EB Capital Again!

Today saw the following market event: EB Capital shares close 57% lower

• Thursday April 3, 2008
  
  EB Capital shares close 57% lower
  
  PETALING JAYA: Wireless broadband and telephony service provider EB Capital Bhd's share price closed 57%, or 15 sen, lower at a five-month low of 20 sen ahead of its suspension on April 9.
  
  It opened at 11 sen, down 24 sen from Tuesday's closing price of 35 sen. At the close, there were 500,700 shares traded at prices ranging from 9.5 sen to 20 sen.
  
  The fall in its share price yesterday erased RM11.66mil in its market capitalisation, reducing it to RM15.54mil.
  
  On Tuesday, Bursa Malaysia refused to grant an extension of time for the company to submit a regularisation plan.
  
  Bursa had warned the company that trading in securities would be suspended at 9am on April 9 after it failed to submit its regularisation plan by the extended timeframe of March 31.

Not surprising because I had blogged on this stock before. See EB Capital, eB Capital: III ( Aug 16th 2006: Stock last traded 1.23. On May 18th 2006, the stock was trading as high as 1.70. Peaked at 2.00 on 5th June 2006!!) eB Capital II and EB Capital.

Well yet another destroyer of market wealth! Makes you wonder, how they got listed in the first place. (EB Capital was listed in 2005!)

EB Capital

Saw this news article published on Business Times on EB Capital. ( article link )

• eB Capital sees profit in two years
  By Chong Pooi Koon
  pooikoon@nstp.com.my
  
  September 21 2007
  
  LOSS-MAKING wireless broadband service provider, eB Capital Bhd, says that after raising fresh capital to stay afloat it can break even this financial year.

EB Capital was listed on Mess-Daq on July 2005. Yes, till today, EB Capital is a loss making venture! Aren't you disappointed on how these companies could be listed?

Now get this. For a loss making company, at its peak in 2006, EB Capital was worth some 48.8 million(based on a price of 1.90+ back in 2006)

EB now trades at around 0.155! It's market capital has plunged to only some 12 million!

Not helping is this announcement, EB CAPITAL BERHAD (“EBCAP” OR “THE COMPANY”) ANNOUNCEMENT PURSUANT TO GUIDANCE NOTE 5/2006 ("GN5/2006") OF THE MESDAQ MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD ("LISTING REQUIREMENTS")

• eBTech is unable to service the facilities to the lenders as the group has been facing tight cash flow since 2006 when the company incurred a loss before tax of approximately RM13.9 million for the financial period ended 30 June 2007 (“FPE 2007”). For FPE 2007, eBCap recorded a turnover of approximately RM4.8 million as compared to a turnover of approximately RM10.1 million and loss before tax of approximately RM0.3 million in the preceding year ended 31 December 2005. The sharp increased in losses is due to provision for doubtful receivable, write-down of inventories and equipments of approximately RM7.1 million and decreased in sales.

Incredible eh?

Anyway in today's publications, the company chairman is saying on record that EB Capital can go on to make profit in two years.

• It can then go on to make profit in two years, its chairman Shaifubahrim Mohd Saleh said.
  
  Prospects are more promising now, given the government's plan to widen broadband coverage to the rural poor.
  
  In addition, a rights issue that raised RM8.1 million also eases its cashflow problems and will allow it to focus on growth, he told reporters after a shareholders meeting in Kuala Lumpur yesterday.
  
  The company has also scaled down business by being highly selective with its customers and slashed costs substantially, he said.
  
  It currently has RM4 million worth of projects, including a RM2 million job to provide broadband services in Kepala Batas in Penang.
  
  It will also ride on a virtual network provider arrangement with Redtone Group to give it recurring income in royalty payments.
  
  eB Capital chalked up a RM13.3 million net loss in the 18 months to June 2007, on revenue of RM4.8 million.
  
  The losses arose from sharply lower revenue and a RM6 million provision for doubtful debts.
  
  Shaifubahrim blamed the weak performance on the delay in the government award of new projects and stiff competition from other broadband service providers.
  
  "eB Capital actually owns assets with very good potential. It has the 2.5 GHz and 3.5 GHz spectrums and has traditionally good projects like the smart schools," said non-executive director Zainal Amanshah Zainal Arshad.
  
  "The take-up (of services provided) among commercial and residential customers was poor," he added.
  
  eB will now target more profitable segments like schools, universities and corporate clients.

eB Capital: III

On the previous blog posting on eB Capital I wrote the following. Before I start, eB Capital announced its earnings yesterday.

EB CAPITAL BERHAD (MESDAQ Market)

Quarterly rpt on consolidated results for the financial period ended 30/6/2006

New comments will be in red font.

----------------------------------------------------------------------------------------------------------------

Boyplunger raised the following issue on eB Capital.

• I noted Redtone Technology Sdn Bhd has been accummulating EB Cap. Currently owning about 1.9m or 7% -8%.
  
  Why is Redtone buying the shares of this company? That is interesting. Did i miss out something on the company's history.

Yes, I do understand that Redtone International has been buying shares into this company.

Why is RedTone buying shares into a company that has real problem in making a profit?

I have no idea.

And yes, I do understand your thinking rational. Because the justification is if RedTone International is willing to buy shares into the company, surely there must be something in the company that RedTone sees as value. And surely no sane company would want to buy a company if there is no profit to be made. Right?

Hence, the argument is of course, perhaps one should follow and mimmick what RedTone does!

But if that is the case, isn't one implying that when one company or one individual purchases a share of another company, the buyer(s) reasoning to buy the share is always correct?

Here is something interesing regarding is the buyer(s) always correct issue. This blog eB Capital II was written on May 18th 2006.

Look at the stock price chart of eB Capital during this period.

Stock last traded 1.23.

On May 18th 2006, the stock was trading as high as 1.70. Peaked at 2.00 on 5th June 2006.

But do we or would we ever know the true motives or intentions in such share purchases? Would we ever have the privilege to evaluate their reasonings in their share purchase? If no, then aren't we making one huge assumption, which is the buyer(s) of the share(s) is always deemed correct?

Can such strategy go wrong? Did one sell this stock when it hit 2.00?

Let me give some examples on what could go wrong.

Take the series of past postings on Karensoft. Well, the boss has always been constantly buying back shares in the company. So is the boss deemed correct in his actions? Well as everyone is well aware, Karensoft has just been re-classified as the first GN3 stock in the Messdaq listing. Which is rather dead serious since this classification states that Karensoft financial health is in a utter dire straits. So was there 'value' in the share purchase? Or perhaps the boss was buying for personal reasoning, which sadly is the 'value of being a listed stock'. So if one had followed Karensoft boss actions in the market, how then? See the danger?

Or how about the infamous purchase of a controlling stake in the huge congolomerate, DRB-Hiccom? How much was the share purchase back then? Wasn't it around 3.50 or so? Ahh.. I am sure that you are aware that some argued that because since the controlling stake was sold at such a high price valuation, then surely there must be value in the stock since the stock was selling around 2.00 back then. And what's the price of DRB-Hiccom today? Would a follow you, follow me strategy work in this case?

On the other hand, there were success stories in stocks like Transmile.

Ah, I am sure you understand what I am trying to say.

There's simply no gurantees in such strategy.

Sometimes it works but sometimes it can be dead wrong.

So how?

What's the best gauge?

Look at eB Capital.

eB Capital supposedly specialises in wireless broadband technology.

There'e 2 things one can gauge it on since it's listing. Look at these past compilations I had made on EB Capital .

The first news clip.

• With a current local market share of 0.54% in terms of broadband subscription, more efforts would be devoted to marketing its products and services to enlarge its share, he added.
  Meanwhile, eB Capital's historical earnings demonstrate its strong growth.
  The company registered a pre-tax profit of over RM1mil last year and an after-tax profit of RM560,000.
  Revenue increased to RM8.3mil in 2004 from RM2.5mil in the preceding year

And the next article...

• Wireless Internet broadband provider eB Capital Bhd (eBCap) expects its subscriber base to grow in multiples of 10,000 over the next two to three years as it embarks on an aggressive recruitment drive after its listing on Mesdaq.

See how b4 listing, eB Capital boasted about its great potential and its track record.

After listing, eB Capital showed it true self.

How do you value such a company?

Secondly, take a look at eB Capital last reported earnings. Do you like what you see?

If you don't then... should you be bothered with what RedTone does?

And if I have to guess, perhaps RedTone wants to go into the wireless broadband industry.

By the way, based on current price of 1.70, do you reckon that eB Capital business is worth what the market is pricing it?

eB Capital reported a paltry sales revenue of only 2.730 million with a net loss of 236k, bringing half fiscal loss to 1.81 million.

So listed on 2nd Aug 2005. The company has yet to make a single sen of profit!!!

Now consider this, at the peak price of 2.00, eB Capital was valued at a mind-boggling 49.814 million!!!!!

Yes, the whole idea of creating MessDaq as a platform where small companies can raise capital for their business is a grand idea BUT companies like eB Capital is showing precisely the dark side.

Where on earth can such company be worth 49.814 million as eB Capital was worth back recently in June 2006?

Ah, the market has so far corrected eB capital insane pricing.

eB Capital last traded at 1.23.

Only 1.23.

Excuse me but this price is STILL INSANE!!!!!!!!!!!!!!!!!

Based on this price eB Capital is worth some 30.635 million!!!!!!!!!!!!

Look at the following snapshot of eB Capital's balance sheet obtained from its quarterly earnings yesterday.

See the piggy bank cash!!!

Think that is bad?

You haven't seen nothing yet babe!

Look at the company's borrowings!

How?

See why I said that it's so insane that eB Capital is worth a whopping 30.6 million??????????????

eB Capital II

Boyplunger raised the following issue on eB Capital.

• I noted Redtone Technology Sdn Bhd has been accummulating EB Cap. Currently owning about 1.9m or 7% -8%.
  
  Why is Redtone buying the shares of this company? That is interesting. Did i miss out something on the company's history.

Yes, I do understand that Redtone International has been buying shares into this company.

Why is RedTone buying shares into a company that has real problem in making a profit?

I have no idea.

And yes, I do understand your thinking rational. Because the justification is if RedTone International is willing to buy shares into the company, surely there must be something in the company that RedTone sees as value. And surely no sane company would want to buy a company if there is no profit to be made. Right?

Hence, the argument is of course, perhaps one should follow and mimmick what RedTone does!

But if that is the case, isn't one implying that when one company or one individual purchases a share of another company, the buyer(s) reasoning to buy the share is always correct?

But do we or would we ever know the true motives or intentions in such share purchases? Would we ever have the privilege to evaluate their reasonings in their share purchase? If no, then aren't we making one huge assumption, which is the buyer(s) of the share(s) is always deemed correct?

Can such strategy go wrong?

Let me give some examples on what could go wrong.

Take the series of past postings on Karensoft. Well, the boss has always been constantly buying back shares in the company. So is the boss deemed correct in his actions? Well as everyone is well aware, Karensoft has just been re-classified as the first GN3 stock in the Messdaq listing. Which is rather dead serious since this classification states that Karensoft financial health is in a utter dire straits. So was there 'value' in the share purchase? Or perhaps the boss was buying for personal reasoning, which sadly is the 'value of being a listed stock'. So if one had followed Karensoft boss actions in the market, how then? See the danger?

Or how about the infamous purchase of a controlling stake in the huge congolomerate, DRB-Hiccom? How much was the share purchase back then? Wasn't it around 3.50 or so? Ahh.. I am sure that you are aware that some argued that because since the controlling stake was sold at such a high price valuation, then surely there must be value in the stock since the stock was selling around 2.00 back then. And what's the price of DRB-Hiccom today? Would a follow you, follow me strategy work in this case?

On the other hand, there were success stories in stocks like Transmile.

Ah, I am sure you understand what I am trying to say.

There's simply no gurantees in such strategy.

Sometimes it works but sometimes it can be dead wrong.

So how?

What's the best gauge?

Look at eB Capital.

eB Capital supposedly specialises in wireless broadband technology.

There'e 2 things one can gauge it on since it's listing. Look at these past compilations I had made on EB Capital .

The first news clip.

• With a current local market share of 0.54% in terms of broadband subscription, more efforts would be devoted to marketing its products and services to enlarge its share, he added.
  Meanwhile, eB Capital's historical earnings demonstrate its strong growth.
  The company registered a pre-tax profit of over RM1mil last year and an after-tax profit of RM560,000.
  Revenue increased to RM8.3mil in 2004 from RM2.5mil in the preceding year

And the next article...

• Wireless Internet broadband provider eB Capital Bhd (eBCap) expects its subscriber base to grow in multiples of 10,000 over the next two to three years as it embarks on an aggressive recruitment drive after its listing on Mesdaq.

See how b4 listing, eB Capital boasted about its great potential and its track record.

After listing, eB Capital showed it true self.

How do you value such a company?

Secondly, take a look at eB Capital last reported earnings. Do you like what you see?

If you don't then... should you be bothered with what RedTone does?

And if I have to guess, perhaps RedTone wants to go into the wireless broadband industry.

By the way, based on current price of 1.70, do you reckon that eB Capital business is worth what the market is pricing it?

EB Capital

Firstly, I noted that this company had just received ze yellow card from the SC. Oops! Too much footie in me fried brain cellls! I meant EB Capital got ze UMA (Unusual Market Activity) from Bursa today, in which EB Capital replied in the following manner:

• There is no corporate development relating to the eB Capital Group's business and affairs that has not been previously announced that may account for the unusual market activity save for the appointment of Aseambankers Malaysia Bhd on 16 May 2006 for the Company's Proposed Bonus Issue of 12,453,500 New Ordinary Shares of RM0.10 each in eB Capital ("eB Capital Shares"), to be credited as fully paid-up, on the basis of one (1) new eB Capital Share for every two (2) existing eB Capital Shares ("Proposed Bonus Issue")

Ah... so I decided to look at how the share was doing.



WoW!!!!

My oh my!

1.70??

Looks like this bugger has been stir-fried sunny side up!!!

Know why I am saying this? This is because I do remember that I had blogged on EB Capital b4.

In the blog posting, Oh Mess-Daq, I wrote the following on EB Capital:

<<==>>

Listed 2nd Aug 2005.

Yesterday I saw this bugger's quarterly earnings.

Sales Revenue: 1.802 million
Net loss: 1.064 million!!!

First quarterly earnings (reported on Nov 2005 ) after being listed and EB Capital reports a net loss!

Imagine a horsie horse in a cup race. The bell rings and the horse stumbles, throwing the jockey off the horsie. How? Out off the gates and already no hope liao!!

Disgusting or not?

You tell me lah.

And worse still, this EB Capital losses is at operating level and the company is net debt.

And lagi worse still for EB Capital, based on yesterday's closing price, EB Capital market capital is worth some 21.4 million.

And lagi, lagi worse still.. just imagine if the bossie owns 13% of this stock. This means the bossie is worth some 2.78 million based on his shares value in the market.

You tell me lah.... how come sky NO eyes one?

So, so easy to be a million hair ar?
So, so easy to be kaya raya!!

Sigh!

And lagi, lagi, lagi worse... just how did such company got listed?

Mana tu QC?

Well, i dunno but u guys and gals but muah is certainly pleased to read that SC is aware of this issue and is enforcing stricter rules.

Comeon... SC let's kick some butt!!!!!!

But there are some who are sceptical.

Will it really help?

I dunno... but... at least the very first small step is being made to rectify this issue.

I shall keep my faith... for now.

<==>

Has my opinion changed?

Heck NO!

Came Feb 2006, EB reported its earnings. Which it had to ammend and ammend. And finally on March 2nd 2006, it announced its final ammended quarterly earnings. And needless to say EB Capital states it loss 221k for that quarterly earnings. But somehow, it states it made 109k for its first fiscal year since listing.

But wait a minute.

Come 27th April, it boldly announced that there was a variance between audited and unaidted results. To cut it short, EB Capital actually lost 342k for the fiscal year!!

How could such a rotten stock be listed in a stock exchange????

So I am sure you are wondering why I am being so harsh on this bugger.

Take a look at the stock price and ze yellow card it got from Bursa.

So EB Capital states that it is proposing a 1 for 2 bonus issue and EB Capital states that:

• To the best of our knowledge, the Board of Directors of eB Capital are not aware of any particular circumstances contributing to the unusual market activity save as disclosed herein;

So does it make logical sense that they are not aware of anything?

So I am wondering, what is there to attract buyers to buy its share?

Is EB Capital bonus issue so seductive?

But then, which sane person would one to buy a share in a company which has yet to make a profit after being listed? And I wonder if the BOD of eB Capital is aware that they have yet to make a profit since listing?

Oh, how much is the price of EB Capital now?

1.70 wor!!!!!

now check this out...



See the Market Capital of EB Capital based on a price of 1.70?

42.341 million!!

Sooooo....

You tell me lah.... how come sky NO eyes one?

So, so easy to be a million hair ar?
So, so easy to be kaya raya kah??

Am I being too cynical?

But take a look at what is happening for EB Capital. Just form a company. Knowing how to make money is not a criteria, most important is to get the company listed on the Mess-Daq. And once it is listed, heck ze stock market might make you a million hair!!!

Oh, what a wonderful world!!

Oh MessDaq

Oh yeah.

M'sia to unveil tougher rules for Mesdaq listing

Finally something is being done over the clear lack of quality of the newly listed stocks, especially those being listed on the MessDaq.

Here is a snippet from the article which clearly highlights the appalling lack of quality control on stocks being listed on the MessDaq.

Litespeed's showing so far typifies that of many a Mesdaq company. Listed only last Thursday on Malaysia's tech index, the counter is trading at 31.5 sen - 15.5 sen lower than its offer price of 47 sen.

On its debut it opened one sen higher but closed the day at 39 sen, the second most-actively traded counter. A total of 11.4 million shares were traded, more than double the public IPO portion of five million shares.

Litespeed raised RM16 million (S$7.2 million) from its public issue of 32.5 million 10-sen shares, and its public portion was subscribed almost six times.

Unfortunately for those subscribers, only a few days into its listing, Lite-speed announced a net loss of RM1.9 million for its quarter ended July 31.

Aiyoh! Only a few days into its listing, Lites-speed announced a net loss of rm1.9 million for its quarter ended July 31!!!!!

This is simply NOT ACCEPTABLE.

Truly appalling!

A waste of market capital.

Only this Lite-speed like this? or is there more?

Ok... how about EB Capital ??

Listed 2nd Aug 2005.

Yesterday I saw this bugger's quarterly earnings.

Sales Revenue: 1.802 million
Net loss: 1.064 million!!!

First quarterly earnings after listing and it reports a net loss!

Imagine a horsie horse in a cup race. The bell rings and the horse stumbles, throwing the jockey off the horsie. How? Out off the gates and already no hope liao!!

Disgusting or not?

You tell me lah.

And worse still, this EB Capital losses is at operating level and the company is net debt.

And lagi worse still for EB Capital, based on yesterday's closing price, EB Capital market capital is worth some 21.4 million.

And lagi, lagi worse still.. just imagine if the bossie owns 13% of this stock. This means the bossie is worth some 2.78 million based on his shares value in the market.

You tell me lah.... how come sky NO eyes one?

So, so easy to be a million hair ar?
So, so easy to be kaya raya!!

Sigh!

And lagi, lagi, lagi worse... just how did such company got listed?

Mana tu QC?

Well, i dunno but u guys and gals but muah is certainly pleased to read that SC is aware of this issue and is enforcing stricter rules.

Comeon... SC let's kick some butt!!!!!!

But there are some who are sceptical.

Will it really help?

I dunno... but... at least the very first small step is being made to rectify this issue.

I shall keep my faith... for now.