Regarding PMCorp's 93 Million Cash

Got the following comments from the posting Regarding PMCorp

• PMCORP has 93 million in cash!

Yes, I am well aware of this fact, however if you would indulge in me in this rather long posting.

Oh before I begin, allow me to be a burden by repeating again: I do not indulge in guessing if a stock would go up or down. I have zero prediction skills at all. Yeah, sue me because I am that bad and needless to say, I am not a Sotong either.

Now say you have a company that is 'cash rich'. Now don't you want to know how the cash got there? And how's the piggy bank cash doing all the years, is it increasing or is it decreasing? I do not know about you but at least these are the questions I will be asking.

When I had a look through PMCorp's archives announcements, the following caught my attention: PAN MALAYSIA CORPORATION BERHAD ("PMC" or the "Company") - Change in Utilisation of The Remaining Unutilised Cash Proceeds Previously Raised From The Disposal of Cement-Based Associated Companies

• Currently, PMC has unutilised cash proceeds of approximately RM288.5 million raised from the disposal of cement-based associated companies in previous years...
• To repay the existing bank borrowings of PMC... 240 million.

And this issue goes way back to 2000. :P

PAN MALAYSIA CORPORATION BERHAD ("PMC" OR "COMPANY") PROPOSED UTILISATION OF PROCEEDS FROM THE DISPOSAL OF THE CEMENT-BASED ASSOCIATED COMPANIES ("PROPOSED UTILISATIONS")

• On behalf of PMC, Commerce International Merchant Bankers Berhad ("CIMB") is pleased to announce that on 1 August 2000, the Securities Commission ("SC") had approved PMC's application for the utilisation of the balance of the proceeds of RM738 million from the disposal of its cement-based associated companies as set out below:-

So PMCorp basically had tons of cash.... from their disposal of the Cement-Based associated companies...

This would mean that I have to look back in 2001.

Feb 2001: Quarterly rpt on consolidated results for the financial period ended 31/12/2000

Those are the key issues I be looking at.

Earnings = profit, debts = bank borrowings, net cash = cash - debts.

And apparently in 2000, PMC is an expert in the share market. So I guess since the focus of this posting is on PMCorp's cash, then I guess I should include how much shares PMCorp have and in my table Shares = cost of 'quoted shares'.

Now back then in 2000.. the figures look decent eh? Net cash of 429.924 million and PMCorp hold some 306 million worth of 'quoted shares'. :P

Let's see how PMCorp performed over the next couple of years...

WOW!

Yup! I felled of my chair upon seeing how PMCorp had performed since then.

The company had 623 million CASH in 2002. By Feb 2005, it reported that this cash had shrunk to just 340.019 million. Their 'quoted shares' now had a carrying cost of only 177.5 million! And needless to say, the NTA shrank from 2.52 in 2000 to just 0.49 in 2004!!!

WOW!

huhu!

Seriously... that's rather poor, yes?

And yes... PMCorp in their 2005 Q4 earnings, reported a 1.1 Billion of losses!

That was actually warned on 31st Jan 2005: Pan Malaysia Corporation Berhad (“PMC” or the “Company”) - Members’ voluntary winding-up of Syahdu Pinta Berhad (formerly known as Syahdu Pinta Sdn Bhd) [“SPB”], a wholly-owned subsidiary company of PMC

• At the Extraordinary General Meeting of the Company held on 28 October 2004, the shareholders of the Company have approved the settlement of inter-company advances owing by Malayan United Industries Berhad (“MUIB”) involving the issuance of Irredeemable Convertible Unsecured Loan Stocks (“ICULS”) by MUIB (the “Settlement”). The details of the Settlement are contained in the Circular to Shareholders dated 12 October 2004 issued by the Company (“Circular”). Pursuant to the Settlement, MUIB issued RM1,285.0 million nominal value of ICULS to SPB in settlement of the inter-company advances owing of RM1,066.5 million.

huhu!

Now in THAT Q4 earnings, (Quarterly rpt on consolidated results for the financial period ended 31/12/2004) there was a striking statement. Under the 'prospects of

• The Directors anticipate that the Group's operations will continue to face challenging trading environment for the financial year ending 31 December 2005 especially in respect of rising input costs. The Group will continue to focus on cost control measures to mitigate the effects of rising costs, increasing its market share for existing and introduction of new product lines. In January 2005, the Group has disposed its entire 22.3% interest in Chemical Company Of Malaysia Berhad for a gross consideration of RM193.4 million. Part of the proceeds will be utilised to repay bank borrowings which will reduce interest expense.

Ah.. more lumpy disposals. So the next fiscal year... PMCorp should see some improvement back in their balance sheet, yes?

And I would need to make a correction in the NTA because in 2006, the NTA for PMCorp had been revised to 0.604.

And also from the fy 2004 Q4, regarding the 'shares', I would note that the market value of these shares were only worth some 25.559 million. Apparently PMCorp is not that good in the share market. :P

And over the years, there were constant disposals.

Like for example, PMCorp had been disposing their shares in PMI.

• Jan 2009: Pan Malaysia Corporation Berhad ("PMC" or the "Company") Disposal of 112,800,072 ordinary shares of RM0.10 each in Pan Malaysian Industries Berhad ("PMI") by wholly owned subsidiaries of PMC, for a total cash consideration of RM6.5 million
• Jan 2007: Pan Malaysia Corporation Berhad ("PMC" or the "Company") Disposal of 91,901,000 ordinary shares of RM0.50 each in Pan Malaysian Industries Berhad ("PMI") by Bidou Holdings Sdn Bhd, a wholly owned subsidiary of PMC, for a cash consideration of RM3.3 million
• Sep 2006: Pan Malaysia Corporation Berhad (“PMC” or the "Company") Disposal of 322,313,000 ordinary shares of RM0.50 each in Pan Malaysian Industries Berhad (“PMI”) by Bidou Holdings Sdn Bhd, a wholly owned subsidiary of PMC, for a cash consideration of RM9.7 million (“Disposal”)

These disposals are good to note because it helped boost PMCorp cash...

And here's the compiled table on how PMCorp has fared since 2000.

How?

Oh.. the quoted shares.. I left empty because PMCorp did not state the cost of the quoted shares in their fy 2010 Q1 earnings report. I wonder why.

So how? All PMCorp states it's market value of their quoted shares is 53.333 million.

Ahem!

Yes, PMCorp has 92.253 million cash in its piggy bank but it also have some 42.243 million in bank borrowings!

But given what has happened in the recent 10 years... this 92.2 million... is the lowest level.

Yeah.. it's in net cash of 50 million but this 50 million net cash paled in comparison to its previous years.

A simple comparison. On Feb 2006, PMC reported its fy 2005 Q4 numbers. Cash then was at 392 million. With debts amounting to 317 million, PMCorp then was carrying a net cash of 74 million. Its quoted securities then had a carrying cost of 176 million.

Now surely PMCorp is more 'interesting' or 'valuable' on Feb 2006 compared to now, yes?

Would I be wrong to make that assumption?

So let's look at how PMCorp the share had fared since 2006.

How?

If one had purchased PMCorp based on the 'cash' and 'quoted shares' value in PMCorp in 2006, reasoning that PMCorp is a 'value' investment, one would have fared badly yes?

Ah.... but past share performance is never an indicative of how the share could perform in the future. I am aware of it. That's why I refrain from predicting if a share would go up or down. Yes, I have no idea how PMCorp would perform as a share, so do take this posting with a massive dose of salt. And it's best that you consult your local Sotong for stock advice.