This Stock Called Mangotone (FTec)

Did you notice this stock called Mangotone Group?

Sounds so rather funky eh?

Well, it used to be TecAsia and TecAsia used to be FTec Resources Bhd.

Let's travel back.... how about May 30th 2007?

• FTec plans transfer to main board by 2008
  By Zaidi Isham Ismail
  bt@nstp.com.my
  
  May 30 2007
  
  FTEC Resources Bhd (FTec), which was listed on the Mesdaq market of Bursa Malaysia in 2003, plans a transfer to the main board by 2008.
  
  FTec founder and president Kenneth Vun said the company is all set to transfer its stocks once its private placement exercise of shares to identified Bumiputera investors receives authorities' approval by end-July.
  
  "We are waiting approval from the International Trade and Industry Ministry. Once we receive the go-ahead, the company is set to transfer to the main board by next year," Vun told a news conference to announce its first quarter results in Petaling Jaya yesterday.
  
  Once transferred, FTec, a maker of laptop and personal computer accessories, will become the third information technology (IT)-related company to transfer to the main board, after Symphony House Bhd and GHL Systems Bhd.
  
  "FTec has met all the requirements set out by the authorities to transfer to the main board. Revenue and the money raised (from the private placement) will be used to to finance our expansion plans as well as working capital," said Vun.
  
  FTec executive director (finance and corporate) Lee Jyh Kiong said under the private placement, FTec will issue 73 million new shares of RM0.10 each, representing 30 per cent of its enlarged paid-up capital, raising proceeds of RM24.3 million.
  
  For the first quarter ended March 2007, FTec's net profit surged 33 per cent to over RM3 million from RM2.2 million in the same period a year ago. Revenue almost doubled to RM84.3 million.
  
  Vun said the revenue growth was in line with the company's average growth of 30 per cent for the past four years.
  
  FTec opened its first IT concept retail store under the brand name, TecAsia Sdn Bhd, in Kota Kinabalu last year, the biggest store of its kind in Malaysia.
  
  Vun said the store registered a sales volume of RM40 million for the nine months ended September 2006. The company plans to open a similar store in Kuala Lumpur at a shopping centre by September with a revenue target of RM80 million.
  
  It plans to open 10 TecAsia stores over the next five years, each with an investment of between RM5 million and RM10 million, depending on location and floor space.
  
  The stores will sell every major brands such as Sony, Acer Hewlett-Packard, Aiwa, Apple, Canon, Intel, Sony and Samsung devices alonside Ftec's own products.
  
  FTec plans to spend RM1.5 million on research and development activities in 2007 compared with RM500,000 in 2006.

This company sounds so happening eh?

From Mesdaq to Mainboard, and 30% average growth for past four years. (ps. what's average growth ah? And what growth is he talking about? Sales growth or profit growth?)

Anyway a few months later, it reported its earnings. Quarterly rpt on consolidated results for the financial period ended 30/6/2007

Company had 118 million sales, net profit of 3.371 million. Cash 31.657 million, receivables 44.183 million and total loans at 57.103 million.

Oct 1 2007 Securities Commission scores a first!

As a result of the findings, in the suit filed on 26 September 2007, the SC is seeking the following court orders:

• that Kenneth Vun personally make restitution of the sum of RM2.496 million to FRB;


• that Kenneth Vun be restrained from directly or indirectly managing funds of FRB and/or any of the companies in the FTEC Group of Companies in the absence of proper controls being put in place by the said companies including but not limited to external supervision by the SC;


• that Kenneth Vun to cause FRB to properly disclose in its audited report for the next financial year, the manner in which the sum of RM2.496 million had been utilised; and


• that Kenneth Vun be made personally accountable for the return of any sum of interest or profit made from the utilisation of the sum of RM2.496 million to FRB.

.... This action against Kenneth Vun is one of the numerous civil enforcement actions undertaken by the SC recently against directors of public listed companies for corporate governance misdeeds. These actions serve as a reminder that it is the responsibility of directors to act in an honest and accountable manner in discharging their duties, and especially when dealing with public funds. (On the side note, it makes me wonder on Megan Media: Megan: Are You Shocked By The Light Sentence For The Accounting Fraud Commited? )

Here is a press coverage.

• FTEC Resources chief and founder resigns
  By Zaidi Isham Ismail
  bt@nstp.com.my
  
  October 3 2007
  
  FTEC Resources Bhd chief and founder Kenneth Vun, who has been sued by the Securities Commission (SC) for allegedly using company money for his own gain, resigned yesterday.
  
  In a statement to Bursa Malaysia yesterday, the company said Vun, a major shareholder of FTEC, also resigned from the audit committee with immediate effect.
  
  Efforts to contact Vun and other directors were unsuccessful.
  
  Shares of the computer hardware maker, which dived to a seven-month low on Monday to 31 sen, fell further to close at 29 sen.
  
  The SC filed a landmark civil suit against Vun on September 26 2007 to make him pay back RM2.5 million to the company that was allegedly used for his own benefit.
  
  The money was raised in FTEC's initial public offering in 2003.
  
  Meanwhile, in a separate announcement, the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) lauded the SC's action.
  
  However, it said that the SC could have moved faster.
  
  "It is hoped that directors are more vigilant in monitoring use of funds be it from IPO proceeds or loans or placements."
  
  MAICSA also expressed surprise that the misuse was not discovered earlier despite existing checks like the audit committee.

WOW!

SC charges, CEO quit, company sounds like in a mess, yes? And if one is into long term investing, surely this is a massive get out signal, no?

Anyway... not much news on FTec after that until Feb 2008.

• Saturday February 9, 2008
  
  FTEC to spend RM40m on new concept stores
  
  BY EILEEN HEE
  
  KUALA LUMPUR: Local IT company FTEC Resources Bhd will spend about RM40mil on two more concept stores this year.
  
  According to managing director Tang Boon Koon, the company had already identified the locations for the two stores but not the commercial area.
  
  “Plans have been laid out to establish TecAsia stores in the northern and central regions,” he told StarBiz.
  
  On Feb 1, the company marked its entry into the IT retail market in Peninsular Malaysia with the opening of its flagship IT concept store, TecAsia, at Low Yat Plaza in Kuala Lumpur.
  
  The 27,000-sq-ft store is set to introduce consumers to the integrated “4C” concept of computers, communications, consumer electronics and content.
  
  Tang said the company had allocated some RM20mil for the store, which included the set-up, renovation and inventory.
  
  “One of the key features of the store is that customers can walk into TecAsia and be exposed to all the big brands. Customers do not have to walk into different stores to make price comparisons,” he said.
  
  Tang said the store would carry a full range of products from vendors such as Hewlett-Packard, Sony and Apple besides the FTEC brand.
  
  “In this sense, we are trying to offer a complete ICT digital lifestyle to the consumers,” he added.
  
  Tang said the store would also carry Dell products. He said this demonstrated Dell's confidence in the company, adding that in the past, Dell only sold its products online.
  
  Tang said TecAsia's emphasis would be to enhance the experience value for its consumers.
  
  “The store will encompass a lifestyle corner, kids corner, virtual digital office and game zone, where customers can touch and feel, and experience the products, before they make up their minds on a purchase,” he said.
  
  It will also have a training centre to provide educational programmes for customers.
  
  “There will be weekly workshops on different products and devices at the store, so that the public can learn about the products,'' he said.
  
  As one of the largest IT concept stores in Malaysia, Tang said, TecAsia was targeting to achieve monthly sales of RM10mil.
  
  He said he was confident of achieving the target given the availability of a complete range of principal products at its stores and the projected growth of ICT spending in the country.
  
  “The first TecAsia store, which opened in Kota Kinabalu in March 2006, turned profitable just nine months into operations,'' Tang said.
  
  According to Tang, ICT spending was expected to increase by 10% to RM44.8bil in 2008 from RM40bil last year.
  
  “ICT spending is still increasing and the demand is still there,” he said, adding that the trend justified the company's investment in TecAsia.
  
  “We are optimistic of society’s growing appetite for ICT products, given the increasing capabilities and functions of IT gadgets,” he said.

And more optimistic stories appeared.

• FTEC expects double-digit growth
  
  Published: 2008/04/01
  
  FTEC Resources Bhd, which manufactures and markets computer products and accessories, is aiming for double-digit growth this year with the opening of two new stores — one in Penang and the other in the Klang Valley — by year-end.
  
  Managing director B.K. Tang said he was confident the target could be achieved based on the good sales at the existing stores at Low Yat Plaza in Kuala Lumpur under its subsidiary TecAsia Sdn Bhd.
  
  FTEC recorded a profit of RM9.4 million last year.
  
  “The growth for the Low Yat Plaza stores will be at a very fast pace. We expect revenue about RM10 million per month within a very short timeframe,” Tang told reporters after the company’s extraordinary general meeting in Kuala Lumpur yesterday.
  
  On market share, Tang said FTEC expects its share to increase after having captured three to four per cent market share in competition against multinational companies like Acer and Dell.
  
  He said the biggest contribution to revenue came from the company’s retail business, with about 60 per cent from FTEC notebook computer products while other contributors included accessories, and security and surveillance systems.
  
  Tang said the retail business will contribute significantly to the overall growth of the group.
  “If you look at the IT industry in Malaysia the potential growth is in double digit despite possible recession in the United States. Furthermore, our business is not dependent on US market,” he said.
  
  FTEC is also looking at venturing into overseas markets like the Middle East and China, and the possibility of setting up TecAsia operations in the two countries, Tang said. — Bernama

And in May 2008, it proposed to change the name.

• 07-05-2008: FTEC proposes name change to TecAsia
  
  KUALA LUMPUR: FTEC Resources Bhd has proposed to change its name to TecAsia Group Bhd, subject to the approval of its shareholders at the forthcoming AGM.
  
  FTEC said yesterday the Companies Commission of Malaysia had approved the reservation of the new name. It said the circular to shareholders which set out the details of the proposed change of name would be issued in due course.

Let's see how Ftec was doing. Quarterly rpt on consolidated results for the financial period ended 31/3/2008

I use the earlier earnings note a year ago and will add in the numbers from this earnings report in blue font.

Company had 55.001 million (118 million sales), net profit 2.056 million (3.371 million). Cash 21.767 million (31.657 million) , receivables 49.138 million (44.183 million) and total loans at 73.170 million (57.103 million).

Declining sales, declining profit, increasing receivables and increasing loans! The four deadly warning signals!

October 2008.

• 22-10-2008: New shareholder likely to emerge at TecAsia
  by Jose Barrock
  
  KUALA LUMPUR: Over the last two days 9.5% of TecAsia Group Bhd shares have crossed in off-market block trades at between 4 sen and 4.5 sen.
  
  A total of 36.5 million shares were transacted on Monday and another six million done yesterday.
  
  It is not clear who the buyers or sellers are at press time. According to the company’s latest annual report the only substantial shareholder is Tradelink Global Investments Ltd, the vehicle of Tang Boon Koon the managing director of the company.
  
  Both Tradelink and Tan emerged as substantial shareholders in TecAsia in December last year, with 5.9% equity or 10 million shares, but upped the shareholding to above the 8% level.
  
  FTEC was a company linked to entrepreneur Kenneth Vun @ Vun Yun Liun and his family. Vun, however, has kept a low profile for some time now, after the Securities Commission filed a RM2.5 million restitution suit against him in October last year. After this Vun resigned as managing director of FTEC and sold down his stake.
  
  It was alleged that Vun had utilised the funds from FTEC for his personal use but this remains unsubstantiated.
  
  TecAsia has its mainstay in the production, distribution and marketing of computer and information technology systems.
  
  For the six months ended June this year, TecAsia posted a net profit of RM3 million on the back of RM112.9 million in revenue. For the period in review TecAsia’s net asset per share stood at about 14.4 sen.
  
  In contrast to a year ago, the company’s net profits were down 53% while revenue was slashed by 44.3%.
  
  TecAsia ended trading yesterday unchanged at 4.5 sen with 8.2 million shares done.

December 12th 2008.

• 12-12-2008: Tecasia to go Main Board
  
  KUALA LUMPUR: Tecasia Group Bhd, formerly FTEC Resources Bhd, has proposed a transfer to the Main Board by the first half of 2009, five years after it was first listed on the Mesdaq Market.
  
  Tecasia said yesterday it posted a net profit of RM9.45 million in its year ended Dec 31, 2007 and an aggregate net profit of about RM34.71 million for the past five financial years up to FY07.
  
  The company also announced that the size of its earlier proposed special issue would be increased to 189.8 million new shares from the earlier 73 million shares.

How nice that statement that it posted a net profit of 9.45 million.

It's December 2008, and Ftec decided to highlight and focus on its earnings reported in Feb. Yeah, it did make 9.45 million for the year. See: Quarterly rpt on consolidated results for the financial period ended 31/12/2007

Now in a way, it was factually correct but it does the tell the accurate story about what was actually happening. You see the statement was made in December 2008. And the past 2 quarterly earnings from TecAsia were terrible. It was hardly profitable!

This was their earnings reported in Aug 2008: Quarterly rpt on consolidated results for the financial period ended 30/6/2008 (it made only 999k!)

This was their earnings in Nov 2008:Quarterly rpt on consolidated results for the financial period ended 30/6/2008 (it made only 417k!)

Now with the last earnings so poor, why did the company used earnings reported 10 months ago in Feb 2008? Was there any intent to deceive?

And guess what?

The next following quarter, TecAsia lost money. Quarterly rpt on consolidated results for the financial period ended 31/12/2008

And in May 2009, TecAsia reported it lost some 10.9 million! Quarterly rpt on consolidated results for the financial period ended 31/3/2009

Let's look at some key balance sheet items. Cash at 15.251 million. Receivables at 48.946 million. Loans were at 65.008 million.

In July 2009, it changed its name to Mangotone!

A month later, Mangotone was listed as a GN3 stock! ( here is klse explanation on what Guidance Note No.3 is here )

• Mangotone tumbles after declared listed issuer
  Written by The Edge Financial Daily
  Friday, 14 August 2009 13:59
  
  KUALA LUMPUR: Mangotone Group Bhd's share price tumbled in late afternoon trade on Aug 14 after Bursa Malaysia Securities Bhd announced the company was an affected listed issuer pursuant to Guidance Note No. 3.
  
  At 3.29pm, it was down two sen to three sen with 32.3 million shares done.
  
  Bursa Malaysia Securities Bhd has announced that Mangotone Group Bhd is an affected listed issuer pursuant to Guidance Note No. 3.
  
  Bursa Securities said the announcement followed the statement issued by Mangotone on Aug 12 that it was an affected listed issuer pursuant to paragraph 8.04(2) of GN3.
  
  Bursa Securities said it would continue to monitor the progress of Mangotone over its compliance with the listing requirements of Bursa Securities.

Here is another article

• Saturday August 15, 2009
  
  Mangotone slips into Bursa's GN3
  
  PETALING JAYA: Mangotone Group Bhd is now an affected issuer of Bursa Malaysia’s Guidance Note 3 (GN3) and required to submit a regularisation plan to the stock exchange regulator for approval in the next 12 months.
  
  In a filing to Bursa on Tuesday, the company said it had defaulted on debt and interest payments due to operational difficulties in the past two quarters, lower trade facilities, decline in sales and low margins.
  
  Further in an announcement on Wednesday, Mangotone said its cash reserves and collections from receivables and sales would be prioritised to sustain operations, replenish fast moving stocks and to pay essential overheads.

Yeah.. one thing most would like to ask now is where was all the growth story???

Last night Mangotone reported its earnings. Net losses increased to 16 million!