Mulpha

Ah Kor-Kor,

S&P on its write-up on Nov had judged Mulpha based on its earnings performance. And this is what it had mentioned:

• Mulpha’s 3Q06 earnings were below our expectations. The company reported 3Q revenue of MYR185.3 mln, which was largely in line with our forecast. However, its net loss of MYR10.5 mln was unexpected.

• Operationally, the performance of Mulpha’s property development arm was surprisingly weak, reporting an operating loss of MYR13.6 mln compared with an EBIT of MYR11.9 mln in 3Q05. Management attributed the weak results to the absence of contributions from Mulpha FKP Pty Limited, which is undergoing a restructuring exercise and the soft property market in Australia from rising interest rates.

Which technically, S&P was correct...

but...

Mulpha business is complex. A different kind of animal in all honesty.

The following was its previous year, fy 2005 Q4 earnings.

Quarterly rpt on consolidated results for the financial period ended 31/12/2005

And if you look at the earnings notes, you would note the exceptional items noting gains of 298.747 million.

And the following is Mulpha's previous year, fy 2004 Q4 earnings.

Quarterly rpt on consolidated results for the financial period ended 31/12/2004

And if you look at it again, there was yet exception items in which Mulpha recorded gains totalling some 30.9 million.

And the previous year, fy 2003, same thing yet again.

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

For fy 2003, Mulpha recorded exceptional gains of 31.380 million.

Do note, these exceptional items are rather tricky in nature. Some involved sale of land, some involved disposal of investments and some gains recorded from the gorup's restructuring of its businesses. Hence, Mulpha is not a straightforward business in one could value by just looking at earnings.

Now let's have a look at its fy 2002 Q4 earnings.

Quarterly rpt on consolidated results for the financial period ended 31/12/2002

Same thing. But back then it had exception losses which cause a lost of 11.149 million. Anyway, i do believe you get my drift.

So perhaps earnings is not how you would want to gauge this group by and perhaps a more interesting way is to gauge is by the doing the quick asset gauge. What one could do is perhaps gauge the fy 2004 Q4 earnings NTA verus its current Q earnings nta. Do note this asset comparison is fallable and many would argue against its usage - however as a quick and fast indicator to see if this company is worth our time in exploring in more detailed, I would perhaps use it as a starter.

So far.. right now.. the simple Question would be, do you like what you see? Do you see value being created in the group? Do you reckon that perhaps there is more value to Mulpha than just to gauge it by its earnings?

And as usual.. just my second opinon.

rgds