Friday, January 07, 2011

BDI update

4 comments:

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.

random said...

really scary drop in the BDI

Moolah said...

Scary?

All the factors there, no?

Overcapcity.. cutbacks.. Aussie.

pica said...

Just FYI, a story on freight rates

http://www.bloomberg.com/news/2011-01-10/freight-rates-poised-to-tumble-as-35-mile-line-of-ships-passes-coal-demand.html