Move Over Who?

LOL!!!

Ahh... i remember this one all too well.

It was just last December 2nd 2004 when Kenanga wrote extremely bullishly about Karensoft's prospect: Move Over Bill

A made-in-Malaysia software package that could challenge the great Microsft's Office Suite.

Naturally, i was impressed and proud when i read about it.

Anyway, that's not what i want to mumble about. Consider this, when Kenanga branded Karensoft as a buy in their notes, Karensoft was trading at 0.96. Target price was supposed to be rm1.46 sen. Karensoft today is trading at a price of 6 sen.

Amazing?

Yup... the potential mentioned by Kenanga till today have yet to materialise...

Ahh... how it pays to remember that potential does not necessary equate to profitability!

How about doing a CSI-like forensic on Karensoft?

Karensoft was listed on Jan 2003. Now if you look at the earnings table provided by OSK, Karensoft had a rather poor earnings history. One year lose money, one year make money and the next year lose money again. Ding-Dong earnings history.

So it was not too surprising that based on the poor earnings history that OSK made the following remarks in their ipo notes:

Valuation?. We peg a fair value of RM0.49 for KarenSoft. This is 20% below its IPO price of RM0.61. Our fair value was derived based on the average PER of Mesdaq companies of 20x on FY12/03?s EPS of 2.4 sen.

keke... IPO price rm0.61 sen. Fair Value only 0.49 sen!!

Sibeh geng lah!

So Karensoft was listed on Jan 22nd 2003.

It made its debut with a price of 69 sen.

It reported a quarterly earnings the very next day.

Quarterly rpt on consolidated results for the financial period ended 30/9/2002

1. Sales 1.295 million.
2. Net profit 0.445 million
3. Cash 1.372 million
4. Loans 2.491 million

Decent but the value of the sales and the net earnings were extremely smallish in value, isn't it? I mean it's really like a kuci-mai size company, tiok boh?

And more interestingly, the company fast-fast make big announcement:

KarenSoft Achieves 123% Revenue Growth for Q3, Bullish for Q4

123% revenue growth wor!!

But.. but... buttt..... all this is kinda debatable.... cos.... it does state that karensoft lost money for the corresponding period the previous year. So in all honesty, what's the big deal, isn't it?

Company then announced that it will be the first Mess-daq stock to pay a dividend. ( KarenSoft, First Mesdaq Tech Counter to Propose Dividend ), which it duly did.

Comes May 2003, it reported its next quarterly earnings. 2003 Q1

Quarterly rpt on consolidated results for the financial period ended 31/3/2003

1. Sales 1.146 million.
2. Net profit 0.078 million (a profit of 78 thousand?)
3. Cash 6.397 million
4. Loans 0.941 million
5, Trade receivables 5.927 million

Amidst a rather bullish article appearing on the Edge (18-08-2003: KarenSoft says there's increasing confidence in the company ) this stock became a rather hot item, promting an UNUSUAL MARKET ACTIVITY querry from the Bursa.

Here is some of the interesting comments mentioned in the article.

He says this development is an indication that institutional investors are beginning to take interest in KarenSoft. MBTF is a growth and income fund that pursues steady income and long-term growth. Mayban Unit Trust Bhd, a subsidiary of the Malayan Banking Bhd, manages the fund. "What is significant is that we are expected to be in a growth fund. With the entry of MBTF, we believe more funds will invest in KarenSoft," Chee tells theedgedaily.com....The counter was traded at RM1.07 in active trading at 10.30am on Aug 18.

Hmm... very interesting... without a profitable track record, Karensoft can be considered in a growth fund, meh?

Anyhow.. do note the price is now 1.07... up some 46 sen or some 75% from its ipo price of 0.61 sen.

Hehe... market was hot... so was Karensoft...

way to go babe!!

next came fy 2003 Q2

Quarterly rpt on consolidated results for the financial period ended 30/6/2003

1. Sales 1.873 million.
2. Net profit 0.409 million
3. Cash 5.728 million
4. Loans 1.708 million
5. Trade receivables 7.147 million

next came fy 2003 Q3

Quarterly rpt on consolidated results for the financial period ended 30/9/2003

1. Sales 1.568 million.
2. Net profit 0.228 million
3. Cash 5.132 million
4. Loans 2.489 million
5. Trade receivables 8.394 million

Boring? Wait... here comes fy 2003 q4. Let's see howKarensoft did for its first full fiscal year after being listed on the Messdaq!

Quarterly rpt on consolidated results for the financial period ended 31/12/2003

1. Sales 0.516 million!!! (huh? sales only 516 k???!!)
2. Net loss 1.202 million!! (which wipes out everything!!)
3. Cash 3.865 million
4. Loans 2.870 million
5. Trade receivables 8.237 million

Fiyooo... see onot!

This meant that from this quarterly earnings, Karensoft unaudited loss for its first fiscal year after being listed is 595k. Yes, it's a small amount... but a loss is a loss is a loss! And Karensoft posted a loss of 595 thousand the very firsy year it was listed. What about the quality control over the new listings? And what is bad is look at the rate the piggy bank is depleting. Then look at how the loans increases. And also the trade receivables too.

Another quality company being listed on the Messdaq?

sibeh geng leh?

And this was only 27th Feb 2004.


to be continued.... Part II.