The STILL NOT CLEAR financial news!

Truly amazing once more.

• SALCON Bhd is close to securing another water treatment project in China, sources familiar with the company tell BizWeek.
  It is believed that Salcon is close to inking a water treatment project in one of the larger cities in Fujian province worth 400 million renminbi (RM200mil). ( China connection for Salcon )

It is believed... the 3 most used words by this so-called financial reporter.

I really wonder who is really believing in what!

First of all, do check on this past blog posting on Salcon to see the ludicrous comments made by the very same reporter. And the most scandalous part was the part where he wrote the following.

• At its close of 45.5 sen on Thursday, Salcon is trading at a price earnings ratio of some 9.4 times. The company’s price to net tangible asset per share is at an attractive 0.9 times, which is well below that of its peers, Puncak Niaga Holdings Bhd and Taliworks Corp Bhd.

A price earnings ratio of some 9.4 times? Which simply was a badly twisted fact!

Let's take a look at the rest of today's article...

• At press time it is still not clear which city Salcon will be venturing into, but the larger cities in Fujian province include, Fuzhou, Lianjiang, Xiamen, Fuqin, Nanping, Sanming, Zhangzhou and Quanzhou.

Emm.... if it is STILL NOT CLEAR.... then... what is the reporter writing about???? Can a reporter legally report on what he or his sources is not clear about?

Are we looking at the first of its kind in the world? The still not clear financial news?

• After about six months of negotiation, an agreement may be inked pretty soon, the source says. “There was a break in negotiation during the (lunar) New Year celebrations, but the final leg of talks continued recently, and everything should be ironed out soon,” he says.

Emm... may be means may be! And who is this source? Why no name? Or perhaps we are even talking about INSIDER info?

• Salcon CEO Datuk Lim See Teok is believed to be spearheading the negotiation and has made several trips to China to try to close the deal quickly, to prevent competitors from scuttling Salcon’s plans.
  It is still not clear what sort of margins Salcon is looking at, or how much equity the company will have in the water treatment plant. But judging from the company’s other projects in China, Salcon is likely to take a 60% stake in the water treatment plant.

Emm... see? It's the still not clear news!

• Late last year, the company made inroads into Linyi City in Shandong province via Linyi Salcon Water Co Ltd, in which it has 60% equity. The remaining 40% is state-controlled.
  Other than Linyi, the company has two other smaller water treatment jobs, in Changle and Chenggong county.
  Should Salcon achieve the same split as the project in Linyi, whereby it has 60% equity in the joint-venture company, the company’s sales would be boosted by about RM120mil.

Emm... Should Salcon achieve.... err... SHOULD..... that's a big assumption isn't it?

• “This is definitely a large job by Salcon’s standards. The company used the smaller jobs it secured as a springboard to move into more lucrative jobs like this one. This could be the start of more large jobs for Salcon,” the source says.
  Lim had earlier said that Salcon was aggressively looking into securing more jobs in China. He had noted, however, that competition was stiff as other big European players were also vying for water treatment jobs in China.
  “There are plenty of projects. China is a big country, we have a good track record and the experience,” he said.
  Eventually, it has been reported, that the company plans to list its Hong Kong unit Salcon Linyi (HK) Ltd on the Hong Kong Stock Exchange once it has secured some large-scale jobs.
  “It (the floating of the Hong Kong units shares) will be done after a few more projects of this size have been secured. The Linyi water treatment plant (which is the largest Salcon has secured so far) is likely to contribute RM19mil to revenue ... This will be much larger – five to six times larger – depending on the split,” the source adds.

Emm... everything is according to this source! How? Can I believe? Or is it to be believed????

• The company has hoped that the China ventures will boost its earnings which, in recent years, have not been very encouraging. For the current financial year, the earnings impact of the new water treatment business in Linyi and Changle will show itself in Salcon’s financials.
  For the nine months ended September last year, Salcon posted a net profit of RM600,000 on the back of RM136.2mil sales.
  For the third quarter, the company made RM30,000 net profit from RM23.5mil revenue.

Emm... after so much creative writing has been done, the reporter decides that he has to include some actual facts... which is... despite the company hoping that the China ventures will boost its earnings, the end results has been really poor!

So what do we have? This reporter is talking about the possibility of Salcon getting some 200million worth of water treatment projects in China. Just a possibility BUT the bottom line it is still not clear.

Meanwhile... for me.... this is the VERY CLEAR PART.... Salcon itself is a company which is really struggling to make profits. Gosh, a third quarter net profit of rm30,000?

How?

ps... here is Salcon beautiful picture... :p

More blog posting on similar issue.

1. Should Financial Press be allowed to spin-off Rumours?
2. Is our financial news really financial news?
3. Is our financial news really financial news?: Part II
4. Mutiara