived from transactions that never took place in the respective financial years and period.

Because of these transactions that NEVER took place, Mems were rated as a high growth stock, yes?

Wasn't that NOT the case?

And because it was deemed such a growth stock, the market valued MEMS favourably.

yeah... Mems were worth some 512 million plus!

And then.... now.... today... we learn these so-called transactions never took place.

(ps. recording transactions that never took place, this one serious or not serious? )

Eerrr.... how much the fine?

  • a six-month imprisonment term and a fine of RM300,000 each!!

Err...

Errrrrrrrrrrrrrrrrrr ......

How ah?

New Year New Outflows From Equity Funds

So apparently US stock markets are doing VERY well. And as per yesterday's trading, Stocks climb to 2-year highs.

Now what would be the normal assumption?

Folks will be rushing into the markets, yes?

Folks would be rushing to put in MORE money into their long term equity mutual funds, yes?

But what if the data shows that the Americans are not doing so but instead they have been taking more money out from their equity mutual funds?

Oh yeah, they are baccccccccccck! Back in a vengeance too!


Yes!

Despite the markets hitting highs, Americans have started the brand new year by withdrawing some 4.229 Billion from their equity funds.

And I have noticed that 21 December data had be revised to an outflow of 453 million.

Which means my posting on 30 December 2010 is faulty!

And We Have A Stop In Outflows!

Which means that we had witnessed 34 consecutive weeks of outflow since 28th April 2010.

And the amount withdrawn?

Just some 103.989 Billion!

You can verify the data here.

And yeah... the market is still going up. :=)

Past postings:

Wednesday, January 12, 2011

How Much Fine For Cooking Your Books? Part III

On today's Business Times:

  • Heavier sentence for 2 ex-MEMS directors

    Published: 2011/01/12

    THE High Court has allowed the Securities Commission Malaysia’s (SC) appeal against the Sessions Court’s sentence of RM300,000 fine each on the former directors of MEMS Technology Bhd, Ooi Boon Leong and Tan Yeow Teck.

    The High Court retained the Sessions Court’s original fine and enhanced the sentence with a six-month imprisonment term each following the appeal by SC for a higher sentence in view of the severity of the offence.

    In February last year, Ooi and Tan, had pleaded guilty before the Sessions Court and were fined RM300,000 each for authorising the furnishing of misleading information to Bursa. — Bernama

Only a six-month imprisonment?

Posted 9th Oct 2010: Lack Of Punishment For Corporate Crimes!

  • And then the fiasco!

    I could be wrong but I felt it was important because Mems Technology was highly regarded by the local brokerage houses. All of them gave the stock a high recommendation.
    In the posting MEMS Told To Correct Its Financial Statements!, I noted that ".. by overstating its earnings by a mere 8 million, based on market capital, Mems managed to value itself 531 million. ". Mems on the date of that posting, on 28th Oct 2009, has a market capital of a mere 42 million!"

30th June 2010: Have You Taken A Look At MEMS lately?

  • MEMS was to rectify the financial statements by excluding RM49.183 million from its revenue for all the three financial statements.

    The basis of the SC's directive was that the amount was derived from transactions that never took place in the respective financial years and period.

Transactions that NEVER took place!

YES! That bad!

Insane isn't it?

All one need to do is add in sales transactions that NEVER existed and the stock market will value your company by some extra 500 million!

500 million!

And your fine?

300,000 fine and a 6 month jail term?

Is that enough?????

See also: How Much Fine For Cooking Your Books? and How Much Fine For Cooking Your Books? Part II

Tuesday, January 11, 2011

Regarding Mitrajaya

Here's the posting: Sudden surge in Mitrajaya share price - speculative or bargain?

Well, I am aware of what happened. :)

CIMB released the report much later in the morning yesterday and Mitrajaya and other small construction stocks got the much needed boost.

Clearly, the CIMB report is the key factor and sometimes we can comment on the report, the pros and the ... err ... but however, in the midst of a rather more bullish market sentiments, it's difficult to ask Ms. Reason to talk to Ms. Sentiment.

Here's the report.



And yeah.. the rather more bullish market sentiments. Let me reproduce the current chart of Mitrajaya.



LOL!

And that's a nice 'little' uptrend eh?

Hehe... your posting title says 'speculative' or 'bargain'. Err... sorry but realistically, if you are reading this ONLY now and you don't have this stock and you are going to buy it, let's be honest, lol... you are a chaser.

lol... just slight humour, if I may. Yeah, why so serious yo?!

It's not like I am giving some voodoo or bad luck to the stock. ( Seriously, I don't have such voodoo skills ( and here's a stunner - I cannot lie! I wish I do. LOL! Can I have? Please? For my next Christmas pressie? I be good this year! ).

Anyway... on a more serious note, the stock is on a serious uptrend and chasing the stock (or any stock) does have its risks.

Now of course, needless to say, the key issue now is ... can buy some? or does the stock have any more bunny hop in it?

As posted in the posting Sudden surge in Mitrajaya share price - speculative or bargain?, Mitrajaya did not have a good track record. Which if one compares the BIG picture, one can clearly see that from 2003 to to 2009... the stock was in a terrible stock.


But the stock as one can see from the above chart, started picking up in 2009.

And Nov 2009, was very much a key, if you asked my flawed opinion.

Quarterly rpt on consolidated results for the financial period ended 30/9/2009

And from the business segmentals, one could clearly see that property development, is the key driving factor.


The company said the following:

  • For this current quarter under review, the Group’s revenue has increased by RM32.4 million (72%) to RM77.6 million as compared to a revenue of RM45.23 million in the preceding year’s corresponding quarter. The increase in revenue is mainly derived from the progressive sales recognition from the Group's property projects. The Group's property division has achieved better sales performance in the current financial year compared to preceding year.
    On the back of higher revenue contributed by the Group's property division, the Group has recorded a significant high profit before tax of RM28.4 million in the current quarter as compared to a loss of RM0.07 million in the preceding year’s corresponding quarter. Apart from that, construction division has also contributed higher profit from its construction projects as a result of the improved profit margin .

And some would argue that it would make sense to be IN the stock then, back in Nov 2009.

And on 26th Nov 2009, Mitra closed at 46 sen.

And some who had been following the stock, would have noted that the company had been buying a lot of its shares.

So here we are today. :=)

Yesterday, CIMB wrote..

  • Our screen of small-cap contractors drew our attention to Mitrajaya, which remains at compelling CY11-12 P/Es of only 3-3.4x valuations despite its share price surge over the past week. The stock is also trading below its NTA of RM2.26. There is more than 100% share price upside to our RNAV estimate of RM3.30/share, 52% of which comes from its landbank, with the jewel being the 100 acres in South Africa.







And one of the KEY factors according to CIMB research is...



The land bank in South Africa has tripled in value.



And then... the financials bit...



This is where I think, it's debatable.

The massive jump in earnings happened on 26th Nov 2009, when Mitrajaya announced its 2009 Q3 earnings. And as per the company own notes, it said the key factor was 'the progressive sales recognition from the Group's property projects'.

Mitrajaya's last reported earnings was in Nov 2010. That's only 5 quarters of 'impressive' earnings.

Of course, the pessimistic would ask (why are they pessimistic? well, after all, Mitrajaya did have a rather poor earnings track recod) could the earnings be sustainable? And they would be quick to point out that the last reported earnings showed some potential weakness.




But hey.... the market is HOT la... this is no time to have a pessimistic mindset. So said Mr. Optimistic. :P

  • Valuation

    Revival of sector catalyst should be positive for the stock
    . For 2011, we continue to expect catalysts for the construction sector to revolve around two key themes, i.e. the 10MP and ETP. This is likely to lead to further positive newsflow in the form of contract awards as the evaluation of tenders for most projects has been completed over the past three months. While projects such as the RM36bn KL MRT, RM7bn LRT extension/upgrade and RM18bn Klang Valley river rehabilitation will be key mega jobs for the sector, we do not discount the rollout of smaller-scale projects over the next few months. This should boost investor sentiment on the construction sector, which would be positive for the share prices of smaller construction players like Mitrajaya. Although Mitrajaya’s share price has already surged 34% or 42 sen since the start of the year, we believe there is still significant share price upside as it is in the early days of its recovery.

    Compelling valuations from RNAV perspective. Even after the share price surge over the past week, valuations are still compelling. CY11-12 P/Es are only 3-3.4x assuming that the group achieves EPS of 46.7 sen in FY11 and 51.3 sen in FY12. The stock is also trading below its NTA of RM2.26. In our RNAV calculations, we have imputed the value of its outstanding landbank which makes up 52% of RNAV, with the jewel being the 100 acres in South Africa. We have also assumed a sustainable level of construction profit and tagged to it our target market P/E of 14.5x, in keeping with other construction stocks. RNAV contribution from the quarry and healthcare businesses is less than 2%.

    Stock could be worth RM3.30. Adding these up, we arrive at an indicative FD RNAV/share of RM5.50. Applying our usual 40% discount for small-cap construction companies, we estimate that Mitrajaya could be worth RM3.30/share, which works out to 7x CY12 P/E. The 40% discount applied to Mitrajaya’s RNAV is the steepest among the contractors and compares to 10% for WCT and MRCB and 20% for Mudajaya’s RNAV. This is justifiable given Mitrajaya’s smaller market capitalisation. Mitrajaya’s foreign shareholdings stood at 4% as at end-10 and could rise given investors’ renewed interest in this play on Malaysian construction. The main potential re-rating catalyst is contract awards. Another positive is its attractive dividend yield of over 6% which is the highest among the construction stocks in our coverage.

    Attractive on other measures too. Apart from being cheap on a P/E standpoint, Mitrajaya is also attractive from P/BV perspective. The stock is trading below its book value of RM2.26 (0.5x P/BV) compared to 0.9-1.5x for other small/mid cap peers. This also compares to the 0.7-4.1x P/BV range for bigger construction stocks under our coverage. Mitrajaya’s ROE of 16-20% is on par with Gamuda, IJM and WCT while its dividend yield is the highest. The stock is also trading at a steep 71% discount to RNAV compared to 13-26% for construction stocks under our coverage. Total landbank makes up 52% of RNAV which implies that at the current share price of RM1.59, investors are buying into the stock and getting its land for free.

Land for free!

LOL!

Where's my favourite Dire Straits track? Money for nothing and chicks for free! :P



The RNAV table from CIMB



The financial table from CIMB


As you can see... CIMB did NOT put in their earning estimate for Mitrajaya on the table. :P

Earlier bit, CIMB wrote...

  • assuming that the group achieves EPS of 46.7 sen in FY11 and 51.3 sen in FY12.

EPS of 46.7 sen.

The key thing to address, I think, is whether the estimate is way too optimistic or not.

Last year, from CIMB table, Mitrajaya made an earnings of 41.2 million or an EPS of 32.2 sen.

CIMB says an EPS of 46.7 sen for fy 2011.

Here's Mitrajaya last reported earnings: Quarterly rpt on consolidated results for the financial period ended 30/9/2010. It's current ytd 3 quarter earnings is a very impressive 40.945 million or an eps of 33.8 sen only. On an annualised basis, perhaps, Mitrajaya could be earning some eps of 45 sen for 2010.

So perhaps the EPS of 46.7 sen isn't too optimistic at all.

Err... so how?

So long posting... still awake ah?


ps: I have no idea if you could lose money in this stock, so there's no need to thank me. :=)

Saturday, January 08, 2011

Reply To Comments On MaeMode

I did not feel like replying to hng's Belated Comments on Malaysia AE Model (MaeMode). I felt that the ton of postings I had written before was sufficient and it was just best to highlight hng's comments.

However, I thought about it. It would do no justice to hng and it would be extremely snobbish not to reply.

So here goes. I hope my reply is not offending for sometimes my fingers type what is needed to be typed.


  • Hi, i've look into your research on Malaysia AE model, which you have highlight its growing receivable and incur high borrowing cost in its balance sheet. Despite Maemode have recent proposed 1 for 3 warrant, but it will only raise less than 500k for its working capital etc..

Yes, I did made this fact clear. On 9 Sep 2010, in the posting MaeMode Wants Your Money Again!, I wrote the following..

  1. MaeMode last traded yesterday at 50 cents.
    Exercise price is fixed at rm1 per MAE share?????
  2. some extra food for thought.
    a.) 2005, MaeMode had a rights issue. That raised some 31.7 million.
    b.) 2008, MaeMode had a 10% placement. That raised some 13.245 million.
    2010... we have rights issue of warrants. :D
    And yeah... MaeMode would generate some little money for their working capital.
    A huge 518 thousand would be generated from this attractive rights issue of warrants.

So just to let it be known, the 518 thousand was raised from this rights issue of warrants. And yeah, let it be known again that the exercise price is at rm 1.00 per share.

  • I'm agree with your concern on Maemode, but i do understand its business nature in which Maemode once secure project, it have to pay upfront cost and there is no progression billing until the whole project is almost complete or already hit certain portion of the entire project, then only the billing will be kick in.

Let me state I do not understand MaeMode's business. What I had commented was based on MaeMode's own earnings notes which showed the incredible ( I had used the word insane if I am not mistaken on it before!) increment in MaeMode's receivables and borrowings each year.

Yeah, comments were based on numbers and not the actual understanding of the business. This I do not deny.

Now I am willing to give you the benefit of a doubt and I am willing to assume that you are correct.

And if so, what do we have?

Hope my understanding of what you had written is not wrong but you are suggesting that MaeMode's can only bill the customers once the job is finished and whatever cost incurred is covered by MaeMode?

Errr .... sorry but does this sound like a good business? Seriously, if you asked me, this sounds like a rotten business to be in. and what about collection? Does this mean that after the job is completed, after the bill is submitted, then MaeMode can only seek collection?

Ok.

Assuming it is like this... my next simple questions are:

  1. Does the customer pay in time?
  2. What if there is a default in payment?

Ok, I do understand that in general, collection of business is an issue in general Malaysian business. Not saying all are bad paymaster but there are more business that do not pay their amount due promptly.

That means .... time is needed.

And in MaeMode's 'special' case, where it completes it jobs first before billing, that would mean that MaeMode's collection of its money is much longer than other business.

Again, the question, does this represent a good solid business to be an investor?

( ps: do remember, I usually blog based on an investing/business perspective. I take no consideration about the market.)

And then ... the issue of the possibility of default of payment.

Here's MaeMode track record SINCE 2002.




It operates on thin margins (ie below 10%) and in recent times, margins have fallen below 3%!

Now with such razor thin margins, do consider how MaeMode is doing its business again, where billing is only made after the job is completed.

And then consider the issue of payment default.

Based on such razor thin margins, could MaeMode afford even one default in payment?

And from an investing perspective, ie if MaeMode was not a listed company, do you think it is logical to be a business partner of such a business?

My answer? You should know, is a no.

Of course, I could be wrong and that MaeMode could grow into one profitable company, yeah I understand the simple thing such as wind of fortunes could turn favourable for MaeMode but based on such numbers, based on such track record, I rather be flawed because I miss this opportunity.

Errr... missing out is never a crime for me, hor. Losing money based on a bad set of reasoning is.

Ah... this missing out issue, is rather misunderstood by many.

Many thinks that one is a loser if one misses out.

But is this really the case?

Take a simple comparison. Take a real casino. As you know, every day, got many losers in a casino but there are also many winners each day. Some big ones. Every know and then, one would see someone winning big, sometimes making a million in the slot machines. It happens pretty often, yes?

Now, if you are a casino gambler but have a history of no luck in the slot machines, what do you want to do when you see someone striking rich in the machines? Do you want to follow, just because you do not want to be considered a loser because you missed out? Yeah, so do you want to put in a couple of thousand in the slot machines each day, hoping you would also be the next million dollar winner in the machines?

Ah... sometimes... lady luck do smile at us and we could be the next winner.

But then .... there's a great chance we are not so lucky.

And this is very much the same with stocks. Sometimes, we see people punting and making so-called blind money from the machine. But if punting is not something we are good at, should we follow? Expanding it further, this is very much the same with stock pickings. For sure, if we buy stocks that 'have not' move in a very bullish market, of course, there is a chance the stock will move. But then, I am sure, many could easily point out too that in a very bullish market, there exist stocks that could even plummet into the abyss!

Ah.. I am not implying anything, ie I am not saying MaeMode is a 110% candidate to plummet. All I am saying is I rather miss whatever opportunity this company has got to offer based on its track records.

  • That is, Maemode have to borrow its working capital via bank borrowing first, which in accounting, its consider its receivable, which then justify its growing receivables in par with growing borrowing in its balance sheet every time there is new project secure. In short, Maemode business model is unlike conventional, its need to borrowing money as working capital which in turn account these working capital as receivable, then once the project in completed, billing will be make and set off most of the receivables and the balance is its net profit. It is indeed difficult to analyze its balance sheet correctly, as there is keep project coming in which in turn causing its unlikely to pare down its receivable per project

Hmmm..... so what you are saying is 'Maemode business model is unlike conventional, its need to borrowing money as working capital which in turn account these working capital as receivable, then once the project in completed, billing will be make and set off most of the receivables and the balance is its net profit'

Err.... again... assuming and accepting your points.... errr.... my simple question is.... how long can MaeMode keep using such business model?

Can it forever borrow money as working capital?

Look at the rate its borrowings has increased over the years. In 2002, it owed its bankers some 75 million. And despite the capital raising effort in 2005 and 2008 (MaeMode raised 31.7 million in rights issue in 2005 and 13.245 million in 2008 private placement). MaeMode's borrowings as per its latest earnings report is at an incredible 328.176 million. Now aren't those figures astounding and crazy? It is for me.

And you said 'set off most of the receivables and the balance is its net profit'.

Now if that's the case, why isn't there any sign of receivables shrinking?

In 2002, MaeMode's receivables was 56.894 million. Today receivables stands at an incredible 353.212 million.

Err... is there any sign of collection? Why is the receivables ballooning each single year?

Ok, let's not go so far back to 2002. Let's use 2007 instead.

In 2007, MaeMode had 191 million in borrowings and receivables were 243.109.
Today, MaeMode has 328.176 million in borrowings and receivables are at 353.212 million.

Which means MaeMode's borrowings increased by 137.18 million and receivables increased by 110.1 million.

And during this period, how much did MaeMode actually make in terms of net profits?

In 2007 it made 16.218 million.
In 2008 it made 20.418 million.
In 2009 it made 11.793 million.
In 2010 it made 6.940 million.
2011 Q1 it made 0.852 million.

All in? The total earnings during this period is only 56.231 million only.

Compare again. During this period, MaeMode's borrowings increased by 137.18 million and receivables increased by 110.1 million.

All I can see is disconnect and I simply cannot comprehend such a business model.

Does MaeMode sounds like a logical sound business entity that I want to be a business partner in? My answer is a simple NO.

  • I'm on opinion that Maemode recent secure two new project LCCT and Indo coal plant will contribute significantly in its 2011 financial result. Expect its EPS to be above 10sen. Its upcoming warrant 1 for 3 also serve as sweeten if its share price ever back to before 2008, share price was above RM1.00

Sorry but sweetener?

The exercise is at 1.00 yes?

So how can this be sweet?

Before 2008, it's share was above 1.00.

Well.... the earnings since 2008....

  • In 2008 it made 20.418 million.
    In 2009 it made 11.793 million.
    In 2010 it made 6.940 million.
    2011 Q1 it made 0.852 million.

That's a rather a poor set of earnings, yes?

  • From my own investment point of view, Maemode should have limited downside risk, and the risk is further cushion from upcoming warrant 1 for 3, 2sen each for 10yr.

Oooh... limited downside risk?

That's 3 words I would never dare use in the stock market.

ps: Thanks for sharing your investment point of view and I am just merely sharing my investment point of view back with you... and needless to say... please just take my comments with a pinch of salt for I am always wrong in the stock market.

ps/ps: Regarding MaeMode's current debt of 328 milliom... is this not a worry when you put into consideration of MaeMode's current earnings?

ps/ps/ps: The receivables issue. What if a portion of it is considered bad? Not possible? Say 10% bad? That's more than 30 million to be written off. Would this not be a huge risk factor?

Friday, January 07, 2011

Belated Comments on Malaysia AE Model (MaeMode)

Received a belated comment on MaeMode:

  • hng said...

    Hi, i've look into your research on Malaysia AE model, which you have highlight its growing receivable and incur high borrowing cost in its balance sheet. Despite Maemode have recent proposed 1 for 3 warrant, but it will only raise less than 500k for its working capital etc..

    I'm agree with your concern on Maemode, but i do understand its business nature in which Maemode once secure project, it have to pay upfront cost and there is no progression billing until the whole project is almost complete or already hit certain portion of the entire project, then only the billing will be kick in.

    That is, Maemode have to borrow its working capital via bank borrowing first, which in accounting, its consider its receivable, which then justify its growing receivables in par with growing borrowing in its balance sheet every time there is new project secure. In short, Maemode business model is unlike conventional, its need to borrowing money as working capital which in turn account these working capital as receivable, then once the project in completed, billing will be make and set off most of the receivables and the balance is its net profit. It is indeed difficult to analyze its balance sheet correctly, as there is keep project coming in which in turn causing its unlikely to pare down its receivable per project.

    I'm on opinion that Maemode recent secure two new project LCCT and Indo coal plant will contribute significantly in its 2011 financial result. Expect its EPS to be above 10sen. Its upcoming warrant 1 for 3 also serve as sweeten if its share price ever back to before 2008, share price was above RM1.00

    Remark: Q1= EPS 0.8sen, Q2 result will be announce by end of these month. Let see whether its subsequently result will boots its earning.

For reference, my past postings on MaeMode can be found here:

BDI update

Saying Tak Nak!!

On money.cnn:

  • The young and the riskless

    In the wake of the market meltdown of 2008, investors under age 35 are shunning stocks in stunning numbers.

Thursday, January 06, 2011

Update On Baltic Dry Index

Update...



Posted yesterday... Baltic Dry Index Plunges 4.5%

Wednesday, January 05, 2011

Regarding The Stock Market Again...

Posted this once b4....

ps: love this one bit..

1:22: .. you also enter a bit.. got money, let's make together.





I Learn From Youtube



World Cup Again



Baltic Dry Index Plunges 4.5%

Blogged on the 23 Dec: The Baltic Dry Index (BDI) Is Not Too Happening




On Bloomberg:

http://www.bloomberg.com/news/2011-01-04/queensland-flooding-to-cut-freight-rates-as-coal-ships-lie-idle.html

  • Freight costs fell as Queensland’s worst flooding for 50 years prompted buyers of the Australian state’s coal to cancel ship charters, intensifying competition for cargoes as the extra vessels become available.

    Flooding has covered an area the size of France and Germany, damaging crops and cutting coal stockpiles for export as mines shut. Freight rates as measured by the Baltic Dry Index today slumped 4.5 percent to 1,693 points, taking the decline since Sept. 10 to 43 percent.

    “There’s no doubt it’s going to be bearish,” said Stuart Rae, joint managing director of M2M Management Ltd., a London- based hedge-fund group that operates about 65 commodity transporters and trades freight derivatives. “It’s going to exacerbate a market that was already squirming.”

    Queensland exports about 180 million metric tons of coal a year, or about a fifth of the global total, according to Sverre Bjorn Svenning, an analyst at Fearnley Consultants A/S in Oslo. The dry-bulk fleet expanded by 17 percent last year, outpacing an 11 percent increase in haulage demand, according to the research unit of Clarkson Plc, the world’s biggest shipbroker.

    $18,697 a Day

    So-called capesize vessels, the largest tracked by the Baltic Exchange, led declines today as daily rental rates slid 6.6 percent to $18,697. Costs fell 2.7 percent to $14,312 for panamaxes, lost 4.8 percent to $14,860 for supramaxes, and declined 2.9 percent to $11,805 for handysizes.

    Total seaborne trade in dry-bulk cargoes, spanning commodities including coal, iron ore and grains, totaled 3.3 billion tons last year, London-based Clarkson estimates.
    Queensland coal buyers already invoked force majeure, a legal clause giving them the right to cancel charters, according to Rae. The release of ships from charters will increase competition among owners for cargoes, he said.

    Producers of power-station coal in Indonesia and South Africa are unlikely to have time to increase their output, potentially generating alternative vessel demand, because the Queensland disruption probably will be too short, according to Svenning at Fearnley.

    “The coming four to six weeks are crucial,” he said. “I don’t think this is positive at all.”

    There are 66 dry-bulk commodity carriers now located at Dalrymple Bay and Hay Point, coal-loading facilities about 490 miles north of Brisbane, according to ship-tracking data compiled by Bloomberg.

    A capesize ship can haul more than 110,000 deadweight tons, according to Drewry Shipping Consultants Ltd. in London. By that definition, 31 of the vessels at Hay Point and Dalrymple Bay would be capesizes.

    Today’s freight-rate assessments were the first published by the Baltic Exchange since Dec. 24. The Baltic Dry Index slid 41 percent last year after almost quadrupling in 2009.

Tuesday, January 04, 2011

Petra Perdana Upgraded To A Trading Buy

I just caught the following article on the Edge: Petra Perdana thrust back into the limelight

  • Petra Perdana thrust back into the limelight
    Written by Financial Daily
    Tuesday, 04 January 2011 11:21

    Petra Perdana Bhd
    (Jan 3, RM1.10)
    Upgrade to trading buy at RM1.06 with target price of RM1.09: Petra Perdana (Petra) has bucked our expectations of a further decline due to poor earnings, rising 40% since its 3Q results. Shares have been rising on talk of mergers and acquisitions as well as the recently dropped lawsuit instituted by former directors. On sentiments, we view that 2011 could be a better year for vessel players, as the many roll-outs of contracts to develop and redevelop offshore Malaysia will give rise to demand for vessels.

    Petra reports that its latest total fleet utilisation stands at 55% for the 9MFY10 period. While no major long-term jobs have been inked, its newer vessels are seeing some spot charters, albeit not at attractive rates, hence the continued losses. Dragging down the group’s utilisation is its AHTS fleet, with old vessels largely idle. However, its workboat and work barge fleet is 65% engaged, as they are locked in for jobs. We view that AHTS charters will only have a chance of picking up when major jobs like Tapis or Malikai come into play offshore Malaysia. Otherwise, with major projects still in the planning stages, there will be no hurry to engage vessel fleets just yet. As such, we view that recovery in Petra’s earnings may materialise come mid to late-2011.

    Given the company’s current loss-making situation, we view it unreasonable to use price-earnings ratios for valuation. Also, given talk of Petra being a takeover target, it further justifies using its net tangible assets as a valuation basis. As such, we now value Petra at its FY11 prospective NTA of RM1.09 (previous target price of 42 sen based on FY11 non-diluted earningsd per share pegging an 11 times PER).

    With our change in valuation methodology, we are raising our call on Petra to a “trading buy”. Our rationale for the call is that there could be a corporate exercise on the cards. We view that while the group’s AHTS may not be an attractive sell at the moment, given slow demand in the market, its work boats and barges could pique the interest of potential suitors in the maintenance business. Further catalyst for a sale is that earnings are still precarious and Petra continues to need cash to meet its operating lease commitments. — ECM Libra Investment Research, Jan 3


    This article appeared in The Edge Financial Daily, January 4, 2011

Err... upgrade to a trading buy at RM1.06 with target price of RM1.09?????

hello? hello? hello?


Here's the nice chart of Petra Perdana after today's trading.







A Quick Look At Malaysia's 2010 Nov Exports

On Business Times:

  • Malaysia's total trade back to pre-crisis levels

    Published: 2011/01/04

    MALAYSIA'S total trade has returned to pre-crisis levels, led by increased demand from regional markets like China.

    The International Trade and Industry Ministry said total trade during the period of January to November 2010 has surpassed the RM1 trillion mark with a value of RM1.064 trillion, increasing by 19.4 per cent from the same period in 2009.

    Exports in November expanded by 5.3 per cent to RM52.70 billion compared to a year ago while imports grew by 6.1 per cent to RM43.79 billion.

    Malaysia had enjoyed trillion ringgit trade for three consecutive years (2006-2008) before the recent crisis.

    According to Miti, the increase in exports was largely due to higher exports of palm oil, liquefied natural gas (LNG), refined petroleum products, chemicals and chemical products, manufactures of metal, crude rubber as well as optical and scientific equipment.

    Kenanga Investment Bank economist Wan Suhaimie Wan Saidi said November's trade performance was an indication of growth prospects for the first half of the year.

    Exports in the fourth quarter of 2010 would be slower than the third quarter, leading to a slower GDP growth.

    "At best, real GDP growth for the fourth quarter 2010 would be slightly higher than 4.0 per cent but we have estimated a growth of 3.6 per cent," he said, adding that GDP growth for the whole of 2010 is estimated at 6.8 per cent.

    Exports would also face some strong headwinds going forward as it would be subjected to the slower external demand especially from Europe and the US, he added.

    "The higher base effect may exacerbate the slower growth trend. However, exports of commodity namely crude oil and gas as well as palm oil and rubber may help to mitigate the slowdown of exports going forward."

    Miti said exports to China increased by 14.2 per cent to RM7.19 billion from a year ago, on higher exports of palm oil, crude rubber, refined petroleum products, chemicals and chemical products, LNG and rubber products.

    Exports to Japan surged by 17.3 per cent while exports to the European Union (EU) registered an increase of 2.0 per cent due to higher exports of palm oil, crude rubber as well as chemicals and chemical products.

    Exports to the US saw a decline of 16.9 per cent from a year ago, mainly due to lower exports of E&E products while exports to Hong Kong also saw a decline of 7.1 per cent from November 2009 due mainly to lower exports of E&E products.

Sounds good eh?

Now compare to this : Pre_External_Trade_NovBI.pdf

Yes... Malaysia’s exports expanded by 5.3% to RM52.70 billion compared with November 2009 but what about that one very important statement underlined?

  • Compared with October 2010, exports in November 2010 decreased by 4.1% while imports contracted by 9.2% and total trade declined by 6.5%.

See below.


Is that statement not important to even mention?

This is Star Biz version: Moderate growth in Malaysia’s November exports
  • According to the Department of Statistics, November exports expanded 5.3% year-on-year (y-o-y) to RM52.7bil, meeting the general market consensus. But the numbers when compared with the preceding month was a decline of 4.1% due to comparatively lower demand from key developed markets, particularly for electrical and electronic products.

At least Star Biz takes the effort to highlight this point. Why did Business Times not highlight the fact that exports showed a decline when compared with the preceding month? Is that issue not important?

I dunno ... but here's the export data so far.