Regarding Silver Bird Yet Again

Here is an update on the posting I made on Saturday, Silver Bird?

Flashback:

I find the following set of comments to be rather interesting.

• Silver Bird is principally involved in the manufacturing and trading of bakery products. It is also involved in the distribution of prepaid phone cards.
  
  In the financial year ended October 2006, Silver Bird plunged into a net loss of RM48.2mil from a net profit of RM22.2mil the previous financial year despite a 23% rise in turnover from RM484.7 mil to RM598 mil.
  
  The company attributed the heavy losses to the provision of impairment losses of RM28 mil, asset write-offs of some RM7.8mil and initial start-up losses of RM15mil in its Singapore operations.
  
  Despite suffering heavy losses, Silver Bird’s cash position actually improved from negative RM4.1mil to RM60 mil according to its cash flow statement.
  
  This indicates that the losses suffered by Silver Bird last financial year is due mainly to accounting treatment. Following the sharp drop in share price, Silver Bird has stepped up its share buyback programme.

And I attached screen-shot of Silver Bird's Cash Flow Statement.

Did you see the proceeds from disposal of properties which totalled 89.920 million?

Isn't this why the MAIN reason why Silver Bird actually improved?

So what does this indicate?

Now consider this.

This proceed of sale or disposal of property totalling 89.920 actually came from their disposal of their main state-of-the-art factory in Shah Alam. Yes, they did a sell and lease back thingy. Logical question, if things are so rosy, why would Silver Bird even embark on such a program? See this announcement posted on Bursa Malaysia: SILVER BIRD GROUP BERHAD ("SILVER BIRD" OR "COMPANY") PROPOSED SALE AND LEASEBACK OF A FREEHOLD INDUSTRIAL PROPERTY MEASURING APPROXIMATELY 59,337.11 SQ. METRES, BEING A PORTION OF THE LAND HELD UNDER THE MASTER TITLE GERAN NO. 64178, LOT 62003, PEKAN BARU HICOM, DAERAH PETALING, SELANGOR DARUL EHSAN, TOGETHER WITH ALL THE ERECTED BUILDINGS / STRUCTURES ON THE SITE AND ALL THE FIXTURES AND FIXED EQUIPMENT ATTACHED THEREON FOR THE SAID PROPERTY TO BE FULLY OPERATIONAL AS AN INDUSTRIAL WAREHOUSE COMPLEX ("PROPOSED SALE AND LEASEBACK") FOR A CASH CONSIDERATION OF RM91.2 MILLION

So they sold and they lease back their own property.

Fantastico.

So what do they do with this excess money?

They start buying back some shares from the market?

On hand hand, they are trying to create shareholder confidence by saying the company is optimistic about their share prices. Which is good.

But how about solving the mess they created in the first place?

That investment of the state of art factory in Shah Alam, the 100 mil bread factory, wasn't it really excessive?

This sale and leaseback only but increased their loans. Have a look at the cash flow again. See the line above it. It shows an entry of Purchase of Property, plant and equipment of 58.712 million.

Again.. another question that begs to be asked is that isn't it again simply excessive?

Look at what's happening. Company does well, it get listed. After listing, it plans big and bigger. And gets into a mess. And what does it do again?