Give back FAIRLY to your shareholders

On Star Biz:

• Monday February 18, 2013
  Give back unused cash to shareholders
  
  Excess cash sitting idle on corporate balance sheets can be the subject of discontent among shareholders.
  Corporate notes by Gurmeet Kaur
  
  CASH is king. This mantra applies both to investors and their companies. Having a ton of cash, companies have the opportunity to grow via acquisitions. Money can also be used to squeeze out the competition.
  
  But excess cash sitting idle on corporate balance sheets can be the subject of discontent among shareholders, taking recent developments at Apple Inc as an example.
  
  Apple, perhaps the world's most reknown company as the maker of iPhone, is facing a rebellion from an influential investor, hedge fund manager David Einhorn of Greenlight Capital who wants the company to stop stockpiling cash and instead give some of it back to shareholders.
  
  Apple has some US$137bil (RM423.8bil) in cash and its once rapid growth has slowed in recent years.
  
  The Apple incident raises the old debate: If companies are unable to demonstrate using their cash effectively, would the right thing to do be returning part of it to shareholders?
  
  In the United States and the United Kingdom, there seems to be heightened shareholder activism in this area as a fair share of large companies have been unable to deploy their cash pile because of the slowing economy.
  
  The Apple case has also shifted the attention to companies like Google on whether it should consider doing the same.
  
  Last year in India, Infosys institutional shareholders had called for top-level changes in the company's management and pushed for the return of the company's excess cash to shareholders through either a higher dividend payout or a buyback offer.
  
  The good news, though, is Bursa Malaysia has a number of cash-generating companies that often return cash to shareholders. But, most of these companies have tended to be multinationals. Hence, the high payouts have also been driven as a means for these firms to repatriate their profits back to their parent companies abroad.
  
  Another set of companies that could be doing more for their shareholders are those that may not be generating a lot of cash, but are sitting on a pile of valuable assets. If these companies have no definitive plans for these assets, then shouldn't they be considering unlocking these assets by selling them and returning the money to shareholders?
  
  Property companies come to mind, especially those whose land-banks have yet to be revalued. As a result of not doing much with this land and, by extension, for the shareholders of these companies, these property stocks tend to trade at paltry valuations, despite the rich assets these companies have.
  
  Worse, a few of these property companies have become privatisation targets of the major shareholders. The major shareholders would justify the exercises as being driven by the market not ascribing a high enough value on the companies.
  
  But the converse is also true: The major shareholders, who are clearly in control of the companies, have not done enough to make the assets of their listed companies work to the benefit of shareholders.
  
  So, there is room for more shareholder activism to question the management/ownership of those companies.
  
  There have also been instances where listed companies have deployed excess cash to investing in stocks and trading them an area where they have no competitive advantage and taking an unnecessary risk, according to some quarters, as they would seem to be deviating from the core business.
  
  Clearly, greater vigilance of shareholders would keep management on their toes, whether it is the right strategy to take or should not that surplus money be returned to shareholders for them to decide how they want to use it.
  
  A recent example of attempted shareholder activism ought to be mentioned. This was the case of icapital.biz Bhd where a little-known UK fund, Laxey Partners Ltd, had sought to shake things up at Bursa's only listed closed-ended fund.
  
  In any case, Laxey may have picked the wrong stock to seek a change. icapital.biz's higher performing and well-known maverick fund manager Tan Teng Boo is no easy pushover. Shareholders have been and remain impressed by Tan's returns and do not wish for icapital.biz to end.
  
  But what's noteworthy was this: that Laxey was seeking to have the fund dissolved and the stocks in icapital.biz's portfolio sold and the money distributed to shareholders. By its assessment, icapital.biz should be more proactive in reducing the substantial discount the fund's market price was trading at against its net asset value.
  
  Laxey is symbolic of shareholders who want more from their management. In principle, that behaviour is not only healthy for our market, it is markedly absent.

Source: http://biz.thestar.com.my/news/story.asp?file=/2013/2/18/business/12724877&sec=business

Comment:

Fully agree with the comments about the property stocks (and even plantation stocks and other companies) sitting on properties that have not been revalued for years! ( The opposite? Sometimes I laugh so loud on how them REIT managers revalued their properties every few months! )

The clear danger to the shareholders of such companies is that the owners could privatise the stock without the shareholders getting rewarded for their loyalty for being a shareholder and get a fair value of what the stock should be worth.

Pirates?

Exactly.

And on iCap?

Yes, companies should really return excess cash back to the shareholders. If you do not know what to do with the excess money, it's only fair to give it back to the shareholders!

Remember, shareholders are your business partners!

So companies should treat their shareholders as business partners and not as other people's money.

Having said all that, surprise, surprise, surprise but I do not feel sorry for Laxey partner or any shareholders of iCapital who feel disgrunted about iCapital not returning the excess money back to the shareholders.

They really should know better.

When they invest (or speculate) in iCapital, they should not have discounted the TTB factor. If they know who and understand TTB's character, they should have known TTB's character better.

And oh yeah, my buddy highlighted one rather good posting last month. http://cgmalaysia.blogspot.com/2013/01/lending-money-to-related-company-is-no.html

I see many making the assumption that a company is worth investing based on the cash per share yardstick without understanding the company.

In Panasonic Manufacturing Malaysia (Panamy), as highlighted by M.A. Wind , a huge chunk of money belonging to Panamy is placed (I think LEND is a much better word) to a related company. Yes, Panamy do get interest for the money placed (LEND) but I am amazed why Panamy shareholders aren't asking the simplest question: Why is this related company borrowing money from Panamy at such a cheap rate? (last I checked it was way below 4%!!!)

Why aren't Panamy shareholders thinking about it?

This is their money and the money lend is massive! It's over 444 million ringgit!!!

Why is the money lend to the related company at such a low rate?

Don't they rather have the excess money returned to them as dividends?

Yes, it's all about money and if you are a shareholder, hey, it's your money.

DO NOT BE BLINDED BY THE CASH PER SHARE.

Understand the company.

Understand what the company does with its excess money.

If they are going to be a cash hoarder or worst still, lend your money to a related company at a cheap rate, don't you think that your money is being abused?

No?

Conflict Of Interests In Investment Advisory

Yesterday I had questioned: How To Expect Proper Governance With All These Conflict Of Interests?

When Swee Joo announced that it is to be delisted on 26 Sep 2011, this reminded me of a conflict of interest between iCapital And Swee Joo that I had written back on July 2009.

I had always disliked the the conflict of interest between iCapital the fund management and iCapital the investment advisor.

As a fund manager, iCapital was already making money. Why the need to be an investment advisor at the same time? Why?

How can one trust the integrity when the same said company manages fund and gives investment advice at the same time? Fund buys, investment advisor gives advice to buy the stock at the very same time. A rather tacky issue, yes? How can one trust if the company is giving a pure independent and trustworthy investment advice?

Let's look back at iCapital And Swee Joo incident once more and the said conflict of interest.

Now let's look at iCapital.biz 2008 annual report announced on 11th July 2008, Annual Report 2008.

• In the year ending 31 May 2008, your Fund made a number of purchases. New investments were Boustead, Hai-O Enterprise, Suria Capital, Swee Joo, Telekom Malaysia and TM International.

And here is the snapshot of the portfolio as at 11 June 2008.

 
iCapital.biz had purchased some 2,083,100 million shares worth some 2,858,552 million. This works out to 1.37.

Now iCapital's 2008 fiscal year runs from 1st June 2007 to 31st May 2008. Somewhere in between these dates, iCapital is said to have invested in Swee Joo at an average cost of 1.37.

Here now is the chart. The top section with all the foot prints denotes the time frame between 31st May 2007 and 30th May 2008. This is where iCapital 'might' have purchased Swee Joo at an average cost of 1.37.




Now Swee Joo was listed in Oct 2006.

First yet of earnings I would use is what Swee Joo reported on Feb 2007. Quarterly rpt on consolidated results for the financial period ended 31/12/2006. Swee Joo made 12.571 million.

May 2007. Quarterly rpt on consolidated results for the financial period ended 31/3/2007 Swee Joo made only 5.043 million. Less than more than half of what it made the previous quarter.

Only these 2 set of earnings and the second set of earnings reported on May 2007, showed a drastic decrease in its earnings.

Would that be considered a 'value' investment'?

Nonetheless, 2 months later, on 20th July 2007, iCapital investment advisory makes a buy for longer term call! And yes, it openly declared the vested interests in the investment report.

Let me reproduce it in full once more.

• [Updated on 20/07/2007 15:41:00]
  Principal activities: Shipping & related businesses
  Major shareholder/s: Leonard Linggi Anak Jugah,Goodlink S/B, Limar Management Services S/B
  
  The principal activities of Swee Joo Bhd (SJB), an East Malaysian group that is fast catching the headlines, comprise mainly shipping services, shipping agencies and shipping-related services like haulage, distribution, warehousing, container handling and repairs.
  
  The shipping services provided by SJB are mainly domestic and some regional routes. Domestic refers to routes between East, Peninsular Malaysia and Brunei and coast to coast refers to Sarawak while the regional shipping liner covers Bangkok, Ho Chi Minh City, Jakarta, Surabaya, and Singapore. Currently, one of the strengths of SJB lies in its comprehensive coverage of the East Malaysian ports. Domestic shipping services contribute the bulk of the group's revenue and earnings. In 2001, SJB formed an alliance with a large global shipper, Evergreen Marine Corp. The tie-up with Evergreen increases its revenue with the trans-shipment of goods from international to domestic routes. SJB is allowed free use of Evergreen's containers for 30 days. Presently, the feeder freight revenue contribution from Evergreen makes up 4.3% of SJB's sales. The group's revenue is primarily denominated in Ringgit, while a substantial portion of its cost is in US$. Unfortunately, the group does not undertake currency hedging. Due to the rise in oil price, bunker costs have been rising but this event affects all shippers.
  
  The two main 100% owned subsidiaries of the group are, Johan Shipping Sdn Bhd (Johan) and Swee Joo Coastal Shipping S/B (SJ Coastal). Johan, which provides domestic container shipping services, started business in 1983. It offers scheduled shipping services between west Malaysia and Singapore to East Malaysia and Brunei. In addition, Johan also provides regional shipping services to Indonesia, Bangkok, and Ho Chi Minh City. Johan expanded its shipping services to Ho Chi Minh City and Bangkok in 2003. In 2006, Johan recorded a turnover of RM206.5 mln with a net profit of RM20.3 mln. On the other hand, SJ Coastal provides scheduled services between the various towns in Sarawak. In 2006, it recorded revenue of RM36.5 mln with net profit of RM2.33 mln.
  
  SJB also provides services such as warehousing, container depot, consolidation and deconsolidation of cargoes at Port Klang, Pasir Gudang, and in the major parts of Sarawak. Repair and maintenance of container services are done at Port Klang. The group has 54 prime movers and 189 trailers. The haulage business had sales of RM8 mln in 2006 and net profit of RM0.11 mln.
  
  Presently, SJB operates a fleet of 14 container vessels, 10 general cargo ships and backed by 7 support vessels. No single client, market segment or industry dominates in terms of revenue or profit contribution to the group. In 2007, Johan is adding one 713-TEU container vessel, 1 dual-purpose CPO/container barge and 1 general cargo vessel for transporting rice and is entering the Myanmar and East India markets. SJ Coastal would be adding one 2,400-tonne CPO barge in 2008. Asia Bulkers Sdn Bhd, which mainly transports palm oil products and logs, will be adding one 7,000-tonne product tanker, and 2 sets of tug and CPO barge in 2008.
  
  Conclusion & Advice
  
  Imagine a company that has proven management, earnings that have grown rapidly and are expected to continue growing rapidly and with some of its businesses enjoying strong market positions, how much would you be willing to pay for such a company? Although the shipping business is capital intensive and the company has high borrowings, the current market valuation of RM278 mln for SJB seems to be on the low side. Hence, i Capital rates Swee Joo a Buy for the longer-term.
  
  Disclosure of interest (required under the Securities Industry Act) : The publisher and associates have an interest in Swee Joo.

The key issue for me is the disclaimer.

• The publisher and associates have an interest in Swee Joo.

With just two set of quarterly earnings. with the second set of quarterly earnings showing a huge decline in earnings, iCapital investment advisory makes a bold buy call on Swee Joo.

Was the buy call from the investment advisory really justifiable, was it a truly independent investment advisory or was it influenced by the fact that the publisher and its associates have vested interests in the stock?

Think about it... iCapital.biz the stock, purchased the stock between 31st May 2007 and 20th July 2007 then the investment advisory quickly issues the buy call!


With Swee Joo announcing it would be delisted next Monday, one would be wondering what happened to iCapital.biz's stake in this stock.


Their cost of purchase was rm 2,858,552. (Bought sometimne between May-Jul 2007)

They reported they dispoed the stock in their Annual Report 2010.

Disposal value was rm 1,005,659.

Loss from disposal was rm 1,852,893.

How?

This posting is not to make a mockery of iCapital's loss but to stress on the conflict of interest between an independent investment advisory and its fund managing business.

Like I said, I dislike such conflict of interest. I do not like to see an investment advisor making a buy call while its own fund management had already bought a substantial stake in the stock.

In Swee Joo's case, the buy call made on July 2007 was so questionable. It was a newly listed stock and there wasn't much financial evidence that suggested it was worth an investment. All it had was two set of quarterly earnings, with the second showing decline in earnings. But yet iCapital's investment advisory deemed it fit to issue a buy call. Was the call influenced by the fact its publisher and associates had vested interest in the stock?

And what about the research reports we read daily? All the buy calls. Are the calls truly independent or do they also carry the same conflict of interests?

Should I Invest In iCapital's Global Funds?

I got a request to comment on iCapital's 'international' fund performance fee and I was asked if the fee was justifiable and if the fund was worth investing.

In regarding to fund performance fee. Much had been written about it by blogger AhYap in his posting Tan Teng Boo Responds to iCapital International Value Fund and Global Fund Performance Fee Issue! But Still Not Addressing The Real Problem. I would suggest one to give this posting a good read (no point in me repeating what's being said and more so, I have nothing to add. :D ) because I do find that the points raised are very much a concern for the prospective investor and that these concerns needs to be addressed before the investor makes an investment into the fund.

Why?

Reasoning is so simple and logical. It's not wise that an investor invests in a fund where the fund structure is so biased or stacked against the investor. The odds are against the investor. In layman's term: Hard to make money! The fund manger would most likely make money than you (in regardless of the fund performance!) Now this does not sound like a smart investment, does it?

Anyway what about the funds itself?

The funds was launched almost a year ago. From their website: The i Capital International Value Fund Launch

• Stock markets are currently at their lows. It is an excellent time for investors to tap into this exciting opportunity, not only recoup their losses, also to enjoy exciting, long term capital appreciation. Action has to be taken urgently as the global markets are already starting a new bull run.

I like to make one comment. Yes, last year indeed would be a great time since the stock markets then was indeed at their lows. Yes, let me give credit to iCapital for that. ( See I do give credit) but then and now, is a world of difference. Since iCapital likes to compare their fund nav with MSCI World and MSCI All Country Index, perhaps a simple view of the charts is appropriate for one to gauge how low are the stocks currently compared to last year when these two funds were launched. ( Valid question to address? )

How? How would you interpret these two charts of MSCI World and MSCI All Country? Let's NOT predict where the charts are heading but look at where these index are at currently. They are not at their highs, and neither there are at the lows. But gauging at where it is, would you define it as 'lows'? ( And of course, one could expand the question by addressing the current financial and economic woes globally. Would this be a great time to be investing? Yeah, of course the global markets could go higher, no doubt but then who's to say we won't visit the lows again? How? You have to address this, not me. :D )

Now the greatest asset of any fund is the fund manager itself.

Yes, the performance of the fund most likely would not be replicated if the fund is managed by someone else, which is why it's so important, in my flawed opinion, to question the integrity of the fund manager.

Do you trust the fund manager completely? 100%? Sure?

So how do you trust a fund manager? Obviously, not everyone, will get to know him personally. So how else to gauge him? Well for me, I could be wrong but one way I would judge him is by his 'market actions', what he says and what he does in the market. And I would see if there is any conflict of interest behaviour. Are these logical questions to ask? Well if you insist on gauging him based on fund performance and totally discounting character of the fund manager, I guess the rest of this posting would be a waste of time. For me, fund performance or the ability as a fund manager is without a shadow of a doubt, a must but so is the issue of the fund manager. Trust of the fund manager is so, so very important.

April 2008, I wrote the following posting: What Do You Think of ICap's Recent Disposal Of Shares Held? . What happened was TTB was quoted in the press to be 'unabashedly bullish' in spite of the apparent market meltdown in US. ( Let me quote him again "“Firstly, the subprime problem remains just that – subprime. Secondly, while many large financial institutions have been badly hit, the central banks have successfully averted a credit or liquidity crunch scenario. Thirdly, the US economy is certainly slowing down but a recession is only a possibility, and not certain.” ). So if you hear this famed local value investor making speaches like this, won't you feel bullish too? Now get this... the problem with that bullish statementS (it wasn't just one statement, it was several!) made publicly, the following quarterly earnings report, iCapital.biz, the local closed end fund, announced it had disposed securities worth 50.999 million!!

How? Publicly he said 'unabashedly bullish' but at the very same period, his fund dumped securities worth 50.999 million like plague! ( see this posting More Rumblings On Tan Teng Boo's ICapital's Disposal Of Shares also)

Why tell everyone you are bullish when you are actually disposing a lot of shares?

And since iCapital has an independent investment advisory business, they are issues to address yes?

Personally, I find no reason why the need of the investment advisory business. Surely if iCapital fund managing business is good, why bother with investment advisory? Can make money meh? And because it owns fund managing business and investment advisory business, the integrity questions will never end!

Yes, for example, does the fund buy stocks they are recommending? Obviously, they would. Simple reasoning. If the stock is no good, the investment advisory won't recommend it and neither the fund will buy it. But what if, things get skewed to the left? What if the advise is given because the fund holds the stock? What if the fund contradicts what the investment advice given? See how messy these questions are? And since so messy, why is iCapital still insisting on keeping that business?

For example: On August 2008: More on iCapital Transparent Issue. I compared iCapital's stock recommendation list as of July 2008 and I was amazed to read the stocks all carried HOLD or BUY ratings but when I compared to its 2008 annual report (click here: CAPITAL.BIZ BERHAD ) iCapital the fund said it had sold!

In the posting iCapital: How Independent Is The Advice When They Hold Vested Interests In The Same Shares They Are Advising On?, I compared the shares disposed, with assumption it had all been disposed during the period, 1st Dec 2007 to 29th Feb 2008, since according to its earnings notes, it had disposed some 50.999 million in that period.

The following was what I noted:

• Take Boustead Holdings, it traded as high as 7.00+ during this period. It's now 4.74.
  Take Intergrax, it traded a as high as 1.40+ during this period. It's now 0.695.
  Take Lion Diversified, it traded as high as 2.00 during this period. It's now 1.03.
  Take Petronas Dagangan, it traded as high as 8.60+ during this period. It's now 7.00.
  Take Poh Kong, it traded as high as 0.70+ during this period. It's now 0.44.
  
  It would appear to me that iCapital fund management was spot on in disposing these shares during that 1st Dec to 29th Feb 2008, where it disposed some 50 million worth of shares. Yes the sum of disposals were as much as 50 million ringgit!
  
  Absolute brilliant for the fund!
  
  But what about their subscribers? (the stocks listed above all had either a buy or a hold recommendation as stated in the posting here )

Yes, the fund contradicted what its own investment advisory stock recommendation!

Now on the issue of the investment advisory recommending a stock in which the fund had vested interest. See iCapital And Swee Joo (long posting! :P) Companies fundamentals were questionable. So was its earnings but yet, iCapital gave it a buy rating when it had vested interest in the stock! (And what about the Mieco saga? )

How?

And then there is Axiata! See iCapital Lost 14 Million In Axiata Without Explaining Why

Well, iCapital lost a lot money in Axiata. That wasn't so much the problem. The problem was, it chose NOT to disclose WHY it sold in its quarterly earnings notes. I thought iCapital should have shown the investing public more respect by disclosing the reasoning why. Yeah, iCapital finally did explain why but only in its agm. Was the action acceptable? I did not think so. To wait for the agm to get the explanation is not acceptable. The investing public had the right to know immediately since the size of the loss was staggering and more so since iCapital had preached investing terms like 'value investment' and 'buy for the longer term', why did iCapital dispose its holdings in Axiata? What happened to fund 'investment philosophy? This closed end fund was a traded entity. It's listed in the local stock exchange and as much as the stock could go up, it could also be sold down! To not disclose why was simply not acceptable. Not for me.

And yeah, some do not LIKE what I had pointed out in iCapital. See iCapital: As Long As There Is Result, You Should NOT Question. Their reasoning is "As an investor, what matters most to them is returns on investments.If TTB can outperform the market, who cares what mistakes he makes? Who cares whether he explains his decisions or not?"

Me? I repeat again.

But as long as iCapital.Biz is a public listed entity, I believe I have the right to POINT out all the mistakes he makes and as long as it is a public listed entity, it is ONLY correct that he address this issue by explaining to the shareholders and the investing public. By NOT doing so only reflects so poorly on the integrity of the fund and TTB himself.

And this is my flawed opinion and no matter how flawed it is, it's mine and it's my right of opinion.

Anyway, so how now?

Based on all these issues, what do you think of this fund manager?

Isn't the conflict of interest one glaring concern? And yeah, what about integrity?

For me, I believe all these questions needs to be addressed when one is thinking about investing in iCapital's global funds. And yes, read AhYap's blog on the issue of fund performance fee too! These are valid issues to address.

Anyway, please understand that these are my mere second opinions and I do hope that it helps and most importantly, end of the day, it's your money, not mine and if you think my posting is severely flawed, so be it.

I am just a nobody and I am not an advisor and neither am I a fund manager.

Ok?

China Crash Unlikely, India Yes!

Same old statement made: China crash unlikely but India’s outlook less rosy

• Thursday May 27, 2010
  China crash unlikely but India’s outlook less rosy
  CAPITAL TALK
  
  WE all know that there is an endless list of people, at least based on what is being reported in the Western mass media, forecasting that China’s economy will crash soon.
  
  Based on the latest April data on China’s property price, bank lending and inflation rate, it would appear that all the dire forecasts for China are unfolding right in front of our eyes.
  
  As i Capital has advised repeatedly, it does not see China crash landing this or next year. In fact, it continues to see a soft landing in the coming months.
  
  By focusing on China, what the China bashers have not shown is that between the two emerging Asian giants of India and China, India should be the economy that is heading for a crash.
  
  
  
  The three charts above show key economic statistics for these emerging giants.
  
  India’s situation is somewhat similar to Greece. She has persistent and high levels of budget deficit, external trade deficit and also a high inflation rate.
  
  In contrast, China’s economy is better managed. Despite such contrasting economic performance, why is it that China is forecast to crash and not India?
  
  Is it because China has some problems with some minorities? The China bashers love to highlight Tibet and Xinjiang as China’s major trouble spots. This cannot be because the social problems that India faces are even more serious than China’s.
  
  In 2006, Prime Minister Manmohan Singh called the Naxalites “the single biggest internal security challenge ever faced by our country.”
  
  In 2009 he said that India was “losing the battle against Maoist rebels.” The Naxalites are very popular and growing in popularity in India. So why zoom in only on China?
  
  The answer is simple.
  
  To the China bashers, India is seen as a rare Asian democracy which they will go all out to portray as the model nation.
  
  In contrast, China is still portrayed as a communist country and they would go all out to discredit her as a successful nation, and if possible to cause the country to break up.
  
  Unfortunately, the facts of the matter do not support such a conclusion.
  
  No matter how one looks at it, China’s economy is not ready to crash.
  
  Based on anecdotal evidence, the property bubblet is already being busted. Property prices are already peaking.
  
  The numerous measures need time to take effect.
  
  The economic and housing data in the coming months will be more reflective of the underlying trend and thus more accurate.

See also Possible Sign Of China's Manufacturing Slowing?

China still portrayed as a communist country?

Why divert attention to India?

Possible Sign Of China's Manufacturing Slowing?

Since the posting Dr. Marc Faber Warns That China 'May' Crash was made, I believe it's appropriate that I highlight the following two postings.

On WSJ: China Manufacturing Gauge Slows

• China Manufacturing Gauge Slows
  
  By AARON BACK
  BEIJING—One gauge of manufacturing activity in China showed continued expansion in April, though at a slower pace.
  
  The HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to 55.4 in April from 57.0 in March, HSBC Holdings PLC said Tuesday.
  
  The decline in April's PMI reading followed a rise in March, though it was still the 13th consecutive month in which the PMI reading has been above 50, indicating expansion. A reading below 50 indicates a contraction.
  
  On Saturday, the China Federation of Logistics and Purchasing said China's official Purchasing Managers Index, which the government issues with the National Bureau of Statistics, rose to 55.7 last month from 55.1 in March, though a high reading on input prices indicated inflationary pressure could be building.
  
  "April's PMI points to a moderate slowdown in the expansion of manufacturing activity," HSBC's chief economist for China, Hongbin Qu, said in a statement. "We see this as good news because it means that Beijing's policy tightening is starting to cool the overheated economy, which will help to contain inflationary risk in the coming quarters."
  
  But other economists felt it would be premature to declare a policy-induced slowdown. "There's no clear evidence yet that things are slowing down," said Royal Bank of Canada economist Brian Jackson.
  
  "The PMIs for April showed that the risk of economic overheating exists in China. However, it is still too early to tell how serious the risk is," said Xing Ziqiang, an economist at Chinese investment bank CICC.
  
  In Beijing's latest action to curb inflation and surging property prices, China's central bank on Sunday announced it was ordering banks to set aside more of their deposits on reserve for the third time this year.

China slowdown?

Of course a randomly favourite article Will China crash economically? ( I really need to paste this here else I be said to be biased. :P )

ps... they are all wrong. they simply love to bash China.

• CHINA bashing by now must surely be the most popular sport among Western investors, mass media and institutions. China crashing now, China crashing a few years later, China crashing anytime and crashing forever is the mantra.
  
  A mantra is like a hymn. If you chant it endlessly and repeatedly, it gets stuck in one’s head. However, the fact that it may get stuck in one’s head does not mean that it will happen or that it represents the reality.
  
  In fact, a mantra based on superfluous analysis or worse, an inherent bias, would block the real realities from surfacing. An objective analysis of the global economic conditions would show that this is what is actually happening.
  
  With all the high profile, high publicity given to China bashing, all eyes are centred on China in general and its property sector in particular. Will China crash? When will China crash? i Capital’s managing director gets these questions all the time.
  
  In contrast to all the dire predictions about China, i Capital expects China’s economy to nicely soft land this year. When the Lehman Panic broke out in September 2008, and almost collapsed the world economy, China was ahead of every other economy in implementing economic expansion measures.
  
  China very quickly bottomed out and pulled the global economy out of its worst conditions (which, of course, no Western country has given China any credit). While the US led the world economy into possibly the worst recession in a long time, China and the rest of Asia quickly pulled the world economy out of a US-created catastrophe (see charts).
  
  As China’s economy recovered quickly and strongly, the Chinese government has subsequently acted very quickly and effectively again. Measures to cool the hot property sector down have already been announced months ago.
  
  China’s government is ahead of the property “bubblet” curve. However, it takes time for the impact to be felt, which is expected to take place in the coming months.
  
  Selected segments of the property sector will cool down but the rest of the economy will still be performing well. China’s economy is huge and a cooling of the property sector will not crash the continental economy.
  
  The decision by The People’s Bank of China not to raise interest rates so far is correct. Why kill the rest of the economy when there is no need to? There are many other effective ways to tackle the property “bubblet”, especially when the cause of the rise in property prices is not low interest rates.
  
  Another unnoticed development that favours China soft-landing this year is that the current global economic recovery is not synchronised. The recovery in the United States is behind that of China and the rest of Asia but it is gathering momentum.
  
  The growth in US exports and the recovery in the industrial sector have led the US recovery. Consumer spending is also recovering and will gather momentum as the US job market improves further. The US housing sector is also expected to contribute positively this year.
  
  As 2010 progresses, the US economic recovery will play a greater role in global economic growth. This is ideal, as it will allow China to turn to other economic sectors for growth while it tackles its property bubblet.
  
  In short, as the US economic recovery gathers momentum in 2010, China’s GDP growth would slow to a healthy, high single-digit rate.
  
  Based on the economic outlook of the United States and China, i Capital sees a benign global economy. Unlike 2006 or 2007, 2010 will see a healthy unsynchronised global recovery. This upbeat view can, of course, be turned topsy-turvy by unexpected events. There seems to be plenty nowadays.
  
  One, while the currency pressure on China seems to have reduced somewhat, the United States is now cleverly turning to other countries and US-dominated global institutions to crack China’s position. Apparently, even India and Brazil are now joining in the bandwagon as prominently headlined on the front page of the Financial Times.
  
  So, although the currency pressure cooker is not boiling over for now, the threat of a trade war needs close watching.
  
  Is China crashing the real worry? Or is the eurozone breaking up the real worry? Actually, an economy that has crashed but that has not been described in this way is the eurozone a.k.a a continent of discontent.
  
  First, it was the PIGS (Portugal, Ireland, Greece and Spain). The budget deficit for Iceland is 14.3%, Greece 13.6%, Spain 11.2%, Portugal 9.4% and China 2.2%. The China bashers say that China’s budget deficit is actually higher because it does not include the local governments. We wonder why the clever Greeks did not think of this simple trickery.
  
  Anyway, the Greek civil servants are on strikes and the budget deficit is running at unsustainable levels. No wonder the Greek economy is not in a sustainable mode. This continent of 35-hour working week but with wages paid equivalent to 350-400 hours of work in China or India is declining fast, faster than what is generally realised or acknowledged.
  
  Greece, supposedly the birthplace of democracy, has transformed itself into a “debtmocracy”. Will China crash, as we all are led to believe, or will Greece be the Sword of Damocles for the eurozone and thus the global economy?
  
  Then, as if Greece et al is not enough, as if an evil spell has been cast on Europe, we all discovered that cash-starved Iceland is actually rich with ashes. Imagine Iceland, more than 1,800km away from London and more than 2,100km away from Germany, taking revenge on the eurozone. Who would imagine that?
  
  The hiatus caused by the volcanic eruption is not small. That a volcano from Iceland is causing so much havoc in the eurozone is symbolic of the very difficult period that this fledgling economic bloc is undergoing.
  
  Almost every economy in the eurozone, including that of the United Kingdom, is in trouble. As i Capital wrote above, this is the reality, this is what is actually happening.
  
  China and the rest of Asia are not crashing. The United States crashed and the eurozone has crashed. Should the East follow the West?
  
  i Capital does not think so although there are many out there who would want to see this happening.
  
  Once again, we have to say, In China We Trust. As i Capital advised previously, “This decoupling is here to stay.

Some Comments On Earlier Posting

Got the following comments on the posting: iCapital Comments On Shanghai SSE

• Ooi Beng Hooi said...
  
  From what I read, TTB didn’t mean that in every case after correction, the market should move up. Did he say so? He was referring particularly to Shanghai market in current situation. He was expecting Shanghai market to go up after correction.“
  
  And if so, isn't this a speculative market?” Did he say the market was not speculative?
  
  “bear market is highly unlikely and a repeat of the 2005-2007 bull market is also unlikely.” What wrong with this statement? I interpret it as the market will go up but not as fierce as the previous one. What is so confusing and deep to understand?“
  
  Is iCapital telling that there is absolutely no justification for the SSE to plunge in 2008????” I read it as the plunge is too deep, over-reacted. Don't you think so? If not, how the market rebounded 100%?

Many thanks for your comments. Let me try to explain my flawed posting. :)

• From what I read, TTB didn’t mean that in every case after correction, the market should move up. Did he say so? He was referring particularly to Shanghai market in current situation. He was expecting Shanghai market to go up after correction.“

Ahh.. I was ONLY posting on iCapital's comments on SSE market which was posted on Star Business. ( source: http://biz.thestar.com.my/news/story.asp?file=/2009/9/3/business/4639658&sec=business )

The third last passage. Quote: "Once the current correction is over, the rally in Shanghai will resume."

Well, how would one interpret that statement?

Allow to repeat what I wrote.

Well let's see.
If market correction is over what could happen?
Hmmm... it could either go up or it go sideways.
And some actually do define a market that moves sideways after a plunge as a phase of market correction.
Hence, by logical reasoning, it's a no brainer (for some) that once the market correction is over, then logically the market should move up.

Fault me if you want, but in my flawed opinion, I always believe that once ANY market correction is over, the market should then move up.

• “bear market is highly unlikely and a repeat of the 2005-2007 bull market is also unlikely.” What wrong with this statement? I interpret it as the market will go up but not as fierce as the previous one. What is so confusing and deep to understand?“

Oh. That's nothing wrong with the statement but I like yours so much better because I can understand exactly what your wrote. "The market could go up but not as fierce as the previous one."

That would have been not so deep and not so confusing for me to understand.

Well.. fault me if you want for the lack of understanding. :)

• “Is iCapital telling that there is absolutely no justification for the SSE to plunge in 2008????” I read it as the plunge is too deep, over-reacted. Don't you think so? If not, how the market rebounded 100%?

Well how about you ask them since I do not know. :)

In their own words from the very last passage, the first few words read..

• Given the steep and irrational plunge in 2008.............

I don't know lah but was the plunge in 2008 irrational?

iCapital Comments On Shanghai SSE

On Star Business: Will rally in Shanghai stock market resume

Some passages caught my attention.

• However, the 2005-2007 bull market was overdone as the rise, although it was to partially make up for the time lost from 2001 to 2005, became too speculative. Can one say the same thing about the 2008-2009 rally?

What's up doc?

Current market rally for SSE is not speculative????

Well if he says it ain't so, who are we to argue? :)

The last few passages were better.

• Once the current correction is over, the rally in Shanghai will resume. However, one needs to note that the Shanghai market does not have to move in tandem with the economic cycle on a quarterly or annual basis. A good example would be from 2001 to 2005.

Well let's see.

If market correction is over what could happen?

Hmmm... it could either go up or it go sideways.

And some actually do define a market that moves sideways after a plunge as a phase of market correction.

Hence, by logical reasoning, it's a no brainer (for some) that once the market correction is over, then logically the market should move up.

The next sentence.

• However, one needs to note that the Shanghai market does not have to move in tandem with the economic cycle on a quarterly or annual basis.

Hmmm.... I agree with that statement. Yes I do. :D

But... but... buttt.... butttt..... what would call a market that does not move in tandem with economic cycle?

Correct me if I am wrong but won't you call this a market that is moving without fundamentals?

And if so, isn't this a speculative market?

The next passage..

• Whether the current correction will be over soon or it will be a prolonged pause is hard to say but one thing is clear: a repeat of the 2007-2008 or 2001 to 2005 bear market is highly unlikely and a repeat of the 2005-2007 bull market is also unlikely.

Errr.... confusing here for me lah. Sorry lah if I cannot understand.

It just said once the market correction is over, the rally in Shanghai stock market will resume.

And if correction is over, surely then a bear market is impossible to say the very least because if the bear market would to happen, the how could the correction be over?

So I guess it's saying the rally in Shanghai market will continue but it will not be the same as the 2005-2007 bull market. I hope I am not wrong here. So a small bull rally, is it?

The last passage was my favourite.

• Given the steep and irrational plunge in 2008, it is not surprising that the subsequent rally was so strong but the future trend from now onwards would be more subdued, more gradual, relative to the movements in 2007, 2008 and 2009.

Errr.... errrr.... errrrrhm.... irrational plunge in 2008?

Huh?

Huh?

Is iCapital telling that there is absolutely no justification for the SSE to plunge in 2008????

?

Exemption For TTB and iCapital?

In the posting: "iCapital Did Explain Why It Lost So Much Money In Axiata!" , the following comments were posted.

• Moolah said...
  
  How about this?
  
  Imagine I am an investment advisor and also I manage a couple of funds. ( LOL! That would be one big joke. However, let's just let our imagination run wild. :P )
  
  I make public recommendations that iCapital.biz (just a blunt stock example... lol.. if do not like this name, use ABC co, ok?) is an excellent stock to invest in.
  
  However... behind everyone back, the funds that I manage, were selling iCapital.biz.
  
  How?
  
  How would you seriously rate my integrity?
  
  Won't you be cursing me that my mouth said one thing but my hands and legs is doing the exact opposite?

And I got the following comments..

• invest said...
  
  LOL !If you're the advisor and fund manager, of course I would curse and scream....
  
  Reputation, respect and leadership have to be earned, not by making comments on others....

Hmmm...

Yes, it's ok that you would curse at me and scream at me but you won't do that at TTB?

Seriously.

Because what I did is simply not forgiveable.

To tell you that I am bullish while the same time I am actually selling would mean that I am less than truthful in my investment advice. Which would reflects poorly on my integrity. I would be no more than the lowlife scum of the earth!

And seriously, you should even throw your rotten shoes and eggs at me too!

:D

However ... just what about TTB and iCapital?

Now I do hope that I am not misinterpreting you wrongly and do kindly correct me if I am wrong.

It would appear to me that you would not you curse and scream at TTB but you would at me.

Rather not fair, eh? Why the double standard?

I do hope that it is not because he has reputation and respect! And I do hope that you are not saying that as long as he has reputation and respect, he as an investment advisor can be telling everyone he is bullish, while at the same time he is selling shares by the truckload! (incident happened early year!)

WOW!

I hope I am wrong in misinterpreting what you are saying.

Or perhaps you are saying that I cannot earn respect and reputation by making (bad) comments on TTB.

This one I can handle, no problem.

Is ok that you have no respect for me. Seriously. :)

Anyway, so what's wrong for highlighting this issues within iCapital and TTB?

iCapital Did Explain Why It Lost So Much Money In Axiata!

Hmmm.... :D

Got a new comment on an old posting: Are My Comments On iCapital Overdone?

• invest said
  
  I tend to think your criticism on TTB is rather harsh and overdone considering a few points I which to make :-
  
  1) TTB did explain the losses in AXIATA in his AGM (those that attended the AGM would know).
  
  2) ICAP did not buy AXIATA from the market. ICAP got the shares as a result of the spin off of CELCOM (AIXIATA) from TELEKOM.
  
  3) Due to the rights issues call, ICAP decided not to take up the rights and decided to dispose the entire stake in AXIATA. TTB feels AXIATA might require further cash calls / funding in future for their expansion plan. Hence, ttb decided to sell and channel proceeds to another stock.
  
  In fact, I found the Q&A with TTB during the AGM was really a wonderful open time where TTB shared some of his thoughts and reasonings.
  
  I guess those that did not attend the AGM if you are shareholders really missed out.

Let me share some views again.

Firstly, many thanks for highlighting the fact that Mr.Tan did share with his loyal supporters on the massive losses iCapital suffered on Axiata.

Now perhaps let share with you my issue.

On the posting: http://whereiszemoola.blogspot.com/2009/06/icapital-lost-14-million-in-axiata.html

The following is the link to the screenshot I had posted on that posting: click here

In that quarterly earnings note, did iCapital explain why it sold? Did it? It did not and for me, it's in my flawed opinion, that it's unjustifiable that iCapital shareholders had to wait for the agm to discover if icapital will explain it losses or not! (In this case, iCapital did explain).

Why is it unjustifiable to wait? Well, iCapital.biz, is a traded entity. And the market, as you know, has it's own mindset. What if the market had sold iCapital down because of the losses? Would this be an impossible scenario? So why can't iCapital explain it losses in its earnings notes?

Is this such an impossible request?

To not explain in their earnings notes and to explain it only in the agm is like icapital telling their investors, 'hey we got huge losses in Axiata (14 million), you do not have to be worried for the next xxx of months. Just wait for my agm, then I will explain'. (In this case, icapital shareholder had to wait more than 2 months to find out the reasoning.)

Does that sound ridiculous?

For some, it does not but for some it's not only ridiculous but ludicrous! Reason? Lack of transparency and lack of respect to the investing public.

Now that was my point.

Did I blast iCapital for not explaining the Axiata loss in its AGM? No, I did not! My point from day one was that iCapital did not bother to explain its MASSIVE losses in its AGM. its quarterly earnings notes!

Regarding points 2 and 3. Thanks for highlighting this issue. Now if one wasn't a shareholder, would they have known? They would not yes?

And let's look at the reason why it sold its shares in Axiata.

Quote: "Due to the rights issues call, ICAP decided not to take up the rights and decided to dispose the entire stake in AXIATA. TTB feels AXIATA might require further cash calls / funding in future for their expansion plan. Hence, ttb decided to sell and channel proceeds to another stock. "

Now this is such a SIMPLE and ACCEPTABLE explanation, yes?

And if I had own Axiata, I might even consider selling based on the exact same reasoning. It was a simple and logical explanation. It's really a no brainer.

So why can't iCapital explain this simple reasoning to the investing public right after it sold it's shares in Axiata? Why did iCapital wait until the AGM (a couple of months later) only to explain what had happened?

Again, I ask, is such an action acceptable?

For me, I find it unacceptable.

Last but not least, if you think that I pointing out this issue as being overdone and harsh, well that's your right of opinion but I will not apologise for pointing out something that I clearly find as unacceptable.

Strange don't you think so?

Everything only wants to talk about the positive.

Those that point out the negatives are deemed as bad folks.

Hey, guess what? I do not have any problems with that. Serious! You see that's your right to only focus on the positives and ignore the negatives. Perhaps in this world, the negatives do not exist.

A Quick Look At iCapital's Annual 2009 Report

Posted not too long ago: iCapital Lost 14 Million In Axiata Without Explaining Why and iCapital Lost 14 Million In Axiata Without Explaining Why

Some suggested waiting for the annual report.

Here is the link. ICAPITAL.BIZ BERHAD

I opened the pdf file in that link and did a quick find on the word AXIATA.

This was what I got.

Huh?

Huh??

Ok, what it is saying is correct but it's a rather 'nice' way that it had compiled all three disposal of shares into one.

Now if one had not followed this blog and the postings, would one have known that iCapital lost a whopping 14 Million in Axiata? And yeah they did not bother to even explain why.

By stating it had a realised gain of rm221.146 gain from those three disposals of shares, it does not tell their massive loss in Axiata, yes?

Some would even call this as twisted reporting!

Anyway, this is how they got the realised gain of rm221.146.

And iCapital's 14.163 million losses in their investment in Axiata has become nothing but a mere accounting entry.

Hey, what are you complaining?

Yeah, some would say, "iCapital made money in their 3 shares disposals what? Bising apa?"

For sure iCapital is good. Hero for many. How could it not be?

iCapital And Swee Joo

Here's another interesting issue on iCapital and its investment in the stock called Swee Joo.

I wrote about Swee Joo back on 27th November 2008. Shipper Swee Joo Announces Losses

I am going to reproduce the posting in full.

-----------------------------------------------------------------------

Local shipping company announced its earnings tonight.

I will borrow these old notes I received from a friend back in 2007. The notes describes what Swee Joo does.

• [Updated on 20/07/2007 15:41:00]
  
  Principal activities: Shipping & related businesses
  Major shareholder/s: Leonard Linggi Anak Jugah,Goodlink S/B, Limar Management Services S/B
  
  The principal activities of Swee Joo Bhd (SJB), an East Malaysian group that is fast catching the headlines, comprise mainly shipping services, shipping agencies and shipping-related services like haulage, distribution, warehousing, container handling and repairs.
  
  The shipping services provided by SJB are mainly domestic and some regional routes. Domestic refers to routes between East, Peninsular Malaysia and Brunei and coast to coast refers to Sarawak while the regional shipping liner covers Bangkok, Ho Chi Minh City, Jakarta, Surabaya, and Singapore. Currently, one of the strengths of SJB lies in its comprehensive coverage of the East Malaysian ports. Domestic shipping services contribute the bulk of the group's revenue and earnings. In 2001, SJB formed an alliance with a large global shipper, Evergreen Marine Corp. The tie-up with Evergreen increases its revenue with the trans-shipment of goods from international to domestic routes. SJB is allowed free use of Evergreen's containers for 30 days. Presently, the feeder freight revenue contribution from Evergreen makes up 4.3% of SJB's sales. The group's revenue is primarily denominated in Ringgit, while a substantial portion of its cost is in US$. Unfortunately, the group does not undertake currency hedging. Due to the rise in oil price, bunker costs have been rising but this event affects all shippers.
  
  The two main 100% owned subsidiaries of the group are, Johan Shipping Sdn Bhd (Johan) and Swee Joo Coastal Shipping S/B (SJ Coastal). Johan, which provides domestic container shipping services, started business in 1983. It offers scheduled shipping services between west Malaysia and Singapore to East Malaysia and Brunei. In addition, Johan also provides regional shipping services to Indonesia, Bangkok, and Ho Chi Minh City. Johan expanded its shipping services to Ho Chi Minh City and Bangkok in 2003. In 2006, Johan recorded a turnover of RM206.5 mln with a net profit of RM20.3 mln. On the other hand, SJ Coastal provides scheduled services between the various towns in Sarawak. In 2006, it recorded revenue of RM36.5 mln with net profit of RM2.33 mln.
  
  SJB also provides services such as warehousing, container depot, consolidation and deconsolidation of cargoes at Port Klang, Pasir Gudang, and in the major parts of Sarawak. Repair and maintenance of container services are done at Port Klang. The group has 54 prime movers and 189 trailers. The haulage business had sales of RM8 mln in 2006 and net profit of RM0.11 mln.
  
  Presently, SJB operates a fleet of 14 container vessels, 10 general cargo ships and backed by 7 support vessels. No single client, market segment or industry dominates in terms of revenue or profit contribution to the group. In 2007, Johan is adding one 713-TEU container vessel, 1 dual-purpose CPO/container barge and 1 general cargo vessel for transporting rice and is entering the Myanmar and East India markets. SJ Coastal would be adding one 2,400-tonne CPO barge in 2008. Asia Bulkers Sdn Bhd, which mainly transports palm oil products and logs, will be adding one 7,000-tonne product tanker, and 2 sets of tug and CPO barge in 2008.
  
  Conclusion & Advice
  
  Imagine a company that has proven management, earnings that have grown rapidly and are expected to continue growing rapidly and with some of its businesses enjoying strong market positions, how much would you be willing to pay for such a company? Although the shipping business is capital intensive and the company has high borrowings, the current market valuation of RM278 mln for SJB seems to be on the low side. Hence, i Capital rates Swee Joo a Buy for the longer-term.
  
  Disclosure of interest (required under the Securities Industry Act) : The publisher and associates have an interest in Swee Joo.

Remember that above set of comments were OUTDATED comments.

Anyway, here is the link to Swee Joo's quarterly earnings reported tonight.

Quarterly rpt on consolidated results for the financial period ended 30/9/2008

It reported losses of 2.4 million.

The below screenshot shows the CLEAR declining set of earnings. ( I wonder if the investment advisor warned its readers about the deteriorating earnings or not! Or perhaps not due to the vested interests!)

Straight away one see the weakness. Receivables are up, cash balances down.

And more weakness can be see in their liabilities.



Loans are increasing and they are HUGE! And trade payables are on the increase!

And this is what the company had to say in its notes.

• For the current quarter ended 30 September 2008, the Group recorded an increase of 26.5 % on turnover compared to same quarter of previous year (from RM 82.8 million in 4th Quarter 2007 to RM 104.7 million in 4th Quarter 2008). However the profit before taxation decreased from a profit of RM10.3 million to a loss of RM1.5 million when compared to 4th quarter of 2007. The decrease in profit before taxation during the current quarter under review compared to same quarter last year was mainly due to the combination of the following factors:
  
  (i) Increase on cost of sales resulted from escalating fuel prices;
  (ii) Higher finance expenses due to additional borrowing to finance the expansion in property, plant and equipment; and
  (iii) Strong appreciation of USD against MYR during the current quarter under review
  resulting in a substantial exchange loss.

Swee Joo last traded at 61 sen.

-------------------------------------------------------------------------
8th July 2009

Key issue for now is the disclaimer.

• The publisher and associates have an interest in Swee Joo.

I will come back to it later.

Now let's look at iCapital.biz 2008 annual report announced on 11th July 2008, Annual Report 2008.

• In the year ending 31 May 2008, your Fund made a number of purchases. New investments were Boustead, Hai-O Enterprise, Suria Capital, Swee Joo, Telekom Malaysia and TM International.

And here is the snapshot of the portfolio as at 11 June 2008.

iCapital.biz had purchased some 2,083,100 million shares worth some 2,858,552 million. This works out to 1.37.

Now iCapital's 2008 fiscal year runs from 1st June 2007 to 31st May 2008. Somewhere in between these dates, iCapital is said to have invested in Swee Joo at an average cost of 1.37.

Let's look at Swee Joo's historical earnings and events.

It was listed back in Oct 2006.

First yet of earnings I would use is what Swee Joo reported on Feb 2007. Quarterly rpt on consolidated results for the financial period ended 31/12/2006. Swee Joo made 12.571 million.

May 2007. Quarterly rpt on consolidated results for the financial period ended 31/3/2007 Swee Joo made only 5.043 million. Less than more than half of what it made the previous quarter.

Only these 2 set of earnings and less than 2 months later, on 20th July 2007, iCapital investment advisory makes a buy for longer term call! And yes, it declared the vested interests!

Hmm.. let's repeat again.... Now iCapital's 2008 fiscal year runs from 1st June 2007 to 31st May 2008. Somewhere in between these dates, iCapital is said to have invested in Swee Joo at an average cost of 1.37.

Here now is the chart. The top section with all the foot prints denotes the time frame between 31st May 2007 and 30th May 2008. This is where iCapital 'might' have purchased Swee Joo at an average cost of 1.37.

Aug 2007, Quarterly rpt on consolidated results for the financial period ended 30/6/2007 Swee Joo's earnings increased to some 9 million. (This could explains for the huge run up in Swee Joo's share price to around 1.79 in Oct 2007.)

Nov 2007, Quarterly rpt on consolidated results for the financial period ended 30/9/2007 Swee made 8.590 million. (a slight decrease in q-q earnings)

And that quarter marked the end of Swee Joo's fiscal 2007 earnings. It made 35.185 million for its fiscal year since listing.

(Hmm... some true value investors would question why an investment is made so soon for there is just not enough investment data for anyone to make any intelligent form of investing. And as you can see above, from the earnings perspective, the best one could do is make q-q comparisons. And as many would know, just on q-q comparison is not sufficient because one would need to understand the y-y comparison numbers too )

Feb 2008. Quarterly rpt on consolidated results for the financial period ended 31/12/2007. Swee Joo made 9.250 million. Previous year same quarter it made 12.571 million. Early sign of weakness, perhaps?

May 2008. Quarterly rpt on consolidated results for the financial period ended 31/3/2008 Swee Joo made only 4.005 million. Previous year it made 5.043 million. Weakness shown on a q-q and y-y comparison. Another warning sign?

Aug 2008. Quarterly rpt on consolidated results for the financial period ended 30/6/2008 Swee Joo made only 2.729 million. Previous year it made 9.013 million. Drastic weakness now!!! Terrible weakness on q-q and y-y comparisons!!

And look at the above chart again. The market is acknowledging the weakness in Swee Joo's fundamentals.

It's so rather clear, no?

Nov 2008. Quarterly rpt on consolidated results for the financial period ended 30/9/2008 Swee Joo lost 2.406 million!!!!

That was when I blogged Shipper Swee Joo Announces Losses

Feb 2009, Quarterly rpt on consolidated results for the financial period ended 31/12/2008 Swee Joo's losses increased to 3.761 million!!

Remeber the blog posting Shipper Swee Joo Announces Losses? Look at the balance sheet again. Look at the cash versus debts. Despite the huge debts, Swee Joo still insisted on a First and Final Dividend.

A First & Final dividend of 1 (one) sen per share, tax exempt for the year ended 30 September 2008

1 sen???!!!!

Makes one wonder eh? Why bother? Balance sheet is so weak and the company is struggling with losses and yet it wants to pay shareholders one big sen in dividend!

Sorry I have to laugh.

Makes one wonder if the dividend is made so that Swee Joo can be classified as a dividend paying stock!

May 2009. Quarterly rpt on consolidated results for the financial period ended 31/3/2009. Earnings turned around. Swee Joo made some 5.135 million. Many thanks to a gain of 3.474 made from disposal of assets (property, plant, equipment)

Swee Joo has cash balances of some 32 million (boosted by disposal of assets amounting to 13.272 million) and total debts stands at a huge 476.640 million.

Swee Joo last traded 0.695. Its buy/sell quote reads 0.655/0.75 currently.

Based at a price of 0.695, if my calculation is not wrong, iCapital's investment in Swee Joo is worth some 1,447,754. Its cost is 2,858,552 million.

Another huge loss in terms of percentage!

Now this comes back to the issue of iCapital's recommendation on 20th July 2007.

Armed with only two set of quarterly earnings, iCapital investment advisory makes a bold buy call on Swee Joo. And what sticks out like sore thumb was the vested interest declared.

The publisher and associates have an interest in Swee Joo.

And with iCapital.Biz purchasing this stock around the same period, don't you think the above disclaimer statement is rather imbiquious?

Who were the ones that had the vested interest in Swee Joo back on 20th July 2007?

Was it iCapital.biz? If it was, some would have mixed feeling because it would meant that after iCapital.biz the stock, purchased the stock between 31st May 2007 and 20th July 2007, the investment advisory quickly issues the buy call!

Hmm... fund buys the stock, the advisory quickly supports the buy by issuing a buy call!

And even if iCapital.biz purchased the stock after that recommendation, some would have even more questions. For it meant that iCapital.biz purchased the stock despite the fact that its so-called associates have vested interes in the stock!

Hmm.. would this be deemed as a conflict of interest?

And needless to say who is the said associates?