caseywong said...
- hi, i have been a silent reader of your blog. I have some holdings in Parkson. Would like to know what is so unreal about the receivables part? And what about the borrowings? Mind to share more of your view on this? Thanks.
Unreal about the receivables part?
Compare the first table and the second.
The first table showed:
1. Trade receivables at 14.411 mil
other receivables at 261.134 mil
total: 275.545 million.
The current table shows receivables as a lump sump, at 451.349 million.
Think about it...
Here's my reason why I think it's unreal.
a. Last I checked, Parkson Holding is a retail business and in the economics of a retailing business, I cannot understand how Parkson can even have receivables. What exactly are they selling on credit? Who OWES Parkson Holdings so much money? And why? I for one cannot see no logic in why a retailer would even have a receivables account!
b. The size of the receivables. At 451.349 million, the figure is insane. It's simply too high! In a short span of 3 months, the receivables jumped 175.804 million!!!!!
Now try not to think about stocks for a moment. Indulge with me for a moment.
Think of a real life normal business where you and your business associate has setup. And imagine you went on a holiday and upon your return, your partner shows you the accounts and you find out that suddenly so many people owe you so much money. How? Wouldn't you not be concerned? Wouldn't you find it so unreal?
I do not know about you but I write what I feel. And in this instance, for Parkson Holdings, I find it so unreal.
Borrowings. I find the amount of borrowings Parkson Holdings is unreal too. Yes, in my flawed opinion, it's in my opinion that Parkson Holdings is too unrealistically high for me to consider Parkson Holdings as an investment grade stock. Do understand that for the borrowing issue, this is my own opinion, which like I said it is obviously flawed, hence, I do hope you take my view points stated here with a pinch of salt. And since I have repeatedly said that I am no investment advisor, I do hope you take all these comments as a mere second opinion and if you disagree, it's your rights to do so.
Cheers
Dear Moola,
ReplyDeleteJust a suggestion...
Perhaps you could perform a debtors turnover ratio for Parkson over a period of three years and also compare this with similar competitors eg. Aeon. That should give a clearer picture as to whether the trade receivables are unrealistic.
Rgds
Dear Avatar,
ReplyDeleteRather unreal suggestion. :)
How about I suggest that perhaps you take the time to see for yourself first. :)
Can ah?
You go have a look.. :)
Avatar,
ReplyDeleteBtw the comparison versus its competitors is hardly a useful gauge.
Let's say, if the whole sector in a given industry, has a debtor turnover of close to 180 days, would it be deemed ok?
Surely, the logical answer would be, "hey this sector represents the terrible business - no way i would want to invest in it!"
:)
Dear Moola,
ReplyDeleteAre all listed businesses in a particular sector that bad? Surely, there must be a market leader to benchmark to, so that one can get a clear picture. Then again, maybe not. Not having analyzed any one of these companies, I really can't say.
Of course, debtors turnover ratio is just the tip of the iceberg. Cash flows would also give a direct picture.
Obviously a debtors turnover ratio of 180 days appears bad, but that really depends on the industry. If it's in FMCG or retail business, then things don't look so good. If it's a construction/engineering company, I would say it depends.
As to a detailed analysis, nah... I trust your analysis. Who wants to look at companies that are under performing lol...
Rgds
LOL!!!
ReplyDeleteThe point is.. as it is ... in my opinion.. it matters not how the competitors are doing in the retailing sector.
Parkson is a retalier, yes? Does it do rental of shop lots like Aeon? If it does, I am certainly not aware of it and would be glad if you could show me.
So tell me.. the receivables are at 451.349 million.
Don't you think it's unreal?
:D
Dear Moola,
ReplyDeleteComparisons of listed companies are always difficult since most of them are involved in a variety of activities. Since the segmental information may not be sufficiently detailed, we can never get a true comparable. Suffice to say, IMHO an approximation may be good enough, yes?
As I said earlier, I haven't analyzed their financial statements in detail. Whether they are reasonable or not will depend on the nature of these amounts, which unfortunately, is not available. Obviously, these amounts appears excessive since retail customers either pay on cash/credit card.
Like your other readers, I appreciate your frank analysis, so don't take it the wrong way.
Rgds
Avatar,
ReplyDelete".. Obviously, these amounts appears excessive since retail customers either pay on cash/credit card."
Now do consider the two points I am stressing here.
1. the receivables are at 451.349 million.
2. in a short span of 3 months, the receivables jumped 175.804!!!
now tell me, if this is UNREAL or what.
:)