Cinema-Blend-whereiszemoola

I was reading this article on the Edge.

• Octagon’s auditors issues disclaimer of opinion
  Business & Markets 2013
  Written by Lee Wen Ai of theedgemalaysia.com
  Wednesday, 06 March 2013 09:06
  
  KUALA LUMPUR: OCTAGON CONSOLIDATED BHD []’s (OCB) auditors have expressed a disclaimer of opinion in the company’s latest audited accounts for the year ended Oct 31, 2012 (FY12).
  
  Its external auditors Messrs Baker Tilly AC expressed “significant doubt” on OCB’s ability to continue as a going concern pending the implementation of a proposed rationalisation scheme (PRS) as a result of OCB’s default on term loan payments during the year.
  
  OCB had earlier submitted the PRS for its lenders’ consideration. OCB was informed on Jan 9 that the PRS was approved. OCB is said to be in the process of finalising and executing its debt settlement agreement with its lenders.
  
  The auditors said there was “material uncertainty” over the recoverability of the group’s RM79.4 million work-in-progress for a waste tyre project, a RM71.8 million development expenditure for a waste-to-energy project in Sri Lanka and the company’s RM33.6 million investment in relevant subsidiaries as at Oct 31, 2012 — which were dependent upon the successful implementation of the projects and the PRS.
  
  The auditors also highlighted that the group had a contingent liability of RM11.9 million from transactions entered into with YEM Holding Company WLL, a shareholder of a subsidiary, for advances made to fund the waste-to-energy project in Sri Lanka.
  
  “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 an audit opinion. Accordingly, we do not express an opinion on the financial statements,” said Baker Tilly AC.
  
  OCB is a financially distressed company under Practice Note 17 (PN17) status because of its inability to fulfil its payment obligations to Amanah Raya Capital Sdn Bhd last June.
  
  For FY12, the group incurred net losses of RM68.6 million. The group had net current liabilities of RM190.6 million as at end-October.
  
  OCB engages in the coating of consumer electrical and electronics products and providing clean energy from renewable sources.
  
  
  This article first appeared in The Edge Financial Daily, on March 6, 2013.

I had posted on this company before back in 2010.

Here are the links to those postings.

• Octagon Series: The Rise
• Octagon Series: A New Octagon
• Octagon Series: Failed Plans And New Plans
• Octagon Series: The Fall

Posted on the Edge.

• Top Glove to acquire tycoon’s buildingBusiness & Markets 2013
  Written by Madiha Fuad of theedgemalaysia.com
  Wednesday, 06 March 2013 08:54
  
  KUALA LUMPUR: Top Glove Corp Bhd will acquire a three-year-old building located in Jalan Tun Razak here from tycoon Tan Sri Law Tien Seng for RM226 million.
  However, the transaction will be done through Value Add Sdn Bhd, a company that is at present controlled by Top Glove executive chairman Tan Sri Lim Wee Chai and executive director Lim Hooi Sin (HS Lim).
  
  In an announcement yesterday, detailing the two-step purchase, Top Glove has proposed to subscribe to ordinary shares and preference shares that will give it 27% in Value Add for RM12.2 million.
  
  Following that, Value Add proposes to acquire from TS Law Realty Sdn Bhd a commercial building known as East Wing of The Icon@Tun Razak for RM226 million.
  
  Top Glove will fund the the subscription via an internally generated fund.
  
  According to the announcement, Lim is chairman of Value Add and holds a 68% interest in the company while HS Lim has a 5% interest in Value Add.
  
  Lim has a 38.12% of direct and indirect interests in Top Glove while HS Lim has a 38.11% of direct and indirect interests in the glove producer.
  
  East Wing the Icon@Tun Razak has a gross built-up area of 278,182 sq ft.
  
  The first phase of the subscription to Value Add shares was completed on Feb 28, 2013 with 270,000 ordinary shares of RM1 and 5.8 million redeemable preference shares of RM1.
  
  TS Law Realty is an investment holding company with an authorised capital of RM5 million comprising five million shares of RM1 each. Law, who is a major shareholder of Hiap Tech Ventures Bhd, holds 80% of TS Law Realty while Puan Sri Saw Geok Ngor holds the remaining 20%.
  
  Top Glove said although the proposed transaction is a related party transaction it does not require shareholder approval because the materiality of the transaction is less than 5% of the percentage ratio threshold.
  The company, however, said Lim and HS Lim have abstained from all board deliberations on the matter.
  
  “The purchase consideration of the commercial property will be funded through a combination of borrowings and equity through subscription of shares in Value Add by its shareholders,” said Top Glove in its announcement.
  
  East Wing of The Icon@Tun Razak, which is built on freehold land, has a gross built-up area of 278,182 sq ft and a 98% occupancy rate.
  
  Top Glove said the acquisition would generate a higher return on its current investment and potential capital appreciation in the future.
  
  “The subscription and acquisition will not have a material effect on the earnings of the group for the financial year ending Aug 31, 2013 but is expected to contribute to the group’s earnings in the future,” it added.
  
  
  This article first appeared in The Edge Financial Daily, on March 6, 2013.

Buying properties????

226 Million?????

Investment or what?????

Related Party Transaction?????

Does not need shareholder approval?????

It's a shame how Man United lost to Real Madrid.

It's a shame because it has been a LONG time since Man United played 'well' in the Champions League.

I felt United were clearly the better team in both legs and with a little bit more luck, United should have another 3 goals at least.

But that's how it is.

It's a football match and sometimes the better team doesn't win.

Them conspiracy theorist would probably chalk this off as United losing because of the referee. Despite me despising that red card decision on Nani's high kick, after cooling off from the initial outrage, I thought about it. Nani's leg did caught Arebola and a high kick is a high kick. It was dangerous because Arebola decided to challenge bravely.

I was outraged by the decision when I was watching the match. I felt Nani was playing the ball and he did not even know where Arebola was and more so, I thought Arebola barged into Nani. And to make matters worse, not one of the Madrid players were expecting neither were they calling for a red card.

The ref, however did flash the red for that high kick.

I guess a high kick is a high kick.

END of.

It's a shame.

Kudos to Mourinho for instantly reacting to the decision instantly by bringing off Arebola and sending in Luka Modric. It was a bold decision by a coach who saw this incident as an opportunity to attack, whereas Sir Alex decided to hold on and not make any changes. It was an understandable decision from Sir Alex. United was really in control and were leading 1-0 before the sending off and Madrid wasn't playing that well then. I did not even recall De Gea having to make a save during the first hlaf.

That was where the match was won and lost.

Modric, later, smashed in an unstoppable equaliser and Ronaldo followed up with a brilliant winner.

Hats off to Ronaldo.

He has improved as a player since joining Madrid and at this moment of time, he's simply unplayable. A gladiator.

• "We study the past to understand the present; we understand the present to guide the future." -- William Lund.

Think about it.

In terms of the stock market, we need to study/understand the stock past. The stock history's tells us what has happened to the stock before and what had happened before could happen once again in the future.

An investor invests for the long term. The long term gives the investor the edge and allow the investor to reap the benefits of seeing the investment grow over time. The time factor is crucial.

However, what if.

What if the time factor turns out to be a risk?

For example, is it a good idea to invest in a stock which had been relisted again?

Think about it.

We are seen many companies whose stock was taken private cheaply in the past getting relisted once more. These companies have turned the stock market into their own playground where they can list and delist their stocks based on their own fancy.

That is the stock past.

The risk, of course, is the delisting could happen again in the future.. In such case, the time factor becomes a risk. The longer time the stock is listed, the greater the chance the stock could be taken private if the stock is trading cheaply.

You invest in Kow Kow stock at 2.00, which is a 10% discount over its relisting IPO price. Five years later, a crisis could happen to the stock market causing Kow Kow to trade at 1.20.

Yes, in most cases, when the stock trades at super low valuations, funds would come in and invest the stock. That's the mechanism of the stock market. Stock prices come up and they do come down. The problem is the owners see the cheap valuation too. Instead of implementing company stock buybacks, the owner do a private buyback. They buy back these shares but via a privatisation offer, benefiting themselves and not the minority shareholders. So the owner launches a privatisation bid at 1.56, which is a so-called impressive 30% premium over the stock price. But what good is such a premium to Kow Kow stock investor who had bought the stock at 2.00?

The investor can mount an outrage and then hope and pray that the privatisation bid fails.

But what good would it do?

Wouldn't it be better if the stock had taken the prevention is better than cure route?

Know the stock past. Don't let the stock past hurt us. Don't let a company who is a chronic privatisor fool you and your money.

Protect yourself is always much better than hope others to protect you.

After posting on Masterskill yesterday, I remembered those postings on this stock called Smartag.

Here are the past postings on the stock.

• June 2011: Is Smartag Worth A Bet?
• June 2011: Smartag: I Am Wrong Because The Stock Moved Higher?
• Aug 2011: A Quick Look At Smartag's Earnings.
• Mar 2012: Since Listing, Smartag Had Reported Losses Every Quarter!

I wondered if Smartag is still reporting losses. My guess was yes.

Here's a screen shot.


As mentioned in the posting Since Listing, Smartag Had Reported Losses Every Quarter! , from the screen shot above we can see that on 13th April 2011, Smartag made two quarterly earnings report. But Smartag made its listing debut on 18th April 2011. Which means those 2 set of earnings was made before Smartag was listed.

Which means since listing Smartag has recorded losses for 7th consecutive quarters!!!!

And needless to say, the lack of sales revenue, since listing, is truly shocking. A sales revenue of 75 thousand for its latest quarterly earnings announced last month!

How could such a company be granted listing??

I then wondered if there was any disposals of shares by its shareholders.

So I checked Bursa Malaysia website.



The first link, 25 Jan 2013: Changes in Director's Interest (S135) - Lim Peng Keong. - The above disposal of 7,000,000 ordinary shares represents 0.44% of the issued ordinary shares of the Company at a price of RM0.14 per share.

That doesn't sound good at all because that's the CEO dumping his shares!

7,000,000 shares sold at 14 sen.

That should work out to some 98 thousand (not counting the normal stock transaction charges) which works out to be more than the company's sales revenue of 75 thousand for the current quarter!!!! Yes, that's how lacking Smartag sales revenue is!!

 Now the disposal of shares by the CEO was highlighted in the first posting, Is Smartag Worth A Bet?

I wrote the following:

• then I saw the following announcements:
  
  Changes in Director's Interest (S135) - Lim Peng Keong
  
  Lim Peng Keong? That's the CEO and according to that announcement some 6,800,000 shares were disposed on 9th May.
  
  Macam mana ni? On the 19th April, Smartag was announced that it will be getting a slice of the ETP projects. On the 9th May, the CEO shows his confidence in his own company by selling a substantial chunk of his shares? Average price of disposal was 0.352.
  
  What lah!
  
  And then on the 20th June, there was another disposal of shares!
  
  Changes in Director's Interest (S135) - Lim Peng Keong
  
  Accordingly the CEO said that 'The disposals were transacted by Namnan Co. Ltd, which my spouse has controlling interest.'
  The wife's company also sold shares. Some 4,250,000 were disposed at a price of 32 sen. ( Just one sen above the ipo price of 31 sen).
  How?
  
  Project is supposed to be big.
  
  Big money is there to be made.

Oh yeah that big project.

I can still recall that 70 million statement made on the local business media, Business Times. (link for the Business Times article is now broken... )

• KUALA LUMPUR: Smartag Solutions Bhd stands to make a minimum RM70 million a year once its Radio Frequency Identification (RFID) solution to track container movements is made compulsory.
  
  Smartag, together with the Royal Malaysian Customs Department, will undertake a trial run of the RFID system at the latter's checkpoints from June 1.
  
  Smartag chairman Datuk Abdul Hamed Sepawi said the pilot project will run for three months with major companies from the logistics and manufacturing sectors such as Western Digital, TNT, Federal Express Brokerage and Priority Cargo having signed up for the test run.
  
  Abdul Hamed said the company may charge around RM10 per trip/container for journeys within the country. Taking into this account, Smartag is set to make at least RM70 million a year once the RFID solution is made mandatory. However, this was just an indicative pricing for now, he added.....

Smartag last traded at 13.5 sen!!

This is how Smartag has traded since listing...



 

Don't just watch the stock price. Do pay attention to what the owner says too. It says a lot.

On 30th May 2011, I posted  How Now Masterskill?. In that posting I highlighted the comments made by Masterskill (MEGB) Boss on Star Biz.

• “Well, I need to wait and see. Perhaps, anything below RM2 doesn't justify keeping the company listed,” Edmund said when asked on the amount of shares he intended to purchase.
  
  Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually.He said that the company was fundamentally sound and that its Kuching campus was already in operation.
  
  “The current share price weakness presents a great buying opportunity for Edmund to accumulate its shares,” an analyst said, adding that Edmund's move to purchase more shares may be a practical thing to do.

Masterskill or MEGB is still a listed stock today.

Yes, my dearest, MEGB,the stock, is still trading in Bursa Malaysia.

And that's not all. Yesterday, MEGB announced its quaterly earnings again. It lost money once again, its 5th consecutive quarter of losses!

Here's a screen shot.


As you can see from the screen shot, MEGB last traded at 0.615!!!

Yes only 61.5 sen!!!

Those comments back in 2011 rings soooooo loud today!

 'ANYTHING BELOW RM2 doesn't justify keeping the company listed'!!!!!!!

So I am telling you... the ownership factor is important factor when you want to make a stock investment.

On Star Biz:

• Monday February 18, 2013
  Give back unused cash to shareholders
  
  Excess cash sitting idle on corporate balance sheets can be the subject of discontent among shareholders.
  Corporate notes by Gurmeet Kaur
  
  CASH is king. This mantra applies both to investors and their companies. Having a ton of cash, companies have the opportunity to grow via acquisitions. Money can also be used to squeeze out the competition.
  
  But excess cash sitting idle on corporate balance sheets can be the subject of discontent among shareholders, taking recent developments at Apple Inc as an example.
  
  Apple, perhaps the world's most reknown company as the maker of iPhone, is facing a rebellion from an influential investor, hedge fund manager David Einhorn of Greenlight Capital who wants the company to stop stockpiling cash and instead give some of it back to shareholders.
  
  Apple has some US$137bil (RM423.8bil) in cash and its once rapid growth has slowed in recent years.
  
  The Apple incident raises the old debate: If companies are unable to demonstrate using their cash effectively, would the right thing to do be returning part of it to shareholders?
  
  In the United States and the United Kingdom, there seems to be heightened shareholder activism in this area as a fair share of large companies have been unable to deploy their cash pile because of the slowing economy.
  
  The Apple case has also shifted the attention to companies like Google on whether it should consider doing the same.
  
  Last year in India, Infosys institutional shareholders had called for top-level changes in the company's management and pushed for the return of the company's excess cash to shareholders through either a higher dividend payout or a buyback offer.
  
  The good news, though, is Bursa Malaysia has a number of cash-generating companies that often return cash to shareholders. But, most of these companies have tended to be multinationals. Hence, the high payouts have also been driven as a means for these firms to repatriate their profits back to their parent companies abroad.
  
  Another set of companies that could be doing more for their shareholders are those that may not be generating a lot of cash, but are sitting on a pile of valuable assets. If these companies have no definitive plans for these assets, then shouldn't they be considering unlocking these assets by selling them and returning the money to shareholders?
  
  Property companies come to mind, especially those whose land-banks have yet to be revalued. As a result of not doing much with this land and, by extension, for the shareholders of these companies, these property stocks tend to trade at paltry valuations, despite the rich assets these companies have.
  
  Worse, a few of these property companies have become privatisation targets of the major shareholders. The major shareholders would justify the exercises as being driven by the market not ascribing a high enough value on the companies.
  
  But the converse is also true: The major shareholders, who are clearly in control of the companies, have not done enough to make the assets of their listed companies work to the benefit of shareholders.
  
  So, there is room for more shareholder activism to question the management/ownership of those companies.
  
  There have also been instances where listed companies have deployed excess cash to investing in stocks and trading them an area where they have no competitive advantage and taking an unnecessary risk, according to some quarters, as they would seem to be deviating from the core business.
  
  Clearly, greater vigilance of shareholders would keep management on their toes, whether it is the right strategy to take or should not that surplus money be returned to shareholders for them to decide how they want to use it.
  
  A recent example of attempted shareholder activism ought to be mentioned. This was the case of icapital.biz Bhd where a little-known UK fund, Laxey Partners Ltd, had sought to shake things up at Bursa's only listed closed-ended fund.
  
  In any case, Laxey may have picked the wrong stock to seek a change. icapital.biz's higher performing and well-known maverick fund manager Tan Teng Boo is no easy pushover. Shareholders have been and remain impressed by Tan's returns and do not wish for icapital.biz to end.
  
  But what's noteworthy was this: that Laxey was seeking to have the fund dissolved and the stocks in icapital.biz's portfolio sold and the money distributed to shareholders. By its assessment, icapital.biz should be more proactive in reducing the substantial discount the fund's market price was trading at against its net asset value.
  
  Laxey is symbolic of shareholders who want more from their management. In principle, that behaviour is not only healthy for our market, it is markedly absent.

Source: http://biz.thestar.com.my/news/story.asp?file=/2013/2/18/business/12724877&sec=business

Comment:

Fully agree with the comments about the property stocks (and even plantation stocks and other companies) sitting on properties that have not been revalued for years! ( The opposite? Sometimes I laugh so loud on how them REIT managers revalued their properties every few months! )

The clear danger to the shareholders of such companies is that the owners could privatise the stock without the shareholders getting rewarded for their loyalty for being a shareholder and get a fair value of what the stock should be worth.

Pirates?

Exactly.

And on iCap?

Yes, companies should really return excess cash back to the shareholders. If you do not know what to do with the excess money, it's only fair to give it back to the shareholders!

Remember, shareholders are your business partners!

So companies should treat their shareholders as business partners and not as other people's money.

Having said all that, surprise, surprise, surprise but I do not feel sorry for Laxey partner or any shareholders of iCapital who feel disgrunted about iCapital not returning the excess money back to the shareholders.

They really should know better.

When they invest (or speculate) in iCapital, they should not have discounted the TTB factor. If they know who and understand TTB's character, they should have known TTB's character better.

And oh yeah, my buddy highlighted one rather good posting last month. http://cgmalaysia.blogspot.com/2013/01/lending-money-to-related-company-is-no.html

I see many making the assumption that a company is worth investing based on the cash per share yardstick without understanding the company.

In Panasonic Manufacturing Malaysia (Panamy), as highlighted by M.A. Wind , a huge chunk of money belonging to Panamy is placed (I think LEND is a much better word) to a related company. Yes, Panamy do get interest for the money placed (LEND) but I am amazed why Panamy shareholders aren't asking the simplest question: Why is this related company borrowing money from Panamy at such a cheap rate? (last I checked it was way below 4%!!!)

Why aren't Panamy shareholders thinking about it?

This is their money and the money lend is massive! It's over 444 million ringgit!!!

Why is the money lend to the related company at such a low rate?

Don't they rather have the excess money returned to them as dividends?

Yes, it's all about money and if you are a shareholder, hey, it's your money.

DO NOT BE BLINDED BY THE CASH PER SHARE.

Understand the company.

Understand what the company does with its excess money.

If they are going to be a cash hoarder or worst still, lend your money to a related company at a cheap rate, don't you think that your money is being abused?

No?