Cinema-Blend-whereiszemoola

Got this in my comments:

• newbie has left a new comment on your post "MaeMode Defaults Its Loan Payments And Enters PN17...":
  
  Dear Moolah, Did you notice the sharp fall in a number of stocks today?Stocks like BJTOTO,BKAWAN,TDM,CBIP and COASTAL plunged near the end of the session .Remembered you wrote about a similar subject some time ago.Any conspiracy theories behind such fall? Spooked quite a number of people.Thanks for your time reading this. 

 Yes, I did write about this before and it's rather spooky again.

This is the 3rd time something like this happen and yet here we are again.

Has something been done?

Are they gonna say it's an error trade again?

21 Oct 2011: And FBM KLCI Decided To Have Its Own FLASH CRASH! 

And almost one year ago,About Stock Market Yesterday: The Day KLSE Decided to Have Gap Up And Gap Down All Over

Same thing all over again.....!!!!!

Several stocks went limit down at the very last minute of trade.

Several stocks shot up too!!!

Come on SC.

Come on Bursa.

Don't tell me you guys saw nothing.............

Apparently they did and they just said " Trades ‘valid and genuine’

!!!!!!

• Six counters from mid-caps to big ones, namely, Hap Seng Plantations Holdings Bhd, Batu Kawan Bhd, TDM Bhd, CB Industrial Product Holding Bhd (CBIP), Coastal Contracts Bhd and Berjaya Sports Toto Bhd, hit limit-down, or a 30% plunge, with a combined trade of RM43.1mil in that short time window during pre-close.
  
  While the trading pattern may seem like an “error in trading” could have taken place, a Bursa Malaysia representative when contacted by StarBizWeek clarified: “With regards to the eight stocks which hit their limits-up (two) and down (six), Bursa Malaysia has investigated the matter and has confirmed with the broker that the basket order, which was from their institutional client, was valid and genuine.”

Valid and genuine????


Has the institutional client lost their marbles???


Why DUMP all those shares and sell with limit down orders????


You believe???


Yeah, I think extremely likely of the pre-close trading. It's nonsense and we get to see nonsensical trades like this!!!

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

Here is how the flash crash looked like....

HSPLANT


BATU KAWAN


TDM


See how these stocks literally fell off the cliff near the end of closing trade???

Which institutional client would give a mindless trade order like this??????

I just highlighted 3. There are more.

And here is the opposite.

Some stocks went straight up!!!!!!!!!!!!!

JCY


STAR


Oh yes, there are several more stocks trading in such an outrageous manner at end of trade. Some plunging while others surge limit up.

What gives?

Come on Bursa, you cannot just say that these trades are from an institutional client and that the trades were valid and genuine.

Of course they are valid.

But.... think lah.

Do you call this a fair and orderly stock market???

Well again... if these institutional clients are so important then what about the retail investors???

Which retail investors wants to be a long term shareholder when market shenanigans like this happen and the culprits get away freely????

Sigh.

Just got this:

• solomon has left a new comment on your post "Unhappy Goldis Minority Shareholder":
  
  Finally, another ship Maemode failed to service it's debt.....this is in your radar if I am not too old to forget.... 

Yeah, I saw that and I see it's highlighted on the Edge also. http://www.theedgemalaysia.com/business-news/242712-malaysian-ae-models-defaults-on-loan-payment-.html

With that default, MaeMode is now a PN17 stock. PRACTICE NOTE 17 / GUIDANCE NOTE 3:FIRST ANNOUNCEMENT 

Anyway, I am not a bit surprised at all.

My last posting on MaeMode was on 2nd May. Time's Almost Up For MaeMode

lim hwa has left a new comment on your post "Investment Adviser: Just Who Are You Advising For?...":

I refer to the recent announcement by Goldis Berhad on 8 May 2013 for the capital distribution of IGB shares. From the first reading of the announcement, it seems the proposal is really to reward the shareholders of Goldis. However, with further understanding of the proposal, the proposal seems to me just another way of taking the value from the minority shareholders.

In my humble opinion, to put the unlisted share as an alternate option to cash to MI is as good as forcing the MI to have no option but just have to take up the cash option. My rationale is that one of the key objectives of us investing in stock markets / listed shares as compared other investments is due to liquidity. As the proposal is to distribute the unlisted shares, then such proposal is defeating the our objective.

To simplify it, assuming a listed co only owns a very profitable subsidiary (say with NTA of RM100 mil). The major shareholders then propose the similar structure to all the shareholders whereby the profitable subsidiary to be transferred to a non-listed company at say RM50 mil. Thereafter, all the shareholders will be given the options to choose (i) the unlisted shares or (ii) cash value per listed share which will be substantially undervalue as the valuation for the transfer is only half of the NTA.

Eventually, the major shareholders will own 100%/ majority of the unlisted company cuz i presume majority of the MI will not opt for unlisted shares due to liquidity.

With this, the major shareholders are essentially privatise the jewel of the listed company at a cheap valuation in the expense of the MIs' value.

I see the above illustration happens to GOLDIS now.

May I have your view on this case i.e. GOLDIS just to make sure MIs' are well protected before the same structure to be replicated for the next many more coming proposals if this first kind of proposal is successfully completed.

Since I had been posting a lot about China based companies listed in our stock exchange, I was watching HB Global.

HB Global's stock was plunging when it said publicly it was delaying its audited accounts ( http://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=237501&Itemid=79 )!!!!

Last night HB Global made the following announcement: http://www.bursamalaysia.com/market/listed-companies/company-announcements/1280081

• The Board of Directors of HB Global Limited (formerly known as Sozo Global Limited) (“HB” or “the Company”) wishes to announce that the Company’s External Auditors, Messrs. Paul Wan & Co had expressed an audit disclaimer opinion in the Company's latest audited financial statements for the financial year ended 31 December 2012, as follows:-
  “Basis for Disclaimer of Opinion
  Included in the Group’s balance sheet as at 31 December 2012 is bank balance amounting to RMB 249,633,611. In the course of our audit, we were not able to satisfactorily and independently substantiate the bank balance of the subsidiary company.  In addition we were not able to receive reliable independent confirmations on majority of the trade receivables and trade payables that were circularised; these balances represented 56% of trade receivables and 48% of trade payables as at 31st December 2012.  These brought into question the proper accounting for bank balances, trade receivables and trade payables and the corresponding transactions in the Group for the year ended 31 December 2012 and the completeness of transactions recorded in the Group’s accounting records.
  Disclaimer of Opinion
  Because of the significance of the matters described in the Basis for Disclaimer of Opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for our audit opinion.  Accordingly, we do not express an opinion on the financial statements.”
  This announcement is dated 7 May 2013. 

WOW!

NOT able to satisfactorily and independently substantiate the BANK BALANCE of the subsidiary company?

Aha!

Red flag raised!

Remember the past postings on the China based stocks? So What's The Problem With China Based Companies?

The media kept on highlighting that these China based stocks were so cash rich.

I challenged that statement and I showed with a real example on how a director of a China based stock sold shares BELOW the cash per share value and for that stock, we saw the company's cash balances was said to be at 894.674 million. So much cash but the company earns only 3.416 million in interests. Does it make sense?

Let's look at the last reported quarterly earnings from HB Global. http://www.bursamalaysia.com/market/listed-companies/company-announcements/1214805

The balance sheet shows the following...


Oh yeah... cash balances were said to be at 124.725 million. HB Global 'as per'  its balance sheet is cash rich!

Now if you look at the cash flow statement below, the interest received is only 1.018 million!!!!!


 Huh?

Exactly!!!

HB Global said it holds cash balances of over 124 million but it only receives 1 million in interests!!!!

Does it make sense to have so much money and not generate any bank interest for all these cash?

Now HB Global auditors is questioning the cash balances!!!!

How?

Next time you hear someone talks about cash rich China based stocks, tell them to have a look at HB Global!!!!!

And yeah... currently there are 9 China based stocks listed here and our dear old Bursa Malaysia wants to have more such listings!!!!!

Sigh!

I was reading the following article: http://biz.thestar.com.my/news/story.asp?file=/2013/5/4/business/13030734&sec=business

In light of the recent posting, Do You Want More China Based Companies To Be Listed Here?, the first few passages caught my attention...

• THERE are currently nine China-based companies listed in Malaysia and you'll be hard pressed to find one that is trading above their initial public offering (IPO) price.
  
  Of course, some did trade above their IPO price soon after they were listed but none proved sustainable.
  
  It's somewhat perplexing that they are not. These companies are cash-rich, have profits that grow year-on-year and almost, if not, all are trading at huge discounts to their net cash per share.
  
  Sure, not all of their businesses are terribly sexy. Most are shoe manufacturers but given the growing population and income levels the world over, there remains growth potential.
  
  So, what is the problem?

Yeah what's their problem?

First thing first.

"you'll be hard pressed to find one that is trading above their initial public offering (IPO) price.".. When I posted Do You Want More China Based Companies To Be Listed Here?, on the average, these China based companies were starring at 63% losses since their IPO listing. And the losses increased since ALL of these China based stocks declined further since then.

Two of the big losers were HB Global and CSL, with HB Global plummeting some 24% yesterday when it announced it's delaying its audited accounts! ( http://www.theedgemalaysia.com/index.php?option=com_content&task=view&id=237501&Itemid=79 )!!!!

CSL closed at 26 sen yesterday. (IPO Price 95 sen!!!!! )

The Star Business article talked about these stocks trading at huge discounts to their net cash per share.

Let's look at CSL quarterly earnings report: Quarterly rpt on consolidated results for the financial period ended 31/12/2012 

Have a look at the pdf file attached to that Bursa webpage.

From the balance sheet, we can see that CSL is cash rich!

 CSL says it has some 894.674 million in its piggy bank!

That's a lot of cash!

Super cash rich since CSL does not have any borrowings.

But the market is selling CSL at 26 sen only!!!!

26 sen... which means CSL market capital is worth 323.117 million!

Holy cow!

I'm sure you will ask is the market out of whack selling CSL at 26 sen!!!!!

With a market capital of 323.117 million, it means the market is valuing CSL way below its 894.674 million.

With 1,242.760 million shares, CSL's cash per stated in its Feb quarterly earnings is 72 sen!

Yes, you heard me, cash per share is worth some 72 sen.
Market valuing the shares at only 26 sen.

How can the share be worth so little compared to the company's cash????

Won't the owners be better off taking the company private?

Correct?

If the cash per share is REALLY worth 72 sen and the share is trading at 26 sen, surely the owners would buy these shares like crazy, yes?

But this did not happen!!!

Instead on 23 March, less than one month after this earnings report was released, one of the directors, Chan Fung @ Kwan Wing Yin, decided to dispose shares at 60 sen!!!!!

Huh!!!!

Yes sir!

Company's cash per share were worth 72 sen.
Company's director disposes shares at 60 sen!!!

How????

Makes sense?

Time to look at the cash flow.

Looking at the cash flow statement is useful because the interest income is stated there.

Think about it. For a company like CSL, it says it has 894 million in its piggy bank. A lot of money, yes? Surely the company would deposit a bulk of the money to earn some interest right?


CSL's interest received showed only 3.416 million.

Huh?

So low?

CSL has 894.674 million cash and CSL only receives 3.416 million in interests!!!!

WHAT'S HAPPENING?

What is CSL doing with its 894.674 million????

(ps: How about CSL allow me to manage their 894.674 million cash and I pay them 6 million in interest!! )

Why is CSL getting so little in interest???

 Well, what's the possible answers?

Is CSL putting any of the money into fixed deposits account?
If no, why?
If no, what is CSL doing with all these money?
If yes, why so little in interest?

How? What's the problem with these China based companies?

Would you trust the NET CASH PER SHARE of this China based company? ( Feel free to do a similar research on other China based companies.)
 

How now?

They say share cheap because share is trading below net cash per share. But company director is selling their share below the net cash per share. Company earns extremely low interest.

DARE you invest in such company???

 ps: When CSL was newly listed it was a darling stock. With an IPO of 95 sen, CSL managed to fly to a high of 1.93 sen within one month from its listing! See chart below.

 Here's the chart almost a year later.

 

One of the stocks I blogged many times before is MaeMode,

 Maemode just announced its 2nd consecutive quarter of losses.

Company said the following in its notes.

• For the nine months period ended 28 February 2013, the Group recorded a turnover of RM 388.96 million compared to RM429.97 million registered in the previous year's corresponding period. The Group recorded a loss before taxation of RM 3.74 millionfor the current period as compared to profit before taxation of RM 16.24 million in previous year's corresponding period. This was caused
  by the substantial increased in holding costs of approximately 6.8 Million due to the delay in the installation works on certain major projects such as KLIA 2, which also caused the billings to be delayed.

I feel those comments are not doing any justice to its minority shareholders.

Have a look at the following table.


How now?

Look at how the LOANS are increasing all the time!
Look at the increasing receivables too!

And look at the depleting cash!

Extremely scary stuff!

How could a company be run in such a manner?

Why is the receivables increasing all the time?
Why is the company not collecting these receivables?
Have the auditors gave a thorough check on the sum of these receivables?

And why is the company continuing to borrow money all the time when there is so much receivables to collect?
What is the company doing with all the borrowed money?

So many questions........

And the scariest picture now has got to be the following....


Amount (borrowings) payable within the next 12 months is 449.559 million!!!!!

How much money does the company have??

Saw the link to the article on Star Business: Kanger set to be 10th China-based company to list on the local bourse

I did not even want to read about it.

First thing on my mind was 10th!

Do we really need all these Chinese companies to be listed in our stock exchange?

Come on Bursa!

Stop thinking like a commission based  salesman! These companies are stinking our stock exchange! Come on. You can't smell it? You guys complain about the lack of retail investors all the time and here you are, inviting all these China based companies to be listed here.

You just don't get it, yes?

More quantity is not going to increase retail investing participation.

QUALITY is the only word that is important.

What is stock investing?

Stock investing is investing in good quality businesses at a good price.

Investors don't want to invest in all these poor quality companies only to find the value of their investment shrink like hell after a few months!

Here's proof.

http://www.bursamalaysia.com/market/listed-companies/initial-public-offerings/ipo-summary/

The three most recent listed Chinese stocks.

China Automobile Parts Holdings Limited
IPO Price: 68 sen
Listed 30/1/2013
Current Price: 36 sen

China Stationery Limited
IPO Price: 95 sen
Listed: 24/2/2012
Current Price: 34 sen

Maxwell International Holdings Bhd
IPO Price: 54 sen
Listed: 6/1/2011
Current Price: 31 sen

Compare the current share price as of this morning versus the IPO price of these 3 China based stocks. All IPO investors of these Chinese stocks would be cursing at the stock performance as of today.

The following table shows the current price versus the IPO price and the % change of all Chinese listed companies.

On average, investors of these Chinese stocks are starring at an average loss of 63% since listing!!!!

How?

Bursa Malaysia, are you aware of this stat?

If so, why?

Why are you pushing for another Chinese stock to be listed on our stock exchange?

Do you care for the quality of the stock exchange?

Or do you just list such companies hoping just for more revenue for the exchange????

Here are the charts showing the performance of all these Chinese stocks since listing.

Chinese Automobile Parts (CAP)


China Ouhua Winery Holdings Ltd (CNOUHUA)


 China Stationery Limited (CSL)


HB Global Limited (HBGLOB) (Old name: Sozo Global)


K-Star Sports Limited (KSTAR)


Maxwell International Holdings Bhd (Maxwell)



Multi Sports Holdings Limited (MSPORTS)


XiDeLang Holdings Limited (XDL)


Xinquan International Sports Holdings Limited (XINQUAN)