Would You Bet On XiDeLang (XDL) ???

On the 4th Jan, the EdgeMalaysia highlighted the following article: Xidelang hits six-month high

• ... There were no new filings for substantial shareholding changes at press time.
  
  Ding Peng Peng, its co-founder, managing director and CEO, owned 54.55% of the company as at May 3, 2011.
  
  At yesterday's close of 37.5 sen, there is a 14.7% upside potential to the 43 sen apiece that Mercury Securities said the stock was worth in a note dated Nov 25, 2011.
  
  Notably, Xidelang's unaudited net asset per share stood at 72.72 sen as at Sept 30, 2011, up from 56.14 sen as at Sept 30, 2010.
  
  Xidelang, which recently got shareholders' mandate to buy back its shares from the open market, sold its shares for 63 sen apiece at its IPO on Nov 11, 2009.
  The low valuations accorded by the market had sparked rumours that its major shareholder may take the company private, one source said. This could not be immediately confirmed at press time....

One source... said major shareholder MAY TAKE THE COMPANY PRIVATE!

All it takes is just one source.... and the stock flew up, up and awayyyyyy!!!

Nice eh?

Just one source. Don't care who the source is lah. It could be tea lady. The toilet cleaner. The car jockey. It's just one source and don't bother about finding out who that one source is lah. The EdgeMalaysia would not reveal their source.

So who cares, yes?

The stock flew!

The next day on BusinessTimes: Decisive year for Xidelang

• His company’s profit has been soaring over the past three financial years only for the shares to keep heading south.
  
  “It is a bit frustrating ... the investment community tells me that this has a lot to do with perception of being a mainland China company,” Ding, who is also the managing director of the company, told Business Times in an interview.
• “Ever since then, mainland companies have been painted in one brush. Look, Xidelang is not a fly by night company. We have been here three years, been profitable and have been building on a dividend track record,” said Ding.

Then in mid afternoon, the EdgeMalaysia came out with this piece: Navis Cap keen to buy Hong Peng's stake in Xidelang

• Navis Cap keen to buy Hong Peng's stake in Xidelang Written by Joseph Chin of theedgemalaysia.com
  Thursday, 05 January 2012 15:10
  
  KUALA LUMPUR (Jan 5): XiDeLang Holdings Ltd (XDL) says Navis Capital has approached the former's major shareholder Hong Peng International Holdings Ltd to acquire its stake.
  It said on Thursday that 'Navis Capital had indicated their intention to acquire the entire shareholdings of Hong Peng in XDL during an informal discussion'.
  
  Trading in the shares of XDL was voluntarily suspended from 2.30pm to 3.30pm following the announcement.
  According to filings to Bursa Malaysia, the British Virgin Islands' registered Hong Peng owns 240 million XDL shares or 60% as at Nov 11, 2009.
  
  XDL share price was up one sen to 37.5 sen before trading was suspended

And the next morning, BTimes followed it up: Navis makes offer for major stake in Xidelang - Business Times

• Xidelang, China’s second second largest maker of running and skateboard shoes, is some 54.6 per cent owned by HongPeng International Holdings Ltd.
  
  HongPeng in turn is controlled by Mark Ding Peng Peng, who is also the managing director of Xidelang.
  
  Analysts said Navis’ plan to buy out HongPeng’s entire shareholding in XDL would trigger a mandatory general offer as its shareholding would breach the 33 per cent level.
  
  “The likely outcome will be the new owners taking the company private,” Mercury Securities Sdn Bhd head of research, Edmund Tham, told Business Times.
  
  Tham believed that Navis might offer between 60 sen and 90 sen apiece for the shares it did not already own in the company.
  
  “It is obvious that Ding is looking to exit the company as he is disappointed with the performance on the local bourse but he may strike a deal with Navis to stay on the board,” Tham said.
  
  In a filing to Bursa Malaysia yesterday, XDL said Navis had indicated its intention during an informal discussion with HongPeng International....

Yeah.. it is so obvious that Ding is frustrated with the stock performance on Bursa Malaysia... but ... the announcement just mentioned Navis intention during an INFORMAL discussion with HongPeng International...

Just an informal discussion hor... err... correct me if I am wrong.... but this is like a coffee shop chit chat isn't it?

INFORMAL discussion hor...

But yet XDL decided that it was improtant to announce it ....

The SunDaily also carried this 'NEWS' ... XiDeLang confirms takeover interest

With such 'news', the stock had a WILD trading day!

It opened higher at 38 sen (previous day closing price was 36.5 sen). The stock soared to 44.5 sen but soon plummeted to close the day lower at 35.5 sen!!!

Did the market realise that all the hoo-ha was based on an INFORMAL discussion? And yeah, no price was even mentioned!

Star Biz wrote on XDL the next day: XiDeLang: Navis showed interest in 55% stake

• ... Its announcement was in response to a news article published in a local Chinese daily which stated that Navis Capital was interested to acquire XiDeLang shares.
  
  “There was no discussion on Navis Capital's offer price during the informal discussion,” it added.

The local Chinese daily mentioned was Nanyang Press.

Getting fuzzy?

Yeah, XDL had to make another announcement yesterday evening on Bursa website: OTHERS

Some 'interesting facts'  mentioned in that announcement. (Thanks TK for your comments! )

• XDL, after having made due and diligent enquiry with our major shareholder, namely HongPeng International Holdings Ltd (“HongPeng”) and the Board of Directors, wishes to inform that the discussions between Navis Capital and HongPeng held during October and November of last year were solely exploratory in nature and there was no offer being made or a price range indicated by Navis Capital.
  These exploratory discussions were discontinued in late November 2011.

The so called talks were made during Oct and Nov 2011!!!!!!!!!!!!!

What??? What??? What????

Them talks happened few months ago?????

Huh????

Like this also can?

So what's the idea to highlight this issue to the media?

To stir fry the stock???????

Gee!!!

And the next statement obviously blew everybody's mind!!!

• XIDELANG Holdings Limited's largest shareholder, Hong Peng International Holdings Ltd, has no intention of selling its stake in the shoe producer

WTH!!!!

HongPeng doesn't even have the intention to sell its stake in XDL!!!!

So what on earth were all the 'news' for?

Stir fry the stock, is it????

And then on Business Times this morning....

• Xidelang board to meet over Navis' buyout offer
  
  By Francis Fernandez Published: 2012/01/10
  
  XIDELANG Holdings Ltd's board is expected to meet tomorrow to discuss the approach made by private equity firm Navis Capital to buy out the company's major stakeholder.
  
  Xidelang, China's second largest maker of running and skateboard shoes, is 54.6-per cent owned by HongPeng International Holdings Ltd.
  
  HongPeng is in turn controlled by Mark Ding Peng Peng, who is also the managing director of Xidelang.
  
  Days before Xidelang had informed the stock exchange of the offer from Navis, Ding had told Business Times that he was frustrated with the lacklustre performance of the company on the stock exchange.
  Xidelang is the third China-based company to be listed on Bursa Malaysia. Its share price had fallen by as much as 35 per cent last year.
  
  Up to the nine months ended September 30, 2011, Xidelang's pre-tax profit stood at RM84.52 million, while for the 12 months of 2010, Xidelang's pre-tax profit stood at RM106.78 million.
  
  Additinally, Xidelang also has about RM134 million in cash while its book value per share comes in at just under 60 sen.
  "Ding will reject the offer from Navis, and instead put in a rival proposal to create liquidity in the market place," a person familiar with the company said yesterday.
  
  The proposal, which Ding plans to table to the board, calls for the company to reward its shareholders.
  
  "It will be a script-based reward exercise," said the source.
  
  As such, Ding will likely propose that Xidelang understake a bonus issue and a warrant exercise so that shareholders who did not directly benefit from Xidelang's growing business will be rewarded in the market place.
  
  As it stands, Xidelang is the only mainland-based company which has a consistent dividend policy in place.
  
  Xidelang paid out a 1.5 sen dividend in 2010 and a one sen dividend the following year, giving shareholders a 12-month dividend yield of 2.63 per cent a year.
  
  Navis, run by former executives of Boston Consulting Group, manages about US$3 billion(RM9.3 billion) in equity capital and is believed to want to take Xidelang private.
  
  It also plans to group Xidelang with other shoe makers from China and list them as one entity on the Hong Kong Stock Exchange.

Sigh!

And so Mr. Ding feels so frustrated about the lousy stock performance from XDL.

I wonder why.

Yeah, if you open the announcement: Quarterly rpt on consolidated results for the financial period ended 30/9/2011, you would see that XDL have 136.5 million cash but its borrowing now totals 47.170 million!

Compare these figures to that posting I made on XDL last July 2011: Regarding XDL. Back then XDL had 98.3 million cash and loans of 19.3 million.

XDL's financial has weakened despite the strong earnings it announced.

And the issue mentioned in the posting Regarding XDL remains.

So XDL said it has so much money.

But yet despite having so much money, I CANNOT UNDERSTAND why XDL's cost of financing is more than its interest it gets for its cash deposits! Cash 136.5 million woh. Borrowings 47.1 million woh! So why XDL has financial costs of 905 thousand for the that quarter, while its interests received is only 315 thousand?