Regarding JPK's Share BuyBacks

The article that caught my attention this morning was JPK share buyback mistimed?

• JPK share buyback mistimed?
  
  By Francis Fernandez Published: 2008/05/02
  
  The plastic precision moulder bought 751,000 shares at between 55.2 sen and 55.5 sen apiece on April 4 and then sold them at lower prices between April 25 and April 29
  
  JPK Holdings Bhd, a loss-making plastic precision moulder, seems to have mistimed its share buyback this month as the stock has dramatically fallen.
  
  The stock plunged after banks started selling shares of its dominant shareholder and managing director, Liew Lai Ping.
  
  JPK bought 751,000 shares at between 55.2 sen and 55.5 sen apiece on April 4.
  
  Then, in a matter of three trading days, it sold the same number of shares at lower prices between April 25 and April 29.
  
  Banks had sold 9.3 million of Liew's shares this week, at between 20.9 sen and 29.4 sen a share.
  
  The sale cut Liew's stake in JPK to about 11.68 per cent.
  
  Liew, who is also JPK's executive chairman, was listed to have owned 23.98 per cent as at August last year.
  
  JPK shares closed at 50 sen a share on April 24. By Monday, it had fallen to a 52-week low of 19.5 sen.
  
  So far this year, the stock is down by more than half.
  
  JPK's annual report showed that in the financial year ended March 31 2007, it had bought 820,000 shares at an average cost of 49 sen a share. This brought the number of treasury shares held at the end of fiscal 2007 to 825,000.
  
  From April to the third quarter of last year, JPK bought back some 169,000 shares at between 51 sen and 57.5 sen a share. It also bought 498,600 shares in late February at 59 sen apiece.
  
  Business Times could not reach company officials for comment.
  
  The company also did not explain in its statements to Bursa Malaysia why it suddenly sold the treasury shares at a huge discount over the purchase price and average cost of investment.
  
  In the nine months ended December 31 2007, JPK suffered a net loss of RM10.49 million against a net loss of RM2.3 million in the previous corresponding period.

Let's see.

1. Company buybacks some 751,000 shares at between 55.2 sen and 55.5 sen apiece on April 4.

2. Banks had sold 9.3 million shares of managing director, Liew Lai Ping, shares this week, at between 20.9 sen and 29.4 sen a share.

Amazing!

Now I do remember this stock.

You know why?

Back in Sept 2005, the following article appeared on Business Times.

The first two statements in the article caught my attention.

• Precision engineering plastic moulding manufacturer and assembler JPK Holdings Bhd is attracting more foreign funds, said its executive chairman and managing director Dr Ivy Liew.
  
  Following the company’s AGM on Sept 29, she said several foreign institutional investors held 15% of JPK’s shares, and that this was testimony to the investors’ confidence in it as a growth company.

Now I do know a lot of growth companies back in 2005 and I was simply shocked to read that statement. JPK Holdings is a growth company?

So I decided to do my fast check via KLSE Tracker.

Hello, where's the said growth? A trailing profits of only 42 thousand??????

And here is the link to fy 2004 Q4 earnings Quarterly rpt on consolidated results for the financial period ended 31/3/2005, which was announced on 5th May 2005.

JPK recorded losses of 2.646 million for that fiscal year 2004.

So for the managing director to come out blazing on the press declaring that their company is a growth stock was rather misleading in my opinion.

The below snapshot from KLSE Tracker shows JPK current earnings record.

In 2003 JPK earned some 4.020 million.

In 2004 JPK earned some 1.881 million .

In 2005 JPK lost 2.719 million. ( Where is the growth??? )

In 2006 JPK earned some 564 thousand.

In 2007 JPK lost 10.148 million!

Here is the link to JPK last reported earnings in Feb 2008, Quarterly rpt on consolidated results for the financial period ended 31/12/2007.

And if one looks inside the company's balance sheet, JPK is in a rather dire situation. Losing money big time and it's in a net debt of 42.362 million.

No wonder the bankers are selling the shares belonging to the managing director!

And as of the company buying back their shares since 2005?

Well all I would say that one should look at the following record.

• In 2005 JPK lost 2.719 million.
  In 2006 JPK earned some 564 thousand.
  In 2007 JPK lost 10.148 million!

Given the terribly poor earnings, one would probably be wondering why this company was buying back its shares since 2006?

Let me show something else.

This was the most recent quarterlry earnings report before JPK made its first share buybacks. Quarterly rpt on consolidated results for the financial period ended 30/6/2006

See how much cash JPK had back then.

634 thousand! (Look at the massive loans it had back then)

This was one of JPK's first share buybacks announcements back in 2006: Notice of Shares Buy Back - Immediate Announcement

How my dearest MooMooCow?