I was going through my old blog postings and I found these interesting sequence of postings.
Let's take a step back in time.
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Saturday, February 11, 2006
Is our financial news really financial news?
Back in Sept 10th 2005, there was this article on Nasioncom.
In that article, again it was crystal clear how ludicrously written the article was. Words like it is believed, sources says, currently believed, it is understood were splattered all over the article.
Makes you wonder if our financial press was printing out actual financial news based on facts or was our financial news being used a tool for some to churn out rumors to seduce punters and speculators to punt on the stock?
And it was such blatant shenanigan when the reporter played around with some actual financial notes.
Take a look at the second last paragraph of that news article:
- For the six months ended June, NasionCom posted a net profit of RM7.2mil on the back of RM112.9mil in sales. In the notes accompanying its financial results to Bursa Malaysia, NasionCom says, “Compared against the group’s results for the financial year ended December 2004, for the half-year ended June 2005, the group has recorded a revenue of RM112.9 million or 70.2% of financial year (FY) 2004’s revenue and a profit after taxation of RM7.18 million, surpassing FY 2004’s full-year profit of RM3.76 million. Moving forward, the group believes that its continuous investments in Internet protocol network infrastructure, broadband infrastructure and Internet data centre, together with development on niche products and services, will yield positive contributions in the future.
The problem is, first of all...
Nasioncom first quarter net earnings was 5.171 million.
Nasioncom second quarter net earnings was 2.009 million.
The earnings report, which the reporter was referring to, saw Nasioncom's net earnings decline from 5.171 million to 2.009 million. This meant that Nasioncom's earnings weren't as rosy as what was indicated by the newsreporter. (see the highlight in blue: a revenue of RM112.9 million or 70.2% of financial year (FY) 2004’s revenue and a profit after taxation of RM7.18 million, surpassing FY 2004’s full-year profit of RM3.76 million.)
Now if I dig into Bursa Malaysia reports, the following is the link to that Nasioncom's earnings report:
Quarterly rpt on consolidated results for the financial period ended 30/6/2005
Click on the attached wordfile... and search for Nasioncom's REVIEW OF PERFORMANCE in their earning notes.... there was 4 paragraphs of remarks...
Ho ho ho... guess what? this reporter DECIDED to highlight ONLY the good stuff!!
The reporter only used the bottom 2 paragraphs, and cleverly ignoring and omitting the first two paragraphs of Nasioncom's notes.
I have pasted those 4 paragraphs in question...
- The 2nd quarter under review has shown a lower overall performance when compared to the immediate preceding quarter ended 31 March 2005. The Group recorded revenue of RM 51.798 million; earnings before interest, tax, depreciation and amortisation (EBITDA) of RM 6.186 million; and profits after taxation and minority interest of RM 2.009 million.
The second quarter results has been impacted by lower revenue due to competitive pricing.
There were no corresponding second quarter results for 2004 as this is the Group’s first 2nd Quarter result after its listing on 25 February 2005 on the MESDAQ Market of Bursa Securities.
Compared against the Group’s results for the financial year ended 31 December 2004, for the half-year ended 30 June 2005, the Group has recorded revenue of RM112.9 million or 70.2% of FYE 2004’s revenue and a profit after taxation of RM7.18 million, surpassing the FYE 2004’s full year profit of RM3.76 million.
Moving forward, the Group believes that its continuous investments in Internet protocol (IP) network infrastructure, broadband infrastructure and Internet data center (IDC) together with development on niche products and services would yield positive contributions in the future.
So I wonder, if this reporter made a simple mistake or perhaps there was intent by the reporter?
By leaving out the first 2 paragraphs, the reporter omitted the current poor performance of the company and most important leaving out the fact that the Nasioncom clearly said that the lower earnings was caused by competitive pricing. Isn't this not an important issue to report?
On 30th November 2005, Nasioncom reported its earnings again.
Quarterly rpt on consolidated results for the financial period ended 30/9/2005
Total net earnings from Nasioncom was only a paltry 260k!!!!!!!!! See how important the issue that in the previous quarter, Nasioncom had already being affected by lower earnings caused by competitive pricing?
So in summary:
Nasioncom first quarter net earnings was 5.171 million.
Nasioncom second quarter net earnings was 2.009 million.
Nasioncom third quarter net earnings was 260k.
Yup... and if you look at the very statement of that article: It appears that there is a lot going on at Mesdaq-listed NasionCom Holdings Bhd.
LOL!!!.... what nonsense isn't it?
That was then. In today's Bizweek, the very same reporter, made another attempt to sell the stock!
New major shareholder to emerge in NasionCom
Same style!
"Sources say, it is understood, it is believed" are plastered all over the article again. All hearsay and no actual facts!
Now check this out...
- The price tag of 50 sen may appear a tad high (compared to its current share price of around 29 sen), but an analyst says not necessarily so. “At 50 sen, NasionCom is being valued at a price earnings of about 9 times, which is fair considering the average PE of 15 times of some of the other prominent stocks on Mesdaq such as Green Packet Bhd and REDtone International Bhd.”
Now I really wonder who on earth this analyst is! Nasioncom's current earnings, which is declining drastically, totals some 7.4 million for the first 3 quarters of the year.
Let me put this 50 sen price tag into perspective. This ANALsyt is effectively equating that Nasioncom should be worth, in terms of market capital, some 400 million ringgit!! (This is the price one has to pay if one wants to buy each and every single share of Nasioncom @ 50 sen price tag!)
So can a company making some mere 7.4 million and worse still, in its last reported earnings in November reported a paltry earnings of 260k, be worth a whopping 400 million ringgit????
So clearly this ANALyst is basing the valuation on some incredibly high earnings per share!
Let's see... at 50 sen, with a price earnings ratio of 9 times, this means Nasioncom's earnings per share is some 5.5 sen. Now Nasioncom has some 800 million shares... which means this ANALyst is saying that Nasioncom's net earnings equates some 44 million!
44 million?
Amazing! Truly amazing!.. and how much is Nasioncom's current earnings? Some 7.44 million?
And regarding this ANALyst... isn't it a wonder that this reporter makes no attempt in naming who he or she is?
ps...
this blog entry is not about what and how Nasioncom will trade in the near future! Will Nasioncom go up or down? It interests me not!
Most important issue: Is our financial news really financial news?
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4 days later, I wrote the following article.
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Wednesday, February 15, 2006
What again about our financial reporting?
The issue of our financial news used to instigate wild speculation ideas on stocks.
Here are some blog postings on the issues:
- Is our financial news really financial news?
- Should Financial Press be allowed to spin-off Rumours?
- Mutiara
And incredibly, all of those articles was creatively written or should I call it engineered by one same reporter and his so-called sources (or should I call it as Maggie Sauce?!)
Take the latest one: Is our financial news really financial news?
Let's take the issue of Nasioncom. That article was posted on 11th Feb 2006.
1. Nasioncom ended the day trading on the 10th Feb 2006 at 0.305.
2. Nasioncom ended the day trading on the 13th Feb 2006, the day after that incredibly creative story was written, at 0.345. See how nice it is to publish a story, throws in the wild speculative 'according to sources" stuff all over the article. And better still, add in a wild insane, nonsensical valuation based on ONE so-called UN-NAMED analyst! Job done, eh? Check the high volume traded on that day!
3. Nasioncom ended the day trading on the 14th Feb 2006 at 0.30. What a lovely, I Love You Deep-Deep Valentine present from this reporter, eh?
4. Now? The selling pressure 'looks' very strong (errr... you might want to get a second opinion on this statement cause I am not one that could read what the trade is saying!).... anyway... at 11.30, Nasioncom is now trading at 0.285.
How?
Do we need such wild no-substance stories?
And worse still, how come one reporter in our financial newspaper can repeatedly publish nothing but speculative rumors in the financial news?
What good is our financial news if everything is but speculative rumors?
How?
Does all this even matters?
Or does it NOT matter as long as it provides us with an opportunity to punt in the said stock(s)?
Or should I question who gives the divine rights to allow this reporter to write as per his own whims and fancy?
How?
Or should I request that our financial news to be changed to our RUMOUR mill?
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And the rest is history!
One year later...
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Friday, February 16, 2007
Nasioncom Caught Inflating Sales Revenue
Posted on Business Times.
SC raps NasionCom
for inflating
revenue figures
The telecommunications service provider has to rectify and re-issue its financial statements for the year ended December 31 2005 within a month
“NasionCom’s revenue of RM194.98 million as reflected in its 2005 financial statements contained RM143.11 million sales that were not transacted,” the SC said in a press release late yesterday.
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How now, my dearest Moo Moo Cow?
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