Reminiscences of a Stock Mumbler: III

The wonders of the press!

Flashback. Aug 19th 2003.

There was this nice little article written on the Edge: Rohas-Euco starts second stage of water project

Now the picture below depcits what happened. The circle dentoes the time of the article. See how the stock went zoom, zooming after the article was written?

And the following picture also...

Which only prompted the stock getting ze UMA (UNUSUAL MARKET ACTIVITY) thingy!

• We draw your attention to the sharp increase in price in your Company's shares today.In accordance with paragraph 9.11 of the Exchange's Corporate Disclosure Policy on Response To Unusual Market Activity, you are requested to furnish the Exchange with an announcement for public release after a due enquiry seeking the cause of the unusual market activity in the Company's securities. When considering your response and when making the required announcement, your attention is particularly drawn to the continuing disclosure requirements set out in Chapter 9 of the KLSE's Listing Requirements.

Now what was interesting was the following comments...

• However, there was an article published by The Edge Online on 20th August 2003 titled "Rohas-Euco starts second stage of water project" whereby the content of which is confirmed correct and that the transactions mentioned therein have been disclosed or announced earlier save and except for some clarifications as follows:
  
  (i) the Sungai Selangor Phase 3 (SSP3) project involved the design, engineering, procurement, construction, installation, testing and commissioning of mechanical and electrical works and associated civil works as well as the operations and maintenance as was disclosed and announced earlier on 7th December 2000 and not project management as stated in the article mentioned above,
  
  (ii) as previously announced on 15th August 2003, the formation of the joint-venture with Downer Engineering (M) Sdn. Bhd. ("Downer") is pending finalisation of the terms and conditions of the joint-venture and the execution of the joint-venture agreement by the Parties. It was incorrectly stated in the article that REI has formed a joint-venture with Downer last week.
  
  Save as disclosed herein, the Company is not aware of any rumour or report which contains information which might likely to have an effect on the trading of the Company's securities.

See how nicely the stock profited from the error made in the news article?

And here are some more interesting stuff...

Rohas-Euco was not performing that well... as can be seen in the following two earnings report...

• 28/05/2003 Quarterly rpt 31/3/2003
  14/08/2003 Quarterly rpt 30/6/2003

So in Aug 2003, the Edge comes out with that write-up....

And viola.... here comes the improvement in earnings...

19/11/2003 Quarterly rpt 30/9/2003

However, if one opens the earnings notes, one would notice the following...

Rohas-Euco's turnaround in fortunes was due to profit recognition..... !

• The Company's and Group's revenue for the current quarter have increased by 86% and 151% respectively compared to the preceding quarter. The increase in Company's revenue was mainly attributed to additional orders received for tower supply and the increase in the Group's revenue was mainly attributed to the profit recognition from the water treatment project carried out at Bukit Badong upon completion of Stage 1 works during the quarter.

And needless to say, a couple of quarters later, Rohas loses money again...

4/08/2004 Quarterly rpt 30/6/2004

Company lost 1.356 million for the quarter, and amazingly, if one opens the earnings notes in the above link, one would find this comment, which gives one the impression as if nothing (no losses) had happened....

• During the current quarter under review, the Group recognised a revenue of RM39 million, mainly attributed to the sales of steel lattice tower structures and the revenue recognition from the water treatment plant project carried out at Bukit Badong.

A couple of months later, in Feb 2005, Rohas reported the following earnings.

28/02/2005 Quarterly rpt 31/12/2004

Rohas current quarter showed an incredible good showing!!!! A net profit of 6.870 million was recorded by the company. (WOW... dat's an eps of roughly 10 sen for da quarter!)

And again, if one reads the companies notes, one would find the company's explaination of what is happening is kinda lacking.!

• During the current quarter under review, the Group recognised a revenue of RM52 million, mainly attributed to the sales of steel lattice tower structures and the revenue recognition from the water treatment plant project carried out at Bukit Badong.

Now, despite the good earnings, one gets a mix reaction from them insiders... cos they were selling!

• 22/02/2005 NOTIFICATION PURSUANT TO PARAGRAPH 14.08 OF THE BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS ON DEALING IN SECURITIES DURING THE CLOSED PERIOD.
  22/02/2005 NOTIFICATION PURSUANT TO PARAGRAPH 14.08 OF THE BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS ON DEALING IN SECURITIES DURING THE CLOSED PERIOD.
  21/02/2005 NOTIFICATION PURSUANT TO PARAGRAPH 14.08 OF THE BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS ON DEALING IN SECURITIES DURING THE CLOSED PERIOD.

Company announced huge jump in earnings... but them insiders were selling... makes one wonder what is happening, doesn't it?

Well.. the answer was kinda answered on May 2005 when Rohas reported its next Quarterly earnings.

Rohas managed only a net profit of 1.512 million, which was down significantly from the net profit of its questionable 6.87 million announced on Feb 2005. Ahem! Isn't it a wonder why them insiders were disposing their shares?

Anyway on June 14th 2005, there was another article written on the Edge: Rohas-Euco to boost exports

• Rohas-Euco Industries Bhd, a giant local provider of transmission tower steel lattice structures and telecommunication industry, targets to boost its contribution from exports to 60% this year from 50%.

Hmmm... another optimistic write-up on Rohas....

And the picture below shows the market reaction to the news... the lower circle indicating when the stock was written ... and the upper circle showed how high the stock went zoom, zooming....

how nice, eh?

perhaps I should forward my portfolio to our daily financial news... :p