Posted in June 2011.
And Smartag is still a fairly new stock in the ACE Market and yes it is trading below its IPO retail price of 31 sen.
For the record again. On 13th April Smartag made 2 earnings announcements!
- Q1 - Quarterly rpt on consolidated results for the financial period ended 31/12/2010
- Q2 - Quarterly rpt on consolidated results for the financial period ended 31/3/2011
Q2 - made 653 thousand.
Q3 - a loss of 1.2 million
And as mentioned in the posting Is Smartag Worth A Bet? , KN had expected earnings for fy 2011 to be 10.4 million! Judging on last night's earnings performance, the chances are great that a net profit of 10.4 million will not be achievable this fiscal year. And this will put the fair vale price of 42 sen given by KN in doubt.
The worrying sign is that Smartag only posted a sales revenue of 14 thousand.
Let's think about it.
Obviously, Smartag is focusing only on the Royal Malaysian Customs project, which makes it a one customer business. If the project is passed and if the project is successful, then perhaps the company will do good.
However, some investors might get edgy with such a business. The business risk is much higher. If anything goes wrong with this project (for example, costing/pricing issues, software/technical issues or change of governmental fiscal policies) the company could be hit badly for it has only one customer. That's the potential business risk.
And to compound the matters worse, the custom project is still not officially announced.
This left me thinking.
Is the investing public aware of this 'one customer' issue?
This made me wonder about the 2 earlier quarterly announcements made in April 2011.
Q1 - Quarterly rpt on consolidated results for the financial period ended 31/12/2010 - Smartag has sales revenue of 1.774 million.
Q2 - Quarterly rpt on consolidated results for the financial period ended 31/3/2011 - Smartag has sales revenue of 3.914 million.
Now those two quarterly earnings painted a totally different picture, yes? There's some business activities going on. It didn't look like a one customer business model.
Before listing, company did not look like a one customer business model and now, after listing, the company turned into a one customer business model.
The perception of the company has changed isn't it?
And if one HAD invested based on the EARLIER set of data, how?
Anyway, from the Q2 earnings, Smartag carried a rather large set of receivables in its books. It had receivables of 11.956 million.
According to its earnings notes, there is MUCH improvement in its collection. Receivables trimmed down to just 2.054 million. It's good that the company manage to collect the debts owed to them. And as a result, the company's cash balance showed a very healthy increase.
Dedicated to Jollybee .