Does Anyone Really Know What's Happening In Mega First?

I kept on saying Mega First purchase and disposal of shares are excessive. I have realised I have not really justified what I was saying.

Take last fiscal year. Here's Mega First q4 earnings last fiscal year. Quarterly rpt on consolidated results for the financial period ended 31/12/2009

Mega First said it made 65.626 million.

Here's Mega First annual report. Annual Report 2009. On page 59. It states that Mega First made 21.299 million.

Well, as the randomly wise one would say, do the math. Mega First net earnings were 65.626 million. Out of that 21.299 came from their unknown 'quoted investments'.

Secondly, Mega First sales revenue for its latest quarter was 120.153 million. On yesterday posting, Mega First Continues To Trade Excessively In Quoted Securities, I pointed out that Mega First purchased and disposed ONLY a mere 85.663 million worth of quoted securities!

Again, do the math. Sales revenue 120.153 million. It traded 85.663 million worth of quoted securities!

Is that a lot? Is that excessive?

It is too me.

While reading the report, I realised that I had forgotten that Rock Chemical Industries (Malaysia) is a subsidiary of Mega First ( Mega First owns 60.4% of Rock Chemical)

My fingers started wondering and clicking around (ok, I lied, the fingers got really itchy! :P ) because it wanted to know if Rock Chemical is yet another super duper trader like Mega First.

Well, I am not surprised and neither did Rock Chemical disappoint me.

At first impression, this doesn't seem a lot. Rather innocent too. Purchase 7.214 million, dispose some 6.936 million. That's ONLY 14.15 million worth of quoted securities.

What's the big deal?

Well the big deal is that Rock Chemical sales revenue is only 16.679 million!

Go figure the maths.

Is this excessive again?

Now my fingers are really itchy. What about Pearl River Tyre?

Let's look at Pearl River Tyre. Here's the link to their annual report.
http://www.hkexnews.hk/listedco/listconews/sehk/20100428/LTN20100428889.pdf

( Interesting KL Kepong owns shares in this company. :P )

Page 23. Same same! Look at the size of the investment of listed securities.



How?

So many quoted/listed purchased/disposed/held by this group of company.

Does anyone know what securities these are?

Mega First Continues To Trade Excessively In Quoted Securities

I was most eager to read Mega First earnings because this was a stock I had expressed some negative views earlier.

Here are the links to the past postings:

1. Comments On Mega First Insane Trading
2. What Do You Seriously Think Of Mega First's Insane Trading Of Quoted Securities?
3. What Is Mega First Doing?

Here is the link to Mega First 2010 Q1 earnings reported last night. pdf file attachment

The cash flow statement showed Mega First purchase and disposal of quoted securities.

And there.. it disposed some 40.783 million worth of shares and it also purchased some 44.880 million worth of shares!

Yes, holy cow!!!!!!!!!!

Pure insanity!

What on earth is this company doing?????

Here's the simple maths.

A quarter is 3 months and each month has about 20 trading days. Which means a quarter has about 60 trading days (give or take a couple of days).

Disposed 40.783 million. Purchased 44.880 million. Well that's ONLY a mere 85.663 million worth of quoted securities Mega First had traded in the first quarter. And since a quarter has about 60 trading days, this meant that Mega First are trading on the average of 1.42 million worth of quoted securities per trading day.

1.42 million worth of quoted securities traded per trading day.

.

Exactly!

Insanity!

For the record, last fiscal year, it purchased 162.658 million worth of quoted securities and disposed some 272.274 million! Which works to some 434.932 million worth of quoted securities purchased and disposed!

And do they describe in full detail what these quoted securities are? Nope. This is all they mentioned ( see B7)

So what quoted shares outside Malaysia have Mega First being actively trading?

Yes, the inquiry mind wants to know.

Sigh!

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

Anyway, I was reading MFCB's annual report...

• Mr Goh N an Kioh, age 56, joined the Board on 1 February 2003 as a Non-Independent and Non-Executive Director. He was appointed as Chairman of the Board on 29 July 2003. Mr Goh holds a Bachelor of Economics (Honours) degree from the University of Malaya. He has wide and varied business investments in many countries. He is presently the Chief Executive Officer of Cambrew Group of companies, a brewery and soft drinks company, and Chairman of Pearl River Tyre (Holdings) Limited, a tyre manufacturing company listed on the Hong Kong Stock Exchange.

So I decided to check out Pearl River.

From hkex.com.hk website

Nice to see Mr. Goh buying more of his company shares in Hong Kong.

I then searched for Pearl River Tyre list of current shareholders:
http://www.hkexnews.hk/sdw/search/search_sdw.asp

Hello OSK! :D



ps: IINM OSK does NOT do coverage on Mega First.

Comments On Mega First Insane Trading

Comments from the posting: What Do You Seriously Think Of Mega First's Insane Trading Of Quoted Securities?

• solomon said...
  One would argue that what is the difference if I put the money for investment house to invest and now I invest myself(MFCB)? On the other hand, minorities might be shouting give us back the money ya.....
  
  This is a definite grey area where it needs immediate address by the Lawman. We need a good channel for the betterment of a world class trading platform, if not today when are we going to???

Yes exactly. However..

1. MFCB is not an investmend house.
2. What exactly is being bought and sold?
3. Any conflict of interest issue?
4. The size of the trading is insane. It's already more than 5% of its net assets.
   

• This is a definite grey area where it needs immediate address by the Lawman. We need a good channel for the betterment of a world class trading platform, if not today when are we going to???

Sadly... MFCB is not the only company. And here lies the problem.

Are we going to wait till one company goes bust before we act?

Take Yung Kong: http://whereiszemoola.blogspot.com/2008/08/listed-companies-investments-yung-kong.html

• So from 1999 to 2008, despite witnessing one incredible bull run, Yung Kong's unknown investment paper loss has increased from 7.94 million to a whopping 22.79 million!

Same thing. What investment is this? Why can't Yung Kong be more transparent?

Anyway, the posting made on Yung Kong was on Aug 2008. Here's the latest update.

• Total investments at cost 42,200
  Total investments at carrying value/book value (after provision for diminution in value) 23,515
  Total investments at market value at end of reporting period 19,135. (source: here )

And as expected, it is still carrying HUGE paper losses!!!

How?

I could post more companies dabbling massive sums on investments that the investing public has no idea on what's happening.

Yeah... when will we see something done about this issue?

And if from a pure investing perspective, I would really, really hate to see the company I invest in taking part in such unhealthy activities and yes, I would vote with my feet immediately!

What Do You Seriously Think Of Mega First's Insane Trading Of Quoted Securities?

Blogged in November 2009: What Is Mega First Doing?

My issue with this company was highlighted in the cash flow screen shot. You can view it here again.

During that 3 quarters, Mega First spend some 258.422 million purchasing 'quoted shares'. And it sold some 145.974 million worth of shares.

Do the math.

That's an insane 404.396 million worth of quoted shares being bought and sold by Mega First.

Well Bursa is sort of aware of this issue, for Mega First is now made to post such announcements on Bursa website: Dealings in Quoted Securities. Now that announcement was made on 17th March 2010.

It states:

• As at 16 March 2010, the investments in quoted securities held by MFCB Group are set out below :-
  
  i) Total Cost : RM146.2 million
  ii) Book Value : RM154.1 million
  iii) Market Value : RM154.1 million

Now on 8th March 2010, Mega First posted this: Dealings in Quoted Securities

• As at 5 March 2010, the investments in quoted securities held by MFCB Group are set out below :-
  
  i) Total Cost : RM131.89 million
  ii) Book Value : RM136.88 million
  iii) Market Value : RM136.88 million

Now it doesn't take a rocket scientist to do the math.

From 5th March to 16th March, Mega First's total quoted securities had increased from 131.89 million to 146.2 million.

Now that's an increase of 14.31 million!!!

Now from 5th March to 16th March 2010, there's only 10 trading days.

Do the math.

Don't you think Mega First is over trading insanely?????

Yeah, some would point out that they did make some profits. So what? Who cares about the profit. Such a practice is insanely unhealthy!

Just what on earth is the board of directors in Mega First doing?

What kind of company has Mega First turned into?

A trading company?????

And to compound the matter worst, there is no transparency at all. What are these quoted securities that Mega First is trading so insanely actively?

Does anyone even know?

Yeah, now Mega First is making money from these trading. What if things go sour? Remember as it is, these trading of quoted securities is already more than 5% of Mega First net assets. I hope Bursa forces Mega First to list out exactly what these quoted securities Mega First is trading so actively in.

Ironic, yesterday the following editorial was posted on Star Business: Transparency vital for world-class capital market

I wonder where is the transparency in Mega First trading of quoted securities. What if things go sour in Mega First's trading? Would the minority shareholders even know what hit them?

How?

What Is Mega First Doing?

I had posted some postings on companies dabbling in the share market.

1. Regarding CSC Steel'sCurrent Earnings And Its Investments In Marketable Securities
2. Apollo Food's'Investments' In The Share Market
3. Listed Companies Investments: Yung Kong Galvanised Steel
4. Maybulk Had 'Investment' Losses Of Over 62 Million!
5. Why Is Maybulk So Active In the Share Market?
6. Again On Yung Kong Galvanised Steel's Quoted Investments
7. A Look At How Apollo Food Holdings Dabble In The Share Market

I was just reading Mega First earnings just now.

I then looked at what the company said in its notes.

WOW! Look at the amount of money Mega First made from the gain of disposal of quoted investments!

I then looked at the cash flow statement.

WOW!

Mega First spend some 258.422 million purchasing 'quoted shares'?????

Holy cow!

And as usual, there is no disclosure on what's happening!

Under section B7 of its notes.

How?

I am lost for words.

Is Mega First Malaysia's super trading or investing company ?????