Highlighted By Peng01: Kencana's Receivables On The Rise

Blogged the other day: Quick Review Of Kencana's Earnings

• peng01 said...
  Year 2009 receivable/deposit/prepayment = 259,874
  Year 2010 receivable/deposit/prepayment = 593,883
  ???

To be more precise here's Kencana's Q3 earnings: Quarterly rpt on consolidated results for the financial period ended 30/4/2010


Here's the latest Q4 earnings balance sheet.



The jump in the receivables is rather glaring, yes?

How?

Why the 'sudden' jump?

Reply From BB: Don't Get Too Excited Over Insider Selling

From the posting: Sep 28: Are Insiders Buying Or Selling?

• The net sum of all the buying and selling on the stock market is zero. The market doesn't notice who owns the shares.
  
  The market goes up and down according to a combination of perceived value and prevailing mood.
  
  In investing, a funny thing happens when prices are quoted minute-by-minute throughout the working day. People start to care less about the underlying value of the shares themselves and instead become fixated on where they think their prices are headed.
  
  And because a stock's underlying value will ultimately be realised, the net effect for all investors of buying a stock above its value will be a loss, while the net effect for all investors of buying a stock below its value will be a gain.
  
  We did have some fun here:
  
  http://fusioninvestor.blogspot.com/2008/07/blog-capsule-bullbear-vs-moolah-on.html

And ...

• From your post:
  
  Oracle ELJ: He exercised a share option of 10 million shares in Apr 2010 and sold these in Sept 2010. His pre and post-option exercise shares is about the same.
  
  Tiffany MPW: Has sold his shares in Mar 2009, Jan 2010 and Sept 2010. In all, sold down 11.7% of his initial holding.
  
  MHS DJP: Sold in Aug 2009 and Sept 22. He sold at the market price and then switched to exercise his share options at lower prices.
  
  MHS KL: (Did something quite similar to MHS DJP)
  
  Amazon VHB: Sold in Sept 2009 and Sept 2010 at market prices. Share options exercised at zero cost. Now holding slightly more shares (85,000) than before (80,000).
  
  Moolah,
  
  I would not get too excited over these insiders selling. There are many reasons for these. Some may not wish to be invested in their own company. Others may already have too many stocks in their own company. Perhaps, one of the above needed some money badly for various reasons.
  
  What do they do with the money after selling their shares? Perhaps, some have reinvested into the stock market in other shares.
  
  Eh.. it is interesting to highlight all these, but what is your point? :-)

LOL!

Quote: " it is interesting to highlight all these, but what is your point? :-)"

See this is where my small brains fails me.

If this was a DOWN market and all these transactions were PURCHASES instead of sales, what would be the interpretation?

And seriously, I have no point. LOL! :-)

All these are plain market facts. No extra coatings and what have we seen for 3 weeks in a row?

Think about it... the market is saying it's going up. The so-called charts are a nice uptrend but then for 3 weeks, insiders reckons it's a good time to sell. How would you want to interpret this? Me? I am nobody. I am lousy. I am obsessive. LOL!

All I did was highlight the facts and perhaps like the continuous equity mutual fund redemption, all these means nothing. :-)

And perhaps the 'negative mindset' are horribly wrong. Yeah, the short term market voting machine are saying they wrong because the markets are moving up. Hence these issues are irrelevant. Yeah, it doesn't matter what the fundamental reasonings. Most important is the market is saying they are wrong. It doesn't matter if these 'negative mindsets' understand why the market is completely rigged and fundamentally flawed. Yeah... it simply doesn't matter.

Anyway, let's look at Oracle again.

It was my intention to highlight the link to show who was selling and the past transactions made. No need to hide anything.

Anyway, let's look at Oracles's ELLISON LAWRENCE JOSEPH disposal of shares again.

Here's Oracle 'data' sheet from finviz.

http://www.finviz.com/quote.ashx?t=orcl

( nice eh? )

And the CEO, Ellison Lawrence Josesph reckons it's a good time to dispose a chunk of his shares at around a price of 27 bucks (according to Bloomberg article ). What was interesting to note is that on finviz's data compilation on Oracle was the Street's opinion on what the stock is worth. ( Wait, I know you understand that such opinion's such be discounted but as a brief indicator, the Street reckons the stock is worth much higher and just like the general market, the Street keeps telling everyone the market should move higher. :P )

The Street's views compiled..

• 27-Sep-10 Reiterated Barclays Capital Overweight $30 → $34
  
  17-Sep-10 Reiterated RBC Capital Mkts Outperform $28 → $32
  
  17-Sep-10 Reiterated FBR Capital Outperform $30 → $32
  
  17-Sep-10 Reiterated Caris & Company Buy $31 → $35
  
  17-Sep-10 Reiterated Barclays Capital Overweight $29 → $31

Yeah, they reckon Oracle should be worth above 30 bucks but apparently, the CEO reckons otherwise and voted with his feet.

And what was even better was that Oracle's CEO started selling on the 17 Sep, the very same day, four firms decided to uplift Oracle's target price. And yes, the gap up on the chart, happened on the 17 Sep! LOL!

ps: good or bad, I have no idea. Me just stating the facts. :D

ps: I get excited when I watch footy. Stocks and markets? They are a bore. :-)

ps: if I do get excited I do pole dancing! :-)

Reply From Kokanart: Time To Highlight The Other Side Of Your Obsessive Focus

From the posting: 20 Consecutive Weeks Of Fund Outflows And 71 Billion Withdrawn From Equity Funds

• kokanart said...
  
  It's time to highlight the other side of your obsessive focus:
  US small investors fleeing their mutual funds.
  
  A recent report on Bloomberg says:
  
  Record-low interest rates are stoking the biggest increase in share buybacks ever.
  
  U.S. companies have announced $258 billion in buybacks so far this year,
  compared with $52 billion in the first three quarters of 2009, according to data compiled by Birinyi. The almost fivefold increase is the largest for any January-to-September period since at least 2000, when the Westport, Conn.-based research firm started tracking the data.
  
  Corporations are using debt to pay for buybacks.
  
  Companies from Microsoft to PepsiCo and Hewlett- Packard are taking advantage of low-cost financing, purchasing their stock to boost per-share earnings.
  
  So, are the small investors the smart money this time or will it be the big insiders ( thru company buybacks ) ?
  
  Time will tell ...
  
  PS: the local market may be hot but we are discussing the US market.
  Also, as swifz pointed out, it is senseless to highlight only one side of the story.
  Do try to be more balanced.
  Mr. Soros said: I'm only rich because I know when I'm wrong.

The other side of my obsessive focus?

LOL!

Oh dear.

Such a nice message to kick off a Monday morning.

You do realise that this is a mere blog of mine and a blog is a collection of personal writings and notes.

And if you do realise this issue then you should have an open mind and realise that I owe NO ONE nothing.

I blog based on my personal preference and this blog reflects who I am. I am not going to bow to anyone to dictate what I shall blog and shall not blog.

Now I do hope you understand such a simplistic issue.

Regarding stock mutual fund redemption. That's a fact inside? 20 consecutive weeks, since 28th April, Americans have been making net redemption from their stock mutual fund holdings. And this issue is not about their stock market going up or down? ( Hmm.. are you afraid that I am the bearer of the bad news that could end this jolly good bull run? LOL! Comeon.. seriously?)

Yeah, dude, I am merely stating this fact.

Seriously, is this fact disturbing? And have I stated that the markets will crash?

Yes, is the fact that 72 billion had been withdrawn form their funds a huge worry for you?

Now I been updating this issue since it became an issue. Should I stop because some feel I am obsessive? Would I be doing justice to all those who are interested to see when the redemptions would end? Yeah, should I stop blogging on this issue and let other readers guess what has happened?

Ah... companies using debts to do share buybacks.

Is that good? If your opinion is that's is good, then I surely respect your opinion.

:-)

Oh... the other side of the coin would be the good news side, eh?

Do I need to turn this blog into one of the countless good news blog cheerleaders? Nah, I don't. I have no desire and no motivation. And if you think this is a blogging mistake, then it's a mistake. I have no problems with what you think of my blog. But if you need to read ONLY the GOOD news, then I am so sorry that this blog shall disappoint you and perhaps it should not be in your click zone!

Yeah man, live on the vitamins of good news and all other news that are potential negative issues just simply taboo and should not be mentioned. :-)

ps: the fact that insiders have been disposing their shares is NOT a worry too. ( Don't worry I did NOT state the markets will crash because of this. Just stating the facts. )

• Sep 21: Are Insiders Buying Or Selling?
• Are Insiders Buying Or Selling?

ps: That's a nice word of advice from Mr. Soros. :-)

=======================================

Apparently, I got another comment:

• kuan said...
  Moola ,I forgot to add my last line - Can millions of small investors be wrong ?
  
  Why not?
  
  They can also be right, when people like Soros are wrong.
  
  No one's perfect all the time.

LOL! LOL! 'Forgot to add my last line'?

Are you saying that you and "kokanart" is the same?

LOL! LOL! LOL!

ps: so fun to post in multiple 'names' eh?

ps/ps: next time, don't bother.

ps/ps/ps: try growing up. :-)

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

Amazing isn't it? To stress a point, does one have to go thru extremes like 'creating multiple nicks'?

ps: winning an internet argument? LOL! LOL! LOL!

ok.. ok... I lose. :-)

Reply From Simon Templar: Swee Joo Bhd-Behind The Curtains of Deceit

Comments received from the posting: And Swee Joo Comes Crashing Down

******************************

Due to some random advice, the posting had been edited out. Sorry.

Moolah.

Reply From BullBear: Don't Waste Time On What Is Not-Knowable

Got the following comments from the posting: "More On Stock Mutual Fund Cash Outflows"

• bullbear said...
  Mr.Moolah dear... I am looking for 5 or 10 stocks, which will provide me with fantastic returns over the long term, in my portfolio.
  
  One should focus on investing in individual stock, rather than the overall market. Adopting such a philosophy and strategy allows one to ignore the flow of funds and other asset classes which one may be less knowledgeable in. Don't waste time on what is not-knowable.
  Can anyone predict where the interest rate will be next year? What about the rate of inflation? ...etc. etc.

Ah BB:

It's now Mr.Moolah dear? I am no longer a female? LOL!

Many thanks for sharing your personal strategy and your kind word of advice.

However, you should know, I have no motivation and interest to blog on my personal investment strategy because I am a flawed nobody. Yes. I am always wrong.

Now just sharing some of my thoughts.

And as you are aware, this is a blog of my writings on my free time and many of which has no bearing of what I will or will not do in the market. Is it a waste of my time blogging on what is not-knowable? Perhaps but as long as I have the time and motivation, this blog shall continue as it is. I do hope it's not a waste of your time reading.

And it appears that this series posting highlighting the fact that American have redeemed a lot of money from their equity mutual funds have caused some unease.

Yeah, our local markets is hot and certain quarters do not want to see me highlighting this fact.

I find it rather amusing, more so because I state not what the market will or will not do.

:-)

Reply From Swifz: For Every Seller, There Is A Buyer

From the posting:

• swifz said...
  For every seller, there is a buyer. Money only flows into the stock market during an IPO. Money only flows out of the stock market when a stock de-list.
  
  If someone is pulling out his money from the stock, someone else is putting in the money. The article only highlighted one-side of the coin.
  
  The question is: Who is buying?
  
  My speculation:
  1. Foreigners
  2. Banks!
  
  Remember, Bernanke printed a lot of money, if banks are not lending, why not just speculate the stock market to make some profit to cover the big losses?
  
  The money is now showing up in commodities, that is why agriculture products are moving up.
  
  The next question: Should you hitch a ride up? The answer is entirely up to you.
  
  10:45 AM

Swifz: Long time no chat!

hmm... for every seller, there is a buyer.

That's true.

But... the posting is about Americans withdrawing money from their long term equity funds.

From the posting on 26th August 2010. Americans Pulled USD 53.279 Billion Out Of The Equity Markets

On that posting, there was a highlight of a NY Times article.

• One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.

Americans had been owning shares either directly or through mutual funds.

Yes, that posting was not about Americans selling stocks that they owned directly, but instead the series of postings highlighted via the label Fund Flows, keep tracks of the fund flowing in or flowing out of the equity mutual funds.

Think of it this way. Think about our local funds, our unit trust funds.

If Malaysians keep redeeming their money from the unit trust funds, how then?

And about the foreign equity fund investors.

Look at the snippet from the current ICI summary again.

Can you see that even 'foreign' investors who had invested in American stocks VIA equity mutual funds had withdrawn some 1.94 Billion for the current period too?

Reply From K C: Can One See The Big Problem With London Biscuits?

From the posting Regarding London Biscuits Again

• Allow me to present LB's performance in a different perspective. The important metric for performance is return of equity, ROE.
  
  Dissecting ROE of LB by Dupont analysis into: ROE=NI/E=NI/S*S/TA*TA/E NI is net income, S is sales, E is total equity, TA is total asset.
  
  For the last financial year, profit margin, NI/S=8%, Asset turnover S/TA=0.44, and leverage TA/E=2.0, giving ROE=8%*0.44*2=7.1%.
  
  ROE is very low despite the high leverage (hence risk). This is because asset turnover is very low (poor usage of assets) and profit margin is low.
  
  Profit margin has deteriorated steadily from 14% in 2005 to the present 8%, a huge drop.
  
  How well does LB utilizes its invested capital? The return of capital (ROIC) is pathetic at only 5.4%, which I believe it is even lower than the after cost of debt.
  
  LB appears to be a good buy for many people because of its seemingly low PER. In what form is the E in the P/E ratio? In the past 6 years, I do not see any positive free cash flow at all in any single year! Dividends have been slashed year after year to 1.5 sen per share. In fact I doubt there is any cash for this dividend payment, if not from more borrowing. Can one see the big problem with LB now? Can anyone still want to argue that LB at 1.07 is a good buy?

Firstly to ck5354: London Biscuit - Kanasai.

ck5354, How are you? It's been a long time since Fusion. I saw your link to my posting. Thanks! :P However, I am sure that you realised that I wrote that posting based on the Property, Plant and Equipment issue because someone had asked, so I replied. It's like my initial posting, Regarding London Biscuits Again, it was also a request. And I am sure you realise that my postings are just postings. Is it really bad news, meh? And you do know that I have no motivation to argue with anyone if any stock is worth a buy or a sell. I seriously lack the motivation to make such talk. And I do realise I had failed to post my disclaimer. :P

Disclaimer
1. I am a nobody.
2. I am not responsible for anyone's investments.
3. I am not a sotong. :D
4. I am certainly not an independent investment advisor.
5. Since I am not an in dependant investment advisor, I cannot guarantee that you should lose money.
6. Most important, I find no motivation to talk about stock price movements. Yeah, I do not indulge in guessing what a stock price will or will not do. So please spare me all the chats that you think this stock will go down by so much or this stock will soar by so much.

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

K C: Many thanks for sharing your views on London Biscuits.

As you are aware I do try to avoid talking investing yardsticks. Not that investing yardsticks are not good but somehow, it take the life out of the company. The company is just turned into a stock made of numbers and more numbers.

Regarding PER.

GULP!

Sensitive issue. Some just don't like me talking about this extremely sensitive issue. :P

Posted before: Can Investing Based On Low PER Fail? ( do see this also: Some Opinions )

Anyway for me, what's needed to remember is the P and E in that simplistic investment yardstick is never a constant. And the P is possible to change in value every time the stock is traded. And the E? Which E does one want to use? Past fiscal year? Current trailing earnings? Next fiscal year? Next, next fiscal year?

And to compound things worse, number of shares could always change. Which means the E could also change.

And what does low PER means?

Meaning is simple for me. In my flawed opinion, all it says is that THE stock is trading at low valuation based on the 'E'.

That's all.

It says absolutely nothing about the quality of the company.

Take LB. All it says it is trading at a low PER, that's all. It does not say if LB is good or no. Many I believe fail to realise this and they buy the stock based on the yardstick.

On the other hand, what's the flip side of it? What's the other sensible question that needs to be asked?

Think about it....

The market is extremely bull yes?

So why is the stock being avoided by the market?

Is there SOMETHING amiss? Is there something that they don't like that is causing them NOT to like the stock? And assuming if this is the case, then the LOW PER becomes redundant yes?

Regarding the lower dividend, I would put the enlarged share base into consideration too. Thanks to the wonder of nice ESOS, shares ballooned from 78.045 million to 96.104 million. Yes the wonderful world of ESOS created an incredible 17.969 new shares. Yeah, who does it benefit? With share base enlarged, and London Biscuit's cash balances really stretched, it's no wonder that dividends is less.

And regarding LB, I really said what I had wanted to say in last month's posting: Review Of London Biscuit

Regarding the stock? Remember I am not a sotong. I have no idea what the stock would or would not do.

Reply From Kokanart: Who Are Pulling Out?

From the posting: 58 Billion Reason Why Americans Thinks Their Stock Market Sucks!

• kokanart said...
  If Americans sold their shares ie net-sell to get out of the market, then who are the net-buyers?
  
  Logically speaking, for every seller there is, of course, a buyer.Are you referring to retail ie members of the public ( not the big insiders ) who are pulling out?

I believe my posting probably confused you.

My posting highlights that currently Americans have been pulling out a lot of money from their long term equity funds, funds designed to trade/invest only in their equity markets.

In the posting Americans Pulled USD 53.279 Billion Out Of The Equity Markets, I highlighted one NY Times article dated 21st Aug 2010. (That article probably explains better) That article reflected what I had been writing on postings like Main Street Telling Wall Street That The Equity Markets Stinks! and Stocks Rally And US Equity Investors Rallied To Get Out Of the Equity Markets.

From the NY Times article.

• ..... Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group....... ( I did not include that sentence because I did not agree what it was saying - see below for my explanation)
  
  Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.
  
  One of the phenomena of the last several decades has been the rise of the individual investor. As Americans have become more responsible for their own retirement, they have poured money into stocks with such faith that half of the country’s households now own shares directly or through mutual funds, which are by far the most popular way Americans invest in stocks. So the turnabout is striking.... (source again: In Striking Shift, Small Investors Flee Stock Market )

The NY Times although highlighting the issue, it made the report based on YTD basis.

• "Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year"

I could be wrong but I thought that actually is the nicer version and more so I wanted to focus on the current trend because I find it incredible to watch that each week, Americans kept pulling out from these funds. Anyway, that NY Times article was published on 21st Aug 2010, which means the article was probably using ICI ( Investment Company Institute ) data as at 19th Aug 2010.

And I actually made a posting on the 19th Aug. Yeah, compare that to what I wrote on 19th Aug 2010 in the posting: Stocks Rally And US Equity Investors Rallied To Get Out Of the Equity Markets.

I had noted that was the 15th consecutive week that American pulled money out of their equity funds. The total I was looking at? 50 Billion already! Americans are taking money out of equity funds which invests/trades in the stock markets.

And today's data, based on the current trend, from 28 April 2010 to 25th Aug 2010, or 17 consecutive weeks, Americans have withdrawn some 58 Billion from the equity mutual funds.

Is that dramatic? Is that an issue worth to consider?

Or is this a non issue?

What's The Potential Of Coveright Surfaces To Analabs Resources?

Received the following comments from grahamsmun in the posting: Update On Analabs Earnings

• Coveright is a superb buy !
  An investment of Rm 32m giving a return in investment of Rm 11m a return of 34% p.a.
  We hard the find such buy giving such a good return.
  On top of this analabs still got Rm 9m cash and Rm 12m of securities with no borrowings !
  Tribute should be given to Analab's management increasing dividend to Rm 0.05 tax exempt also !

Grahamsmun, long time!

Ok, let me say this without twisting and turning. Yes, Coveright Surfaces, and the resin impregnated business does have its potential. No doubt.

However, I reckon I deserve the right to pass judgement because it is still way too early to pass judgement.

But if you would indulge in me, let me share why...

Now Analabs acquisition of Coveright Surfaces is described in this pdf file posted on Bursa website.

Now one of the obvious way to gauge an investment is obviously the return of investment. Yeah, this type of stuff, no need to say for it's common sense. :D

Anyway, what I was interested in is the financial track record of Coveright Surfaces.

Here's my comments on those numbers.

1. It's always about profitability. No profits for Coveright means most likely this would be a poor return of investment for Analabs Resources.

Look at the numbers. The last two fiscal year, 2007 and fy 2008, the earnings are DECLINING, yes?

2. The net assets. Compare 2004 and fy 2008. Why the decline?

I then put these numbers into my worksheet.

What do I see? I see declining profit margins!

Am I impressed? Are you?

Now Coveright have only contributed 3 quarterly earnings to Analabs results. Taking the numbers from the segmental results, I have compiled it and placed it right below. This way we can see Coveright performance before and after.

Oh.. Coveright 2009 numbers... missing. :( :(

Yeah.. don't ask me... I cannot seem to find it.

Here's my flawed interpretation.

1. It's like I am looking at two different companies. The one in yellow was less profitable. (Ok, we are missing 2009 numbers). The one in yellow was Coveright performance before it was acquired by Analabs.

Ok.. perhaps I am being overly cautious and there could be a logical reason why the business economics had changed for the better. For example, a better selling price for their products could be a reasoning. ( Now if I am seriously an interested investor, I reckon it would not hurt me to find out more. LOL! Yes.. get out of my lazy chair, move it move it! Stop staring at Shakira and her Wakaka! friends kicking and diving and play acting while chasing one round ball! :P )

2. Q4 numbers (ie Coveright earnings) dropped substantially versus Q3. Sales dropped. Earnings and its margins also slumped. Why?

And this is where it's tricky.

Is it seasonal? Is it a temporary factor?

Me?

I stick to the easiest solution. LOL! LOL! Which is to say 'its way too early to pass judgement!! :P

But of course... for the really, really, really cynical bugger... the bugger would be thrashing out the conspiracy theories and indicates the extreme goodness of the numbers.

ROFLMAO!

Yes, the numbers were too good to be true. :P

What do we have? 11.054 million profit from a sales revenue of 69.827 million was contributed to Analabs earnings this fiscal year.

And how much did Analabs paid for it? 32 million!

Of course, it's indeed a superb buy!

But then the really, really, really cynical bugger would be asking is the owner of Coveright Surfaces silly or what? :P

Yes... if the company does make 11 million from a sales revenue of 70 million, or a profit margin of 15%, why on earth did the owner sold this business for a mere 32 million???? Something smelly?

LOL!

And needless to say, if it's indeed so good, why should Analabs minorities complain? They be rather silly if they did, yes?

How?