The Trade Receivables In MaeMode

Early this year, I made ceveral postings on the stock MaeMode. A look at MaeMode again , Mae, I hope I am not WRONG! , Reply to Mae, I hope I am not WRONG! and MaeMode Again

MaeMode reported its earnings last night.

Naturally I was interested to see what is happening.

My main concerns back then as posted in the posting, Reply to Mae, I hope I am not WRONG!

• As can be seen, the company has decent, impressive earnings growth but as mentioned the fundamentals behind the company is so rather weak. Let's look at the issues.
  
  1. The net profit margin is declining. When sales and profit growth is achieved at the expense of profit margins, is this not a reason to be concerned?
  
  2. The company net debt position is on an increasing trend.
  
  3. Trade receivables is increasing on an alarming trend.

And I posted the following table.

The company's net debt and receivables issue was most alarming back then. It was so Megan like. See The Receivables Issue And Megan

Those were the two main issues.

Before I begin, I was aware that MaeMode had a rights issue ( see here ), so I was expecting some sort of boost in its balance sheet.

So the first thing I look for was the cash flow statement.

Net proceed from this rights issue was 12.639 million.

But look at the end result!

Cash and cash equivalents at the end of the period was 13.222 million. Another cash outflow of 27.183 million!

And here is the updated table for MaeMode.


The company's net debt has increased to 178.473 million.

The company's trade receivables increased by a whopping 37.117 million from the previous quarter to an insane 308.390 million!

Just how insane is this? Well just consider the fact that the company made only 6.567 million for the current quarter. And the trade receivables soared by 37.117 million. Man, this is no way to manage a business in a profitable manner.

Don't they know that a sale is not a sale until the cash is in the bank?

How?

And do remember when all these receivables issue becomes doubtful, they will have to be written off and given the current size of the receivables, if and when this happen, the losses should be massive!