Should Financial Press be allowed to spin-off rumours?

Should Financial Press be allowed to spin-off 'rumours'?

Should it?

On the Saturday Bizweek, there was this one article.

Again it was by Mr. Jose Barrock! Want to check a sample of his past handywork? ( see Mutiara ). This is what I wrote then.

Being creative in one’s writings help sells books.

Being creative in a financial business article?!!??

In the financial world, when the writer attempts to be creative, more often than not, the actual facts is simply distorted and twisted as per the writer’s whimps and fancy.

And the end result? We end up with business financial articles which do nothing but mislead investor(s) who uses the local news media as a source of information for their investing purposes.

So what chances does the investor(s) have if what they reads is badly twisted as per the writer’s own vested interest?


Here's the link to it: Courting AV Ventures

Let's take a look the whole article. Original article is in dark blue italics and my comments is in green.

By JOSE BARROCK

SECOND board counter, AV Ventures Corp Bhd (formerly Autoindustries Ventures Bhd) may have a new controlling shareholder pretty soon, sources familiar with the company say.

Perhaps my 'England' is that bad but 'may have' means nothing. It's just mere heresay or speculation.

Datuk Amanullah Mohamed Yusoof, who is a non-independent, non-executive director of the company, is currently the majority shareholder with 28% equity or 12.1 million shares in AV Ventures.

He is believed to be looking to cash out of AV Ventures to focus on his oil and gas business currently held under a private company Pivotal Achievement Sdn Bhd.

BizWeek was told that several parties have expressed interest to take up his stake in the company, one of whom includes Tan Sri Syed Mokhtar Albukhary.
Told by several parties? And the author of this blatant creative piece threw in a star corporate name to spice up the article. Now as expected, AV Ventures announced yesterday that there was some parties sounding interest BUT it states clearly that Tan Sri Syed Mokhtar had NOT expressed any interest.

So tell me.. how can the reporter write like that? Where's the integrity in his reporting?

Here is the link to AV Ventures announcement yesterday: Click here

Question 1 Dato' Amanullah Bin Mohamed Yusoof confirmed that he is not looking to cash out of AV Ventures. However, as an entrepreneur, Dato' Amanullah may be open to any offers which may benefit the shareholders of AV Ventures.

Question 2 Dato' Amanullah has confirmed that several parties have expressed interest to take up his stake in the Company, but did not receive any offer from Tan Sri Syed Mokhtar Albukhary.

Question 3 Dato' Amanullah confirmed that Tan Sri Syed Mokhtar Albukhary did not make any offer.

Syed Mokhtar’s interest in AV Ventures, which manufactures automobile parts, such as wiper arms, car window regulators, horns and other parts for the auto industry, it seems stems from his shareholding in another automotive player, conglomerate DRB-HICOM Bhd in which he acquired 15.8% equity last year.

The tycoon is believed to have sent his feelers out and made an offer to Amanullah via merchant bankers CIMB Bhd, offering RM1.20 a share, which works out to a total of about RM14.5mil for Amanullah’s shares.
The RM1.20 per share offer is a steep premium to AV Ventures close of 66 sen on Thursday and its net tangible asset peer share which at end September stood at 27.5 sen.

It is still not clear what Syed Mokhtar has planned for AV Ventures, but an analyst says he may be looking to inject his equity in AV Ventures and other existing motor related businesses for additional shares in conglomerate, DRB-HICOM.

There is also a possibility that Syed Mokhtar who also controls MCIS Safety Glass Sdn Bhd, which manufactures windshields and Mardec Bhd, which is largely involved in tyre manufacturing may rope in all his auto related businesses to strengthen his shareholding in DRB-HICOM.

DRB-HICOM’s as part of its sprawling automotive empire has a 34% stake in Honda Malaysia Sdn Bhd, which manufactures, assembles and distributes Honda vehicles in Malaysia and some other parts of Asean.
An analyst from Mayban Securities says the acquisition by Syed Mokhtar and the subsequent injection into DRB-HICOM may be due to more assembly work inked by the auto giant DRB-HICOM.

There have been rumours that DRB-HICOM may look to assemble Chevrolet marques for the Malaysian market.

The conglomerate also directly distributes or has a hand in the distribution of several other marques, via its 29.3% unit Edaran Otomobil Nasional Bhd, which distributes marques such as Audi, TD 2000, Mitsubishi and Tata vehicles among others.

Look at the above paragraphs. Littered with phrases such as is believed, a possibility, have been rumours.

So if there was no offer made, then what about the above statements? A fragment of imagination from the reporter?

Don't you find it strange that we have such quality reporters reporting?

The jewel in the crown for AV Ventures it seems is its 70% unit, Autoventure Mando Sdn Bhd (formerly Autoventure Halla Sdn Bhd), which manufactures steering columns.

Up until June last year, AV Ventures controlled only as much as 51.7% of Autoventure Mando, but has since acquired 8.3% equity from Tengku Malek Tengku Mohamed and another 10% from Bank Islam Malaysia Bhd, collectively for about RM1.5mil.

See how the reporter tries to SELL and PROMOTE the company by insinuating that there is a jewel somewhere in AV Ventures?

The company turned the corner in FY04, but has been posting paltry earnings.

For the nine months ended September, AV Ventures posted a net profit of RM201,000 on the back of RM33.8mil in sales. For the third quarter of FY05, AV Ventures made a net loss of RM67,000 on RM10.2mil in revenue.

As at end September, the company’s current assets stood at about RM26mil with cash and cash equivalents of some RM8.3mil, while its current liabilities stood at about RM20.1mil.

LOL!

Yup, Av Ventures indeed has been paltry.

But... to be even more precise ... AV Ventures made losses for its most recent 2 quarters.

So what do we have?

We have a below average company which lost money for its most recent 2 quarters and whose stock price was drifting lower and lower in the market. And out of the blue, the star CREATIVE reporter decided to do a creative article, throwing in a SPECULATION that a star corporate player MIGHT BE interesting in buying a stake.

How? When our financial press is turned into such a circus, what's left of our financial news?

Err... doesn't it turn it into a funnycial press?

Now take a look at the trading pattern b4 the news was published on Saturday, Jan 21st 2006

Date      Vol(Lots) Close
24-1-2006 10213     0.830
23-1-2006 39412     0. 860
20-1-2006 5524      0.700
19-1-2006 2228      0.660

See how the stock was trading below 70 sen b4 the article was published?
See how the stock JUMPED from 70 sen to 86 sen???
 
Btw... this is just my usual mumbling and i have absolutely NO idea how this stock will perform in the stock market. 
 
Would it go up? or would it go down? 
 
Ask me not. I dunno!
 
I am mumbling this cos I care... and i simply find it strange how our reporters could churn out such poor reporting.
Do you care?