Reply to comment on PriceWorth

• Anonymous said...
  allow me to add some real-life facts. P'worth is also a logger.All the timber concessions are awarded by Yayasan Sabah through YS private arm Innoprise which comes in the form of two agreements-timber extraction contract and logs purchase.Majority of the timber if not all are sold as round logs in the export market...and underdeclaring of price is a common practice in the timber industry...the question is has all the income derived been taken up or just the contracting income...Your Guess. I was a bit surprised when I saw a reputable researcher recommending a Buy.P'wrth & Sanbumi are the 2 principal operators of Yayasan Sabah...notice that Sanbumi reports their monthly production figures. You decide

My Dearest Anon,

I hope you do not mind me saying this but it would extremely nice if you could put a name behind your posting. This is because there is so many Anon around.

Anyway, you are correct that PriceWorth is also a logger.

However, this does not change my concerns.

1. Declining net profit margins. Extremely clear margin erosions can be seen each fy since fy 2002. Is this not a concern?
2. Incredible deterioration seen in PriceWorth's balance sheet. Company's nett debt is increasing each single year at an alarming rate.

Those are my concerns.

And yes, research house such as S&P, which is part of the CBSR program ( see Research Reports Good For Stocks?? ), has just upgraded to a buy. I am well aware of it.

Here is their past recommendation and target price.

Date      Recommendation Target Price
New       Buy            1.12
5-Mar-07  Hold           0.94
30-Nov-06 Hold           0.83
13-Nov-06 Hold           0.78
4-Sep-06  Hold           0.65
6-Jun-06  Hold           0.59
2-Mar-06  Hold           0.53
14-Dec-05 Hold           0.49 

They say buy, should we follow? Or is it more important to reason out our own investment reasoning?

Me?

I always prefer to reason out my own reasoning. And my reasoning tells the that those concerns should not be discounted if I want to invest in priceworth.

Thanks again for your feedback.