MaeMode And Its Receivables Again!

It's almost an year since I wrote on Malaysian AE Mode or MaeMode.

21st Jan 2009, I wrote Update Again On MaeMode

Let me copy and past what I wrote a year ago.

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Here's an update to the posting: Would You Buy MaeMode?

MaeMode announced its earnings tonight.

And as you can see, the key yardsticks simply got weaker and weaker!

The margins is still thin. Net debt post increased yet again and the trade receivables are still ballooning at an extremely alarming rate!

Past postings on MaeMode:

1. A look at MaeMode again
2. Mae, I hope I am not WRONG!
3. Reply to Mae, I hope I am not WRONG!
4. MaeMode Again
5. The Trade Receivables In MaeMode
6. Would You Buy MaeMode?

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My issues on MaeMode were simple. Razor thin margins, high debts and an insanely high receivables in its books.

MaeMode announced its earnings last night. Here's a news article from the Edge Financial: MAE 2Q net profit plunges to RM26K

• MAE 2Q net profit plunges to RM26K
  Written by The Edge Financial Daily
  Thursday, 28 January 2010 23:35
  
  KUALA LUMPUR: MALAYSIAN AE MODELS HOLDINGS [] Bhd's (MAE) net profit for the second quarter (2Q) ended Nov 30, 2009 plunged to RM26,000 from RM6.38 million a year earlier mainly due to lower turnover and lower profit margin from projects.
  
  MAE said on Jan 28 customers' delay in taking delivery of the projects was also a contributing factor.
  
  Revenue dipped 10% to RM115.12 million from RM128.43 million while basic earnings per share fell to 0.02 sen from 5.96 sen previously.
  
  For the six months ended Nov 30, 2009, net profit fell to RM503,000 from RM11.55 million a year earlier while revenue fell 23% to RM196.62 million from RM256.22 million. EPS fell to 0.47 sen from 10.8 sen.
  
  MAE said its board remained cautious about the weak global economic environment which might impact its future performance but was optimistic it would remain profitable in the remaining quarters of the financial year ending May 31, 2010.

Here's how MaeMode's numbers are stacking up.

Look at the size of the receivables!!!

It's 355 million!!!

Forget about investing for a moment and just use some normal business common sense. Don't you wonder about such a company? How could they run a business where you have amount due to the company snowballing each year? The table says it all. In 2002, receivables were only at some 56 million. It's now 2010 and receivables have blown to 355 million!

And the even more incredible thing about this receivables comparison between MaeMode's fy 2002 numbers and current is that in fy 2002, MaeMode made 8 million. Now? It's less than one million but people owing MaeMode has snowballed to 355 million!

Yeah holy cow!

How could a company be run in such a manner???

And I wonder, since it's the receivables are in MaeModes books for so long, what if these receivables are scrutinised and review in depth? What if a huge portion needs to be reclassified as doubtful debts??? And when this happens, due to size of the receivables, won't MaeMode get hit by huge loss provision for these doubtful debts??

How?