Letter On XingQuan Again

Got this new set of comments from gwynwelsh.

• Dear Investors,
  
  Please excuse me for heading towards a different subject i.e. on Xingquan. I have just received the annual report and I have also went through analysing the top thirty largest shareholders of this company. I have been a shareholder of Xingquan for more than a year now and I must admit to all of you that my investment had been dismal. My investment shrunk more than 45% as of the time of this note. This is also why I pay particular attention on Xingquan and would very much glad to hear from fellow investors on this counter. The annual reports reveals that Koon Yew Yin, dubbed to be the Warren Buffet of Malaysia has holdings more than 11.12% in Xingquan. His holdings were held through his wife, family and himself. 11.12% means more than 34 million shares. The other notable shareholder of Xingquan is Dato Koh Kin Lip, through Rickoh Corp and himself. Dato Koh has 2.52% or more than 4.7 million shares. Malaysian government backed retirement funds were recorded to have some 6.15% holdings as well. Foreign banks have some 4.65% holdings. A major shareholder of IOI Corp, Madam Lai owns 0.26% in Xingquan too. From the report, we can safely say that all major shareholders apart from the Chinese themselves, are smart and perhaps long term investors. Xingquan is currently muddled in the ruts and its share price fell like a stone. Multiple issues were raised on this counter from non-payment of dividends to allegedly producing dubious accounting. These are detrimental news and until or unless views from Malaysian investors change, Xingquan would just continue to be in the rut. However, it was recently reported in the Taikors and Taikons under its private eye column that MBMR is planning a loan of RM50 million to Xingquan. The deal was purportedly to be announced this Nov 15 with MBMR holding Xingquan's preferential shares and a commitment that 35% of all future profits of Xingquan be declared as dividends. My fervent hope is that the deal as reported by Taikors and Taikons is true and the perception of Malaysian investors on this counter change thereafter. `

Hello there gwynwelsh.

It's not a problem that you have posted your opinions and views on this stock.

Hmm... Koon Yew Yin investment in XQ again? Well, here's food for thought. Even the man himself, Warren Buffett has acknowledged he has many a mistakes before. From this perspective, I am just wondering what's the chances of Koon Yew Yin (KYY) not making a mistake? KYY bought his initial 5.5% stake on 27/09/2010. Has his investment in the stock performed or has it under perform?

Why am I saying this?

Sorry but I get this feeling that you appear to me that you are anchoring your investment decision to STAY in this stock simply because Koon Yew Yin is a shareholder. Yes, I could be WRONG but I feel that you are still invested in this stock simply because of KYY.

Is that wise? But what if KYY is wrong? Have you thught about it from this perspective?

And I am aware you have posted several comments on XQ on this site before. Many thanks for sharing your views. And here's one from the posting: http://whereiszemoola.blogspot.com/2011/05/quick-look-at-xingquans-earnings.html

Quote: I have a feeling that Xingquan is reporting a pack of lies like any other Chinese based companies. It is definitely doesn't make sense to suddenly switch product brand and go through the re-branding exercise after establishing the old brand name. I think it is a way to siphon out money in the form or name of re-branding exercise. I have also found out that the real owner of XQ is the brother-in-law of the CEO who is not in the board. This Chinaman is the actual person running the show behind those iron curtains.


I have invested into XQ and I regretted of my mistake. I thought it was good to invest in such a low PE share but it turned out to be a farce.


I have also the feeling that the IR chap, Ooi Guan Hoe is posting his comments in this blog as well. I have screwed him up and he didn't reply any of my emails to him.


If XQ is good then why it is trading below IPO price and keep falling like a stone? F XQ

--------------------
How? You felt you had made a mistake back then and some of the reasoning does support that decision but yet you have decided to stay invested in this stock. Is this because of the KYY factor?

Anyway did you consider some of the points mentioned in the last posting http://whereiszemoola.blogspot.com/2011/05/chat-on-koon-yew-yins-investment-in.html

ps: Market sentiments towards penny stocks are extremely strong. Anything could happen, yeah? So let me say again, I have no idea and I certainly have no interest on how XQ the stock will fare in the future. ;)

ps: for investors perception to change.... hmmmm.... I think balance sheet improvement is one major factor. I am really sceptical to see companies saying they have tons of money in their balance sheet but yet they seem to get 'value' or interest income from their vast pot of money. Why? Is the money real or not? And worse still, despite all these cash, these chinese companies still wants to raise money via share placement sale and TDR. Why? Got tons of money mah... but still want to raise more? Errrr.... and then some of the capex made by these Chinese companies seems rather exuberant. In XQ's case, the rebranding exercise simply blew my mind. In short, it's simple. For the perception to change, investors do not want to see questionable issues in the company they are investing in. And sadly for the Chinese stocks listed here, these questionable issues are the very same issue raised in Chinese stcoks charged with fraud.

ps: XQ balance sheet issue. Ok, sales and improved a lot the last quarter but sadly, I would ask the same old question, so what? My last posting on XQ, Chat On Koon Yew Yin's Investment In Xingquan Again
 , I wrote

• Balance sheet cash. Cash is shrinking but most important thing is interest received. As mentioned several times by blogger snowball, why is the interest so low? Why is Xingquan getting so low value for its money? From the table above, we know that at the end of 4th Q FY2010, Xingquan had some 280 million cash. Nine months later, cash left is only RM 168.850 million. 168 million is a lot of money, yes? But from the cash flow, Xingquan said it's only getting some 563 thousand in interest. Err.. why so little value for their money?

Ok... cash as per their quarterly earnings report in Aug 2011. Cash did improve back to RM214.484 million. Lot's of cash right? Why still want the TDR? And what will it do with the money they get? What if they do another crazy rebranding stunt once more?

But the main issue... interest paid and interest received column in their cash flow.

Now as you are aware, XQ has 'very little borrowings' compared with its huge cash pile.

As per its quarterly earnings, XQ said it has some RM27.083 million in borrowings. Their cash pile totals some RM214.484 million.

Now surely, one would expect XQ to be getting more interest than paying yes?

Any well managed and prudent company would easily manage such a cash balance, yes?

But ... if you look at the cash flow statement....

Interest paid is rm1.839 million.
Interest received is 810k.

Ahem... for a company holding some 214 million cash and some 27 million loans, why so low value for its money????

And for me... I can't really understand this. I am sceptical. I am forced to ask two questions. (1) Why such a poor management of the company's cash? (2) Is the cash even real?

I dunno and I dun have any answer.

ps: The receivables.... 18 May 2011, this was posted A Quick Look At Xingquan's Earnings.The one statement from Jupiter Research stood out.

• Higher receivables of RMB261.3m in 1HFY11 were due to higher sales in November and December and was within the 2-months credit period. Xingquan explained that the total amount has since been collected

Let me highlight my old table on XQ once more.

Now as you can see before 2011 Q1, receivables were less than 100 million.

But for 2011 Q2, receivables 'suddenly' rocketed by more than 100 million to 180+ million.

This made investors very sceptical.

Won't you?

But in May 2011, XQ TOLD Jupiter Research that the total amount has been collected.

But if you look at their Aug quarterly earnings, receivables stood rm167.352 million.

Errr....... how??????

So....... are these issues 'negative perceptions' or are they really questionable issues within the company itself?

Dutaland's Reason

And Dutaland finally gives its reason why it rescinded the S&P with IOI.

• Dutaland: deal rescinded to avoid prolonged legal tussle
  Written by theedgemalaysia.com
  Friday, 11 November 2011 20:04
  
  KUALA LUMPUR (Nov 11): DUTALAND BHD [] and IOI CORPORATION BHD [], which mutually rescinded the sale and purchase agreement over the disputed RM830 million oil palm PLANTATION [] deal, had done so with a view not to prolong the legal dispute arising from the termination of the deal.
  In a reply to a query from Bursa Malaysia Securities Bhd on Friday, Nov 11, Dutaland said the Deed of Rescission entered by the parties on Nov 9 would avoid protracted litigation, the outcome of which can be uncertain and this may have adverse implications on the company.
  
  “Moreover a prolonged litigation would hinder any potential sales of the PROPERTIES [] in future,” it said.
  
  Dutaland said that by entering into the Deed of Rescission, Sri Mayvin had retracted all its allegations and assertions made against Pertama Land.
  
  It said Pertama Land had consistently maintained that Pertama Land has complied with and is not in breach of the SPA as alleged or at all by Sri Mayvin.
  
  “In the absence of the sale proceeds from the Proposed Disposal, the Group may obtain bank borrowings and/or internally generated funds to fund/support the items stated in the intended utilisation of sale proceeds (i.e. purchase of Irredeemable Convertible Bonds, settlement of debts, funding of Kenny Heights project, etc),” said Dutaland.
  
  To recap, IOI Corp and Dutaland on Nov 9 said they had agreed to mutually rescind the sale and purchase agreement over the disputed RM830 million oil palm plantation deal.
  
  IOI Corp said on Wednesday that its unit Sri Mayvin Plantation Sdn Bhd and Dutaland’s Pertama Land & Development Sdn Bhd had entered into a deed of rescission in a move to resolve all issues and disputes relating to the SPA that involved 11,977.91 ha (29,597.42 acres).
  
  “With immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto,” it said.
  
  IOI Corp said following from the execution of the deed of rescission, OSK Trustees Bhd, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.
  
  On Oct 25, IOI Corp terminated its proposed acquisition of the land from Dutaland, citing the cancellation was “due to non-compliance of certain terms and conditions”.
  
  However, Dutaland had then said it did not accept the reasons for termination of the sales and purchase agreement and directed the stakeholder, OSK Trustees Bhd not to remit the deposit of RM83 million, which was the 10% deposit paid.
  
  In a separate statement on Nov 9, Dutaland said that with the rescission, Sri Mayvin has retracted all its allegations and assertions made against Pertama Land as contained in Sri Mayvin’s letters dated Oct 4, 20 and the 21.
  
  "Pursuant to the deed, Sri Mayvin has further confirmed that it has not lodged and will not lodge any private caveat(s) or any encumbrances(s) over the properties," it said.
  
  Dutaland also said its board having sought legal advice and after taking into consideration all relevant aspects of the termination of the SPA, was of the view that protracted litigation would hinder any future sales of the properties.
  
  "Furthermore, the outcome of litigation can be uncertain and this may have adverse implications on the group. In the meantime, the group shall continue to manage the properties to generate positive returns," it added.

Source: http://www.theedgemalaysia.com/business-news/196041-dutaland-deal-rescinded-to-avoid-prolonged-legal-tussle-.html

And Dutaland and IOI Both Rescind Their 830 Million Ringgit Deal

Posted last month: Yet Another Multi Million Screw Up From IOI Corp? and And IOI Corp Gave Its 83 Million Reasoning Why It's Cancelling The Deal With Dutaland

On the Edge: IOI Corp, Dutaland rescind RM830m oil palm estate deal

• IOI Corp, Dutaland rescind RM830m oil palm estate deal
  Written by Joseph Chin of theedgemalaysia.com
  Wednesday, 09 November 2011 19:34
  
  KUALA LUMPUR (Nov 9): IOI Corp Bhd and DUTALAND BHD [] have agreed to mutually rescind the sale and purchase agreement over the disputed RM830 million oil palm PLANTATION [] deal.
  
  IOI Corp said on Wednesday that its unit Sri Mayvin Plantation Sdn Bhd and Dutaland’s Pertama Land & Development Sdn Bhd had entered into a deed of rescission in a move to resolve all issues and disputes relating to the SPA that involved 11,977.91 ha (29,597.42 acres).
  
  “With immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto,” it said.
  
  IOI Corp said following from the execution of the deed of rescission, OSK Trustees Bhd, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.
  
  To recap, on Oct 25, IOI Corp terminated its proposed acquisition of the land from Dutaland, citing the cancellation was “due to non-compliance of certain terms and conditions”.
  
  However, in a separate statement, Dutaland said it did not accept the reasons for termination of the sales and purchase agreement and directed the stakeholder, OSK Trustees Bhd not to remit the deposit of RM83 million, which was the 10% deposit paid.

Huh?

That's it?

WTH!

Comeon... this is a 830 million ringgit transaction. Surely, both companies have a duty to show some respect to the investing public by explaining why the deal was rescinded. Mind you, when the deal was first announced, Dutaland shares soared. The investing public chased the stock because they speculated that there could be a potential cash windfall arising from this sales and purchase agreement. And Dutaland minority shareholders would like to know why the company is NOT fighting for the 83 million deposit paid.

Here's Dutaland announcement on Bursa.

• We refer to the announcements made by the Company dated 28 July 2011, 26 September 2011, 11 October 2011, 25 October 2011 and 27 October 2011, in relation to the Proposed Disposal. (Unless otherwise defined, all terms used in this announcement shall have the same meaning ascribed to them in the aforementioned announcements)
  
  The Board of Directors of the Company (“Board”) wishes to inform that the Company’s wholly-owned sub-subsidiary, Pertama Land as Vendor and Sri Mayvin as Purchaser have, on 9 November 2011, entered into a Deed of Rescission (“Deed”) to rescind the SPA and to record the arrangements consequential to the rescission (“Rescission”). Pertama Land had vide its letter dated 25 October 2011 disputed Sri Mayvin’s termination of the SPA on 25 October 2011. The primary objective of the Deed is to resolve all issues and disputes relating to the termination of the SPA by Sri Mayvin.
  
  The salient terms of the Rescission are as follows: -
  
  1. With the execution of the Deed, the SPA has been rescinded whereby both Pertama Land and Sri Mayvin have been released from all obligations and liabilities in connection with the SPA and neither party shall have any claim against the other in respect thereof.
  
  2. With the Rescission, Sri Mayvin has retracted all its allegations and assertions made against Pertama Land as contained in Sri Mayvin’s letters dated 4 October 2011, 20 October 2011 and 21 October 2011.
  
  3. Pursuant to the Deed, Sri Mayvin has further confirmed that it has not lodged and will not lodge any private caveat(s) or any encumbrances(s) over the Properties.
  
  4. The Stakeholder shall, simultaneous with the execution of the Deed, refund the Deposit of 10% of the Sale Consideration amounting to RM83 million together with all interest accrued thereon to Sri Mayvin.
  
  The Board having sought legal advice and after taking into consideration all relevant aspects of the termination of the SPA, is of the view that protracted litigation would hinder any future sales of the Properties. Furthermore, the outcome of litigation can be uncertain and this may have adverse implications on the Group.
  
  In the meantime, the Group shall continue to manage the Properties to generate positive returns.
  
  After considering the above, the Board is of the view that the Rescission is in the best interest of the Company.
  
  The Rescission is not expected to have a material effect on the earnings, net assets and gearing of the Company and the Group for the financial year ending 30 June 2012 as well as the issued and paid up share capital of the Company and the shareholdings of the Company’s substantial shareholders.

What's the main reason to rescind?

Why the lack of transparency?

This is from IOI.

• Reference is made to the Company’s announcements dated 25 October 2011 and 27 October 2011 relating to the termination of sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd (“Sri Mayvin”) and Pertama Land & Development Sdn Bhd (“Pertama Land”) for the Proposed Acquisition.
  
  To resolve all issues and disputes relating to the termination of the SPA, both Pertama Land and Sri Mayvin have on 9 November 2011 entered into a Deed of Rescission to mutually rescind the SPA with immediate effect whereupon the parties are released from all obligations and liabilities in connection with the SPA and neither party shall have any further claim against the other in respect thereto.
  
  Following from the execution of the Deed of Rescission, OSK Trustees Berhad, being the stakeholder jointly appointed by the parties, will proceed to refund the deposit earlier paid by Sri Mayvin pursuant to the terms of the SPA together with all interest accrued thereon to Sri Mayvin.
  
  This is announcement is dated 9 November 2011.

Just like that?

Case closed?

Here's Dutaland chart...

See how Dutaland, with the announcement of this 830 million transaction, soared from 50 sen to a high of 68 sen?

Yeah, see how Dutaland crash and burned once IOI said it was pulling out from this deal?

How?

Is this acceptable?

Look at the bigger picture. One of the bigger Malaysia corporate signed a S&P to make a 830 million land purchase. Deposit is even paid but yet..... such a deal can have be 'GOSTAN-ED' ..........

If this is going to be the normal practice amongst corporate Malaysia, can you wonder the future of investment in Malaysia stocks? How's Malaysia going to attract foreign investors when our corporations behave so unprofessional? One buys and signs the agreement but the next minute, the agreement is cancelled.

Yeah and what good is signing an S&P?

Could investors trust the signing of any S&P in the future when IOI and Dutaland have shown how easily the S&P could be rescinded?

WTH!

Ok, assuming IOI reasoning to withdraw from the deal is valid. However, the main question is why didn't IOI make a thorough inspection before they sign the S&P? Why sign and pay deposit then only say they want to withdraw? Very unprofessional isn't it? And they put their 83 million deposit at risk.

They Call Mems A Landmark Case For SC?

Posted earlier this year: How Much Fine For Cooking Your Books? Part III

• THE High Court has allowed the Securities Commission Malaysia’s (SC) appeal against the Sessions Court’s sentence of RM300,000 fine each on the former directors of MEMS Technology Bhd, Ooi Boon Leong and Tan Yeow Teck.
  
  The High Court retained the Sessions Court’s original fine and enhanced the sentence with a six-month imprisonment term each following the appeal by SC for a higher sentence in view of the severity of the offence.
  
  In February last year, Ooi and Tan, had pleaded guilty before the Sessions Court and were fined RM300,000 each for authorising the furnishing of misleading information to Bursa.

I thought the sentence was way too light!

Why?

They recorded sales transactions that NEVER took place!

That's downright cheating in my opinion!!!

By recording sales transactions that NEVER existed and the stock market valued Mems as a growth stock and the company was handsomely valued some extra 500 million!

And the description of the fine? 'Providing misleading information' was way too kind. They fudged and they cheated on their books! And the fine of 300,000 and jail term of 6 months? That is absurb. Too kind.

With such a crime, how are we ever going to stop corporate crimes like this?

On Star Biz: Landmark decision for securities cases

• Wednesday November 9, 2011
  Landmark decision for securities cases
  By CHOONG EN HAN
  
  PETALING JAYA: In a landmark decision for securities cases, two former directors of MEMS Technology Bhd saw their six-month jail terms imposed by the High Court being upheld by the Court of Appeal last Friday.
  The Securities Commission said in a statement that the Court of Appeal affirmed that a custodial sentence was necessary in order to ensure that investors would not lose confidence in the local market and to deter potential wrongdoers.
  
  “The Court of Appeal emphasised that knowingly furnishing misleading information to the stock exchange is a serious offence because potential investors, both foreign and local, rely on such information,” the commission said.
  The two former directors of MEMS, which was de-listed in November 2010, were charged for authorising the furnishing of a misleading statement to Bursa Malaysia in MEMS's condensed consolidated income statement for the 12-month period ended July 31, 2007.
  
  They were charged in the Sessions Court in Kuala Lumpur in 2009 for falsifying the company's reported revenue of RM73.416mil which contained over RM30mil of sales that did not take place.
  
  Both Ooi Boon Leong and Tan Yeow Teck had on Feb 25, 2010 pleaded guilty to committing the offence and were fined RM300,000 each, upon which the public prosecutor appealed to the High Court on the ground that the sentence was manifestly inadequate.
  
  Then in January 2011, High Court Judge Datuk Ghazali Cha imposed an additional six-months jail sentence to the fine of RM300,000, citing public interest as a reason for the increased sentence, pointing out that the offence affected the integrity of the capital market.
  
  Ooi and Tan had then appealed to the Court of Appeal.

I still think it's inadequate.  It's way too light.

And how can they call it a landmark case?

Really? Comeon!

Ironicaly on Star Biz also: Rajaratnam ordered to pay $92.8 million in SEC case

• Rajaratnam ordered to pay $92.8 million in SEC case
  
  NEW YORK (Reuters): A federal judge ordered Raj Rajaratnam, the Galleon Group hedge fund founder sentenced to 11 years in prison for insider trading, to pay a record $92.8 million penalty in a related Securities and Exchange Commission civil case.

( See past postings Rajaratnam: Guilty On All Counts! and Trading: Is success guaranteed from INSIDER NEWS/TIPS? )

11 years in prison and US$92.8 million penalty!!!

Now this is what I will call a LANDMARK case!

Mems? It's still a joke. The penalty is way too light!

And do consider this May 2008 posting:  Mems Asks For Support!!

Bernama's Amazing Article On Lingui

Just noticed the following article from Bernama published on Star Biz: Lingui first quarter pretax profit up 65%

• Saturday November 5, 2011
  
  Lingui first quarter pretax profit up 65%
  
  KUALA LUMPUR: Lingui Developments Bhd registered a 65.15% increase in pretax profit for the first quarter ended Sept 30, 2011 to RM24.04mil from RM14.56mil in the corresponding three-month period.
  
  Its revenue grew 19.16% to RM435.01mil from RM365.06mil.
  In a statement, Lingui said gross profit for the period increased 58.61% to RM34.03mil from RM21.46mil previously.
  
  “The increase in the group’s core profit before taxation was mainly attributed to strong operating results from the logs segment. In addition, the return to profitability of the group’s plywood and veneer operation also contributed significantly to this quarter’s performance,” it said.
  
  Lingui said the group’s performance in future quarters might be affected if the correction in timber prices following Japan’s delay in commencing its post earth quake reconstruction, was prolonged.
  
  “Although faced with a volatile and uncertain operating environment, the group continues to work on improving operational efficiency by enhancing the productivity of its workforce and equipment fleet and emphasising tight control over cash cost of production,” it added. — Bernama

How?

Sounds pretty good, yes?

Now compare that article to this one from the Edge: Lingui posts RM28m 1Q net loss

• Lingui posts RM28m 1Q net loss Written by Max Koh
  Friday, 04 November 2011 11:52
  
  KUALA LUMPUR: Lingui Developments Bhd posted a net loss of RM28.1 million for 1QFY12 ended Sept 30, compared with a net profit of RM39 million a year earlier. Revenue was up 19% year-on-year to RM435 million.
  
  In its notes to Bursa Malaysia, the timber company attributed the net loss to changes in fair value of biological assets less estimated point-of-sale costs of RM25.9 million, foreign exchange differences amounting to RM15 million, and losses in associates and joint-controlled entities of RM8.6 million.
  
  Lingui also noted that it saw lower sales of its timber products during the quarter.
  
  Lingui sold 186,501 cubic metres of hardwood logs at an average price of RM484 per cu m during the quarter. “Prices for hardwood logs achieved by the group remain stable due to tight log supply and relatively robust demand from India and China,” it said. It also sold 133,188 cu m of softwood logs at RM299 per cu m, and 55,910 cu m of plywood at RM1,902 per cu m.
  
  Lingui posted an operating profit of RM19.5 million in the quarter compared with RM9.6 million a year earlier.
  
  At the company AGM yesterday, managing director Yaw Chee Ming said Lingui is planning to invest RM143 million in FY12 for timber replanting efforts, infrastructure and upgrading of equipment. He said Lingui is looking at replanting 10,000ha to 15,000ha of its Sarawak timber plantation in FY12.
  
  “Our hardwood trees mature between eight and 10 years. We have planted some 30,000ha and hope to replant up to 15,000ha,” he said, adding that replanting costs RM4,000 to RM5,000 per ha.
  
  Lingui is planning to invest in and upgrade its machinery to cope with the worker shortage in Indonesia.
  
  On its softwood plantations in New Zealand, Yaw said Lingui plans to increase its harvest to 800,000 cu m per year in the next two to three years, with the upgrading of infrastructure and amenities.
  
  “We are investing between RM8 million and RM12 million to build roads and other infrastructure that will help increase our harvest,” he said. Lingui harvested 520,000 cu m of softwood for FY11.
  
  On its outlook, Yaw said hardwood prices have softened and are expected to maintain at current levels given the stable demand from China and India. “Demand for hardwood from India has been quite stable despite concerns of inflation. Demand from China has remained stable although there was a slight decline,” said Yaw.
  
  He added that plywood prices have already peaked on speculation on the rebuilding in Japan after the March 11 disaster. “The price has eased since. We expect prices to pick up again once the rebuilding in Japan begins and the stock depletes,” said Yaw.
  
  Analysts are expecting the rebuilding in Japan to begin next year, which would increase demand for plywood. Lingui exports 60% of its plywood to Japan.
  
  For FY11, Lingui posted RM191.7 million in net profit on the back of RM1.65 billion in revenue. It has 721,00ha of forest concessions in Sarawak and 35,000ha of forest plantations in New Zealand. It also has an associate stake in Glenealy Plantations (Malaya) Bhd.
  
  Lingui’s stock has fallen 40% in the last six months to a low of RM1.10 before closing at RM1.54 yesterday.
  
  
  This article appeared in The Edge Financial Daily, November 4, 2011

In short..

How?

Hello Bernama!!!

And so Manchester United Got Hammered By Citeh

It's been a while since I last wrote something about







And United got hammered. We lost. We got beaten.

The incredible thing was, this hammering made many people happy. It's not that their team won. It's simply that United got whipped badly at home in a derby match.

And no, I will still support Man United and I believe many will still do for a long time. We did not support United just because they were winning.

And I will be cheering for them against Everton later.

And no, I won't be cheering like a cow on steroid just because the other team lost.

And IOI Corp Gave Its 83 Million Reasoning Why It's Cancelling The Deal With Dutaland

Last night, IOI Corp explained in detail on why they are pulling out from the deal to buy the plantation land from Dutaland.

I find it very unacceptable how IOI is handing this whole saga.

Their first announcement made on 25 Oct 2011:

• Reference is made to the Company’s announcement on 28 July 2011 pertaining to the sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd ("Sri Mayvin"), an indirect wholly-owned subsidiary of the Company with Pertama Land & Development Sdn Bhd (“Pertama Land”), a wholly-owned subsidiary of Duta Plantations Sdn Bhd, which in turn is a wholly-owned subsidiary of Dutaland Berhad ("DutaLand") to acquire 11,977.91 hectares (or equivalent to 29,597.42 acres) of oil palm plantation land ("Plantation Land"), for a total cash consideration of RM830 million ("Proposed Acquisition").
  
  The Company wishes to announce that Sri Mayvin had on 25 October 2011 issued a notice to Pertama Land to terminate the SPA due to non-compliance of certain terms and conditions which had been communicated to Pertama Land. Under the provision of the SPA the rights and obligations of the parties shall lapse and be of no further effect from the date of termination notice, save and except that OSK Trustees Berhad, being the stakeholder shall within a period of seven (7) days from the notice of termination refund to Sri Mayvin the deposit of RM83 million which is equivalent to 10% of the purchase consideration and interest accrued thereon.

That was it.

They terminated the S&P to purchase the land because "non-compliance of certain terms and conditions".

This is a 830 million ringgit transaction that they are terminating and at stake is a 83 million ringgit deposit paid.

The lack of detail was utterly disappointing. Surely, as one of Malaysian leading corporates, IOI Corp, could have shown the decency and respect to the investing public by explaining in detail what exactly was happening.

Now given what happened three years when IOI Corp forfeited 73 million ringgit when they pulled out of a deal to buy Menara Citibank, IOI Corp should have realised that it's absolutely crucial that they explain in full detail to the market what exactly was happening.

But no, they decided not to.

Was it an act of arrogance? I dunno...

Last night, 27 Oct 2011, IOI made another announcement. I was shocked at IOI Corp's inefficiency. Why can't they just announce it on the 25th? Why the need to make another separate announcement? Gosh! I just find it so unacceptable. Why the utter lacking in professionalism?

Anyway, this is what they said.

• We refer to the Company’s announcement dated 25 October 2011 pertaining to the termination of sale and purchase agreement ("SPA") entered into between Sri Mayvin Plantation Sdn Bhd (“Sri Mayvin”) and Pertama Land & Development Sdn Bhd (“Pertama Land”) for the Proposed Acquisition.
  
  The Company wishes to announce that Sri Mayvin has communicated incidences of non-compliance/ breach of the SPA to Pertama Land vide letters dated 4 October 2011, 20 October 2011 and 21 October 2011. In summary, the incidences of non-compliance/ breach by Pertama Land of the terms and conditions of the SPA may be, among others, categorised as follows:
  
  1. Adherence to the obligation for the continued upkeeping/ maintenance of the properties in accordance with accepted agronomic practices;
  2. Discrepancies in the particulars relating to the properties; and
  3. Integrity of the title of Pertama Land in relation to one of the properties.

Finanlly.... a proper reasoning is given to the investing public.
How?

Are these three reasoning valid for IOI to pull out for the deal?

And at a stake, a 83 million ringgit deposit. Huge money at stake here!

How?

On Business Times today, IOI Corp was featured again.

• IOI maintains stand on deal turned sour
  
  By June Ramlee Published: 2011/10/28
  
  KUALA LUMPUR: IOI Corp Bhd, which stands to lose an RM83 million deposit to Dutaland Bhd from a deal turned sour, yesterday insisted that the latter had breached their sale and purchase agreement (SPA).
  
  Dutaland, however, maintained that it had not acted in breach of the SPA relating to a piece of plantation land.
  
  IOI previously announced that it had terminated the SPA to buy 11,977.91ha of oil palm plantation land in Sabah from Dutaland for RM830 million.
  
  IOI then said the cancellation was "due to non-compliance of certain terms and conditions".
  
  On July 28 this year, IOI's unit Sri Mayvin Plantation Sdn Bhd had signed the deal with Dutaland's unit Pertama Land and Development Sdn Bhd.
  
  Yesterday in a filing to Bursa Malaysia, IOI maintained that Dutaland, among others, had failed to continue upkeeping and maintaining the properties. It also claimed that there were discrepancies in the particulars relating to the properties, and that Sri Mayvin had communicated the alleged breaches to Pertama Land.
  
  Dutaland, in its latest filing to the stock exchange, said Pertama Land had consistently maintained that it was not in breach of the SPA as alleged.
  
  There had also "been non-compliance on the part of Pertama Land under the SPA as alleged or at all by Sri Mayvin", it added.
  
  Meanwhile, analysts said there will be a minimal impact on IOI's overall earnings if it loses its RM83 million deposit from the deal inked with Dutaland Bhd a few months ago. This is because IOI is a cash-rich company with profits of close to RM2 billion to RM3 billion a year.
  
  Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.
  "It's too early to say (if the deposit will not be returned) but if they can prove that it is non-compliance, then they should be able to get their money back.
  
  "But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much," said one analyst.
  
  It will not be the first time IOI will lose its deposit. In 2008, the company had forfeited its deposit of RM73.4 million after it walked away from buying Menara Citibank.
  
  Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.
  Dutaland earlier said it was seeking legal advice and had notified OSK Trustees Bhd not to remit to Sri Mayvin the deposit of RM83 million being the 10 per cent deposit paid by Sri Mayvin under the SPA and any interest accrued.

 I do not agree some of the points mentioned.

• Losing the RM83 million deposit on that deal would not make a big difference as the potential loss will only lower its earnings by three to four per cent, said several analysts when contacted by the Business Times yesterday.
• "But if they lose their deposit, then there would be minimal impact on the company as it makes RM2 billion in profits in a year, so it won't hurt much,"

Errr.... I am simply lost.

How could these analysts take the 83 million and compare it against what IOI Corp is making as whole? Yeah, IOI Corp could be making rm 2 billion a year but goodness me, 83 million ringgit is 83 million ringgit is 83 million ringgit. This is money way beyond most of us Malaysians.

Well, what if everyone starts having such an attitude and mindset such as  'hey we make 2 billion a year, it's ok to blow away 83 million... it's just a bloody spit in the ocean....' ?

How?

Is that acceptable behavior?

No, that's not for me. Not in a million years.

But then ... looking at recent losses from IOI Corp - the 300 million forex losses, the 73 million forfeited deposit and now this.... you begin to wonder.....

And last but not least...

• Analysts, however, said the Citibank and the Dutaland deals cannot be equated, given that the company had decided to walk away from the former deal.

Huh?

How could it not be equated?

Tell me.... sigh.

In the Citibank debacle, IOI Corp pulled out 3 months after signing and the S&P. For this Dutaland purchase, IOI is again pulling out 3 months after signing the S&P.... how are they not the same?

Two of the reasons given last night by IOI...

• 2. Discrepancies in the particulars relating to the properties; and
  
  3. Integrity of the title of Pertama Land in relation to one of the properties.

The discrepancies and the integrity of the title... shouldn't this be thoroughly examined by IOI Corp themselves before they sign the S&P?

Hey, it's a 830 million deal... surely you want to examine everything in full detail... before you sign, yes? Why sign and paid the deposit only to now claim discrepancies and integrity? Why risk losing the deposit paid? Is 83 million ringgit small change?

Now? It looks like the fate of the 83 million ringgit lies in the hands of the court.

On Star Biz: IOI, Dutaland in war of words over termination of RM830mil deal

Yet Another Multi Million Screw Up From IOI Corp?

I was shocked when I read the following set of news last night:

• IOI Corp cancels RM830m land purchase from Dutaland
• Dutaland rejects IOI Corp bid to cancel RM830m land purchase

IOI Corp had signed a deal on 28 July 2011 to purchase 11,977.91 ha (29,597.42 acres) of plantation land from Dutaland. A 83 million deposit had already been paid.

Last night, just 3 months after signing the deal, IOI Corp said it's cancelling this deal.

And of course, Dutaland quickly responds by saying it's taking legal advice since it's not accepting IOI's reason for termination.

And as you can guess, Dutaland has asked that the deposit of 83 million not be remitted back to IOI Corp.

And this looks like yet another woeful corporate exercise from IOI Corp.

Just what on earth are they doing?

This is a 830 million transaction. You just don't sign any 830 million corporate deal without making thorough due diligence before agreeing to purchase. And IOI explanation on why it's cancelling this deal is simply a " non-compliance of certain terms and conditions".

This is simply pathetic and it reminds me of the recent Citibank debacle that happened back in Nov 2008.

Here's an article on Star Biz back then.

• Saturday November 29, 2008
  IOI Corp should better explain why it’s losing its RM73mil deposit
  By P. Gunasegaram
  
  REALLY, listed companies should be a lot more careful before they pay a deposit for their proposed acquisitions. If they can’t complete their deals for any reason, they can lose hefty sums of money and raise needless suspicion over board integrity.
  Boards of listed companies and CEOs should realise that they have a statutory duty not only to their major shareholders but also to each and every shareholder – and there are many minority shareholders to consider.
  
  The least that listed companies should do when they abort their deals is to offer a full and fair explanation of why it was aborted, what were the events that had changed and why these things had not been anticipated in the first place.
  Take the deal called off inexplicably by IOI Corp after having signed on the dotted line less than three months ago and losing over RM73mil in deposits paid in the process.
  
  It had announced on Aug 28 the effective acquisition of Menara Citibank in Kuala Lumpur for RM586.7mil through the purchase of Inverfin Sdn Bhd which owned the building. Inverfin is owned in turn by Citigroup unit Citi Holding (50%), Singapore’s CapitaLand (30%) and Amsteel Corp (20%).
  
  On Thursday, Nov 27, IOI Corp, just a day short of three months of the earlier announcement, told Bursa Malaysia that it has decided not to proceed with the acquisition.
  
  The reason in IOI Corp’s own words: “However, due to the recent sudden adverse developments in the global economic environment which have spread to this region and impacted negatively on business sentiments, the Company has, after due and careful deliberations, decided that it would be in the overall best interests of the Company and its shareholders not to proceed with the Proposed Acquisition.”
  It further announced that the vendors were forfeiting the deposits paid of RM73.4mil together with interest and added that it was “seeking legal advice as to the propriety and quantum of the aforesaid forfeiture”.
  
  It is instructive to note what IOI Corp said in its original acquisition announcement: “The Proposed Acquisition will provide IOI with an immediate substantial rental income stream. With its choice location at the heart of Kuala Lumpur and well served by the surrounding infrastructure and amenities, Menara Citibank is presently enjoying close to 100% occupancy rate with quality tenants consisting of multinational companies and reputable companies in their respective industries.
  
  “In addition, the 50-storey Menara Citibank is well-maintained and well-equipped with high quality mechanical and electrical equipment and good security system. Its distinctive design and quality also distinguish itself from the competing office buildings in the vicinity.
  
  “On the whole, the Proposed Acquisition is a strategic move which augurs well for the IOI Group as it accords the Group with the golden opportunity to own one of the few available high-rise Grade A office buildings in Kuala Lumpur with first class location and prestigious address.”
  
  So, why is that changed in three months? Was there an exodus of tenants from Menara Citibank? Did the rental income drop? Was there a collapse in office space prices? Why is the acquisition not strategic anymore?
  
  Why could not IOI Corp have foreseen these problems earlier? After all, the subprime crisis was already upon us. Why did it pay the deposit which it now has most likely lost if it had felt there could be problems?
  
  IOI Corp’s explanation is poor at best and we really don’t know what it is at worst. Investors certainly expect a lot more from this company, once the darling of the stock market. And so should regulators. Minority shareholders certainly have a right to be seriously upset.
  
  Coming so soon after its recent debacle where it reported foreign exchange losses of over RM312mil for the quarter to end-September, the latest episode will put another dent in its reputation, largely unsullied until the forex episode.

See the similarities?

IOI Corp back in 2008, had also terminated a deal 3 months after signing the deal!!!!

And IOI lost its 73 million deposit back then. Me? I won't be surprised one bit if IOI loses 83 million ringgit this time for cancelling its deal with Dutaland.

It's simply embarrassing and if I am a minority shareholder in IOI Corp, I would be deeply annoyed to see what's happening. IOI Corp is supposedly one of our country's biggest corporation. In 2008, IOI lost 73 million by rescinding a deal to buy Citibank. 3 years later, IOI could now lose 83 million by cancelling this deal to buy land from Dutaland. What the hell? Does IOI have so many million ringgit to give away???

Would you blame any minority shareholder for asking 'Is IOI Corp the biggest water fish in corporate Malaysia?'

Good grief!

ps: Looks like Dutaland could get 83 million ringgit free!
ps: I got some barn yard. Does IOI want to agree to buy and then cancel to buy from me? :P