Maybulk Earnings And Its Marketable Securities

Malaysian Bulk Carriers (Maybulk) reported its earnings tonight.

Given the fact the market had been doing great and given the fact that I had stated so many times before Maybulk had been way too over aggressive in its investments ( yes at such rate, some would call it wild trading!), I was keen to see how Maybulk fared.

By the way, this issue was asked back in Dec 2008: Why Is Maybulk So Active In the Share Market?

Are we going to see a shocker?

Those shares cost around 107 million. The current market value is worth 154 million. My, that works out to 'paper gains' of over 47 million!

Impressive?

My answer is a FLAT NO!

Now.. now.. don't call this as being as being sour grapes but let me show you why.

Here is Maybulk Annual Report for its recent fiscal year 2009 posted on Bursa Malaysia website: Annual Report 2009

The following snap shot is taken from page 8 of the Annual report.

So 2008, they lost 95.3 million!!!!! That's realized losses ok.

And in 2009, they made rm 52.9 million! Now they are sitting on a nice chunk of paper profits.

But what good is all these shenanigan for the minority shareholders?

Nada! Nothing! Zilch!

It brings no value for the minority shareholder and it only gives the minority shareholder huge amounts of concern. What concerns you may asked. Well the minority shareholder knows absolutely nothing on what the company is doing!

Now take a look at the following statements. Page 42.

• (f) Investment securities
  Investment securities are classified as financial assets at fair value through profit or loss. The accounting policy for financial assets at fair value through profit or loss is stated Note 2.2(e)(i).
  
  (g) Determination of fair value
  The fair values of quoted financial assets are based on quoted market bid prices at balance sheet date. If the market for a financial asset is not active, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to the current market value of other instruments that are substantially the same, discounted cash flow analysis or other valuation models.
  
  

Which is fine.... but....but... but.... let's look at page 59 of Maybulk's annual report and see how Maybulk describe their investments.

Can you see how it states "Quoted securities outside Malaysia" to be worth a massive 109 million.

Hello Mr. Transparency and Hello Ms. Integrity!

If Maybulk does not describe in detail what these quoted securities are, where is the transparency?

See, it's simple. When things like this are not described in details, how does the investing public know what exactly is happening? Would you blame the investing public if they start suspecting something smelly is going on? Yes how does the investing public knows if everything is done fairly and at 'arms length'? And surely Maybulk should understand the very simple logical thing which is they need to be more transparent here!

Anyway, for comparison with the quarterly earnings announcements, here is Maybulk's Q4 announcement back in Feb 2010: Quarterly rpt on consolidated results for the financial period ended 31/12/2009

Now this is where it gets funky. (Should be since I am not a qualified accountant and I have never studied accounts before. Yeah. Please note that. Meaning? I could be wrong!)

Anyway, compare the 2009 Q4 marketable securities with Maybulk's 2009 Annual Report 'Investments'. I don't understand why the numbers differ.

And then compare 2009 Q4 with 2010 Q1 (reported yesterday.)

2009 Q4.

2010 Q1.



By the way, from the 2009 Annual Report, I was looking at Maybulk's subsidiaries and the last 2 entries was interesting (for me). MBC Equity Management Sdn Bhd and Gaintrack Sdn Bhd whose main activities is TRADING IN MARKETABLE SECURITIES. (ps: so many 'investment holding' subsidiaries Maybulk has.)

Incredible eh?