Malaysian AE Models 2Q net profit jumps 70%???

The following article was posted on the Edgemalaysia.com

• Malaysian AE Models 2Q net profit jumps 70% to RM3.34m
  Written by Surin Murugiah of theedgemalaysia.com
  Tuesday, 31 January 2012 18:33
  
  KUALA LUMPUR (Jan 30): MALAYSIAN AE MODELS HOLDINGS [] Bhd (MAEMode) net profit for the second quarter ended Nov 30, 2011 jumped 70% to RM3.34 million from RM1.97 million a year earlier, due mainly to higher revenue and better profit margins from logistics projects.
  
  The company said on Tuesday that its revenue for the quarter rose 44.24% to RM165.46 million from RM114.71 million in 2010.
  
  Earnings per share was 3.12 sen compared to 1.84 sen a year earlier, while net assets per share was RM2.21.
  
  For the six months ended Nov 30, MAEMode’s net profit surged RM7.76 million from RM2.82 million in 2010, on the back of revenue RM317.09 million compared to RM224.33 million a year earlier.
  
  On its outlook, the company said it was confident on the improvements of the global economy that may enhance its future profit moving forward.
  
  “With the current order book and barring any unforeseen circumstances, the board is optimistic that the group will remain profitable for the remaining quarters of the financial year,” it said.

Sounds good, yes?

However, this is one stock which I had blogged several times before and it was blogged based on all the wrong reasoning.

Past postings: http://whereiszemoola.blogspot.com/search/label/MaeMode

On 29th July 2011, my last posting on MaeMode was Maemode's Mind Boggling Q4 Earnings.

Let's review the issues.

1. Is there improvement in profitability?

Current half year sales revenue increased to 317.088 million. Current net profit totals 7.764 million. This equates to a margin of 2.4% only. Last fy 2011, MaeMode had margins of 3.08%.

2. Is there improvement in cash balances?

Company said its profits increased a lot. Well if the company is making more money, surely the company has more cash, right?

Here's a snapshot of MaeMode's balance sheet.

3. MaeMode has an issue with its receivables, is there any improvement?

MaeMode's total receivables, ie trade receivables+amount due from customers on contracts ( I wonder why the need to have list these items separately since both items essentially represent amount owed to MaeMode) now totals 499.464 million. Same quarter last fiscal year, the receivables totalled 442.443 million.

Receivables increased a lot once again!

Now, let's refer to table posted in the last posting: Maemode's Mind Boggling Q4 Earnings.

In FY 2006, MaeMode's receivables was 186.128 million. Receivables today stands at 499.464 million!

 Is that mind boggling or is that mind boggling???!!!

4. Is MaeMode owing more money now?

One of the other issue was the MaeMode's loans kept on increasing. As at end fy 2011, MaeMode owed some 368.224 million.

Let's have a look at MaeMode's current borrowings.

MaeMode's current total borrowings now stands at 410.097 million!

It's borrowings increased a lot, once more!!!

But the most worrying issue is stated on notes B9.

Amount payable within next 12 months is 376.997 million!!

!!!