Friday, July 29, 2011

Maemode's Mind Boggling Q4 Earnings

MaeMode announced its earnings. It looked impressive when you just look at the earnings alone.

Last quarter, Maemode had net profits of some 3.261 million

Last night, MaeMode said it had net profits of 12.499 million for its 2011 Q4.

Sales revenue for the quarter surged to a very impressive 242.183 million

Net profit for the year stands at 18.577 million. Last fiscal year, Maemode only had net earnings of 6.895 million only..

However, if one looks at the bigger picture, it becomes so clear..

Despite the huge jump in revenues, cash at the end of the fiscal year decline to just 20.949 million.

Total borrowings rose to 368.224 million. Look at how total borrowings increase every single year.

And its total receivables soared to a mind boggling 441.227 million!

Sales increasing, cash declining and the total borrowings and receivables soaring each year.

How long can this last?????????????????????????????????????????

Would you dare to invest in such company?

And don't you wonder why the receivables are increasing so much every single year??

What's happening?

Have the auditors review if the receivables are collectible or not?

Worse still, have the auditors checked the validity of the receivables?

What if.............................. ????


ronnie said...

Worse still, who are the auditors?

casey said...

Surprise! surprise! surprise! Auditors turns out to be one of the BIG 4: Ernst & Young.
From recent US-backdoor-listed Chinese firms fiascos, looks like a reputable auditor is not any sort of quality assurance of its accounts.

Ooi Beng Hooi said...

Independent Auditors' opinion for FY 2010

"In our opinion, the financial statements have been properly drawn up in accordance with Financial Reporting Standards and the Companies Act, 1965 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as at 31 May 2010 and of their fi nancial performance and cash flows for the year then ended."

K C said...

When in doubt, look at cash. Although making 18.2 m net profit, cash flows from operation is negative RM53 million! Doggy isn't it? There is 441 m in receivables, more than 100m more than last year! OMG. Just declare a dividend payment of 1% for show show only. Cannot even afford it. Never mind lah. Can borrow to pay dividend and for other expenses. So borrowed another RM48 m loh!

limko said...

All that glitters is not gold is indeed true!

Moolah said...

Limko: "All that glitters is not gold is indeed true!" .....

I am not suggesting or implying anything on Maemode but...that statement of yours hold so true...

but take the more recent cases of Mems, Transmile and Megan Media.

Their raw numbers... looked so glittery too.... until.... one looks much deeper into their books.

Maemode? Their numbers are so dodgy right now... for Maemode's own sake... they really have to explain right now why their receivables are soaring like crazy. Can these receivables be collected?

TK said...

Those figurs shows that the company has the symptoms of overtrading.

K C said...

Can you enlighten me what glitters are there in Maemode? Besides negative CFO of 53m, receivables of 441 m, profit margin is only 5.2% and ROE 5.4%, less than half that of the cost of capital. Does one wants to put in his capital at this type of risk for 5.4% return? Which metric of measurement for the performance of Maemode glitters?

Moolah said...

K C: All that glitters is not gold = all the earnings one see does not ... 'glitter'.

* err.. i think u should know what i mean. *

Moolah said...

TK: Overtrading? LOL!

Who? :P

K C said...

Moolah, earnings of 17.4 sen per share compared to its price of 53 sen (subsequently jumped by 12% to 59.5 sen) does appear to "glitter". PE was only about 3 times (I know this cow does not like to talk about PE ratio but it is relevant to share investing). However, like what have been deliberated, the earnings does not translate to cash. Instead cash flows and debts keeps on deteriorating. Unfortunately most retail investors are not able to fathom financials beyond the simplistic PE ratio. Good on you to keep on highlighting this to the small time investors to avoid this kind of pitfalls. Hope these people read your blog. I do introduce you blog to my friends.

Moolah said...

K C: Thanks! :)