Can Kenmark Survive?

Kenmark shares were slaughtered yesterday. It plunged some 46%! It went from 27 sen to a mere 14 sen!



And surprisingly Bursa CEO calls Kenmark MD’s behaviour irresponsible

Now the biggest questions for me are the following...

1. Would we see more losses from the company?
2. Can the company survive?
3. Would we see more disposal of shares by the major shareholders?
4. What about Ishak - the so-called friendster?

These are massive questions, yes?

Yes, I know it's getting tedious and perhaps boring but besides these issues, there's something not right.

Yes! Something happened and it's not right!!!

Posted yesterday: Kenmark Finally Discloses In Detail Why It Suffered 146 Million In Losses But...

In that posting, I included data from a worksheet which Kenmark submitted in its announcement to Bursa.

This morning I clicked on my 'source' of data, Debtor Aging.xls and I found it to be an invalid address. Then I realised Kenmark has removed that worksheet and replaced it with another new one.

They said the following...

• Further to the Company’s announcement on 8 June 2010 in respect of the reply to Bursa Securities on the quarterly results for the financial period ended 31 March 2010, the Board wishes to inform that the “Debtors Aging” attachment file was inadvertently forwarded with the announcement. The attachment file is errorneous as it only contains the debtors aging for affected companies where provisions for doubtful debt were made. Attached is the corrected file indicating the summary of the total debtors and the aging analysis of the Kenmark Group.

Well let me say this. I do not think it was erroneous. Instead, I am glad I saw and took the snapshot of the file. And most importantly, that 'debtors aging' showed one important data, which is the debt that was written off came from 3 main debtors, which are BILLION CREATOR (HK) LTD, DAILY EMPIRE TRADING LIMITED and EVER VICTORY (HK) LTD.

Why did Kenmark want to remove the file?

Did these 3 companies who saw their debts being written off by Kenmark stood out sorely????? ( refer Kenmark Finally Discloses In Detail Why It Suffered 146 Million In Losses But...)

Take Billion Creator. It owed Billion Dynamic Sdn Bhd 44.565 million. Billion Dynamic wrote the whole sum off. Billion Creator owed Kenmark Industrial 7.1 million. Kenmark Industrial wrote off 4.23 million off to just 2.875 million and Billion Creator still owes Kenmark (Labuan) close to 3 million.

I cannot help thinking. If I am Billion Creator, and I see Kenmark writing off close to 49 million off from what I owe them, what should I do about the remaining 5.8 million owed to Kenmark group of companies?

How?

My say?

The fact that bulk of the write down came from 3 companies and given what has transpired, Kenmark should NOT have removed the file. This is a rather important disclosure of information to the investing public!

Anyway.. back to the main issue.

1. Would we see more losses from the company?

The general impairment of fixed assets was scary. Given the limited data, there's no way I can ass-u-me that there will be NO MORE impairment of fixed assets.

Remember, Kenmark only did a 10% general impairment of fixed asset left idle due to the current interruption of its business.

And the more I thought about it, the more I am baffled.

Kenmark's reported earnings submitted was for the period ending 31/03/2010 and the current mess only happened on the last week of May 2010.

First thing that came to my mind, how could Kenmark provided for such general impairment of fixed asset since the current interruption of business only happened end May 2010? It was like Kenmark was providing for losses for events that had not happened.

Then I came to my senses. :P

Sales revenue... sales revenue... check out the sales revenue.

On Feb 2010's reporting quarter, Kenmark said it had 101 million in sales. Ok that sales figure is so questionable now, given what is happening, because the previous reporting quarter in Nov 2009, Kenmark sales revenue was only some 35 million. So on a q-q-q basis, sales went from 35 million to 101 million to just 18 million (current quarter, Kenmark sales was only some 18 million).

Leaving out issue of 'fudged' numbers, from 101 million to 18 million, is indeed a serious interruption of business.

Which meant that Kenmark's troubles was known months ago!

That would be my assumption. Yes I ass-u-me and if I am wrong, I am making an ass out of you and me.

Now if that's the case, then most likely than not, it is possible to see more general impairment of fixed asset left idle! That would be guess! And I again I stress, I am guessing and I could be wrong.

How much impairment would we see? Well current quarter of general impairment of 10% already equated some 29 million! So go figure. My guess is that the figures would be huge the next quarter!

Provision of bad debts.

Let's have a look at the resubmitted Debtor Aging summary1.xls (yeah, it's a summary!)

Now the file is too wide, so I again hid some columns and showed debtor aging from 150 days onwards.

And I added myself a total of the debts over 150 days and more. See the arrow highlights in the table below.

Why am I doing this? (click on the table above for a larger view)

Come next quarter, these figures would be 180 days and above already and by any industry standard, such debts are pretty much doubtful.

And what do we have? After the provision of bad debts, Kenmark's receivables over 150 days is more than 51 million.

How much of these would be bad?

Did another calculation. The receivables over 210 days is about 9.878 million. This would the figure I would ass-u-me could be written off come the next quarter! Yes, meaning to say, it's possible to see provision of bad debts of at least 9.8 million come the next quarter!

That's my flawed guess. Ok?

Next... Can the company survive?

Let's see the bare facts.

Cash on hand as reported for the period ending 31/3/2010 was stated as 440 thousand!

Total loans outstanding is 139.043 million!!!!!

And trade payables is a massive 83.958 million!!!!

Can Kenmark even pay its bills???

Perhaps sale of assets is imminent!

But how much are the assets really worth?????

Kenmark's impairment of its machinery from its current quarter is a whopping 15 million!!!!!

What's the exact book value of these machinery?

How?

I do not even know how to ass-u-me its assets value.

3. Would we see more disposal of shares by the major shareholders?

Last night Kenmark siad its Taiwanese shareholder, Chen Wen-Ling also reduced its stake. LOL! The other day, was James Hwang.

Which makes it all so disgusting.

Really.

Think about it.

Given the state of the horrible mess Kenmark is in, the major shareholders and the boss, had been disposing their shares like plague!

Would they continue to dispose their shares?

Think about it.

Lastly, What about Ishak - the so-called friendster?

Hey, he was the friendster who lend the helping hand hor. And he bought his stake on 1st and 2nd June. That was when Kenmark was below 10 sen.

So how? Is this friendster really a 'Robin Hood' or is the friendster in for pure profits only?

Go think about it....