Wednesday, May 25, 2011

Chat On Koon Yew Yin's Investment In Xingquan Again

Posted yesterday evening: Update On Koon Yew Yin's Investment In Xingquan

I received one great set of comments from xinzhang.

  • You can check for yourself with Koon Yew Yin if he is still holding Xingquan at I have been informed that he transferred those shares to his daughter. This is an information which I got from himself. He is also holding Xingquan through his wife and other close relatives. The total holdings might be more than the 5.5% quoted. The point of him dumping Xingquan does not arise. However, the apparent dismal price movement of this counter had many riled up in anger.

    I have read the comment posted by Gwyn Welsh on Xingquan in your blog recently. He had pointed out pertinent points which are of course facts. The management of Xingquan has to increase dividends to its shareholders in order to instil confidence among shareholders and potential investors. The confidence among investors now on Chinese stocks are very low.

    Xingquan has to show that they are above the rest.
xinzhang: Hello again.

Now sending an email to Mr. Koon is probably a very good suggestion for those interested in FOLLOWING Mr.Koon Yew Yin's investment in Xingquan.

Point that I wanted to make is a rather simple fact that Mr.Koon by himself, his name, he is NO longer a substantial shareholder because he no longer holds the minimum amount required to be classified as a substantial shareholder.

Which means, he can either buy or sell his stake without the need to informing Bursa Malaysia.

Which puts investors who had adapted the follow Mr. Koon investing strategy in a dark.

Now the irony of Mr. Koon's transfer of shares is that Xingquan shares had declined rather sharply since then.

So how? Is Mr.Koon still holding these shares in Xingquan? Did he buy more for his family members? Or has he reduced his shareholdings?

And yes, I guess sending him an email might help.

Anyway, back in Nov 2010: on the posting More Balanced View On Xingquan, I highlight now again parts of your comments.

  • ..... 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.

Firstly the last statement. Sorry but not to be rude or arrogant but it's now May 2011. Despite the known fact that Mr. Koon is an investor of Xingquan, Xingquan shares have not fared well. So how?

On the issue of dividends again. You said today "The management of Xingquan has to increase dividends to its shareholders in order to instil confidence among shareholders and potential investors. "

On March 2011, CIMB had a report titled "Xingqian: Looking to plant a bigger footprint."

Here's a screen shot.

Apparently Xingquan is still holding very firm on its dividend payout at 10-20% of net profit, a point which you had already highlighted back in Nov 2010.

Now let's consider the updated tables again, from the posting recently, A Quick Look At Xingquan's Earnings

Now with profits not booming (compared on a yearly basis) and as mentioned in CIMB's latest reports, Xingquan, is hit by high material costs. One has to question where's the growth? Now the growth issue for Xingquan is extremely important because Xingquan had insisted it still wants to carry on with its TDR. Without growth and a future dilution of earnings caused by the issue of shares in the TDR programe, future eps will shrink.

Balance sheet cash. Cash is shrinking but most important thing is interest received. As mentioned several times by blogger snowball, why is the interest so low? Why is Xingquan getting so low value for its money? From the table above, we know that at the end of 4th Q FY2010, Xingquan had some 280 million cash. Nine months later, cash left is only RM 168.850 million. 168 million is a lot of money, yes? But from the cash flow, Xingquan said it's only getting some 563 thousand in interest. Err.. why so little value for their money?

And with cash depleting and the management hell bent on expanding and even rebranding everything, how to expect more dividends?

Having said that, yes, I really agree with you. If the management would show the investors the moolah, this stock could generate some investing interests!

Just my flawed opinions.


Mr ICICI said...

with reference to xinzhang's comments.
i don't think we can draw conclusions that he still holds the stock.

kyy said he transferred the stock holdings to his daughter and close relatives, but did he mention whether his daughter and close relatives still have the stock holdings with them??

im not with any sides, but if he can't answer that question, then i think we all know most of it probably has ended up with kyy's followers...