Symphony sees Strong Revenue Growth!

My dearest Moo Moo Cow,

Remember the Symphony posting I made the other day?( see Symphony Again )

• So how did Symphony do for it's fy 2006? Have a look, Quarterly rpt on consolidated results for the financial period ended 31/12/2006. It lost 4.607 million for the quarter and made only 2.116 for fy 2006!Symphony just announced its earnings. Any better?

Today, there is an article on Business Times, Symphony sees strong revenue growth

• SYMPHONY House Bhd, which has re-positioned itself as an outsourcing services provider, is confident of seeing double-digit growth in its revenue this year.
  
  "The shareholders are happy with the new direction of the company to exit the technology business and focus on the outsourcing business which would provide a more visible and stable income," group chief executive Datuk Azman Yahya told a media briefing after the company's AGM in Kuala Lumpur yesterday.

Confident of seeing double-digit REVENUE growth? LOL! It's a revenue growth and not an earnings growth!

Quote: "The shareholders are happy"

I wonder HOW and WHY!!

The following is a 2 year chart of Symphony House. Compare the performance of Symphony House versus the broader market index. How could any shareholders be happy?

• Azman said with the new focus, the company has decided not to go ahead with its listing plans for its 72 per cent-owned subsidiary VSource Asia Sdn Bhd, which would be the main anchor for its outsourcing business.

Ah, this VSource was another issue!

Back in May 2005, have a look at this announcement, Quarterly rpt on consolidated results for the financial period ended 31/3/2005

• The Group recorded revenue and profit before taxation ("PBT") for the quarter ended 31 March 2005 of approximately RM32.5 million and RM2.3 million respectively. This is an increase of 104% in revenue and a decrease of 58% in PBT when compared to the same quarter of the last financial year. The drop in PBT for the quarter under review was largely due to lower profit margin for IT billings during the quarter and initial quarter losses incurred by the Company's new subsidiary, Vsource Asia Berhad.

See the problem with VSource was best described by Surf88 ( an investment advisor which unfortunately no longer exist now).

• By: Surf88
  Date: Friday, December 12, 2003
  Time: 8:20:10 AM
  
  Symphony House (Symphony) (susp @ RM2.29, stock code 0016) has proposed to acquire 30.3% of Vsource (Malaysia) for RM27.9M cash from its US-based parent company, Vsource Inc. Vsource (Malaysia) is principally involved in business process outsourcing (BPO) services, which covers areas such as claims processing, invoicing, human resources and payroll, finance, procurement and customer support. Vsource Inc also plans to sell another 9% stake in Vsource Malaysia to one or more Malaysian investors.
  
  Meanwhile, Vsource (Malaysia) is in the midst of acquiring Vsource Inc’s business operations in Japan and Taiwan, which will essentially give Symphony indirect exposure to the two countries. Based on available information, Vsource (Malaysia) has done well with revenue of RM94.4M and pretax profit of RM23.9M in the financial year ended Jan 2003, translating to a healthy margin of 25%. The performance of the to-be-acquired businesses in Japan and Taiwan was not disclosed.

Symphony simply wasn't too transparent in disclosing full details of VSource, yes? For a rm27.9 million purchase, surely as a listed company, you should have disclosed fully.

And to make matters worse, SYMPHONY HOUSE BERHAD ("SYMPHONY") - PROPOSED DEBT PURCHASE

• The Proposed Debt Purchase involves the purchase by Symphony the sum owing of USD1,739,000 by Vsource Asia to Vsource, Inc. The sum owing are advances previously made by Vsource, Inc. to Vsource Asia to fund their working capital requirements.

Now the company has performed poorly.

• Symphony House posted a revenue of RM218.39 million, up 10 per cent from 2005, but saw its net profit decline 88.3 per cent to RM2.12 million for the financial year ended December 31 2006

Can someone please tell me how could the shareholders be happy?

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Reviewing the events at TransMile

My dearest Moo Moo Cow,

Here is a summary of what was written on this blog on Transmile.

I first did a posting on TransMile back on Nov 18th 2005.

• X We like Transmile for: (1) Its unique product, i.e. point-to-point express air transportation service; (2) Its ability to secure traffic rights for lucrative routes; and (3) Its EPS that is expected to grow at a CAGR of 67% between FY12/04 and FY12/07, backed by two full-fledged US-bound services. Maintain OUTPERFORM with a DCF-derived indicative fair value of RM12. In our DCF model, we apply a discount rate that is equivalent to Transmile’s WACC of 10.1% (based on a 20-year risk free rate of 6%, an equity premium risk of 7.5%, Transmile’s Beta of 1.07x, a target debt-equity ratio of 0.7x, and an average before-tax borrowing cost of 6% per annum).

A CAGR of 67% between fy12/04 and fy12/07? See how the Mile game was set back then in 2005! (This posting has an update here: Update on Transmile )

• Note: Malaysian air cargo firm Transmile Group Bhd said on Wednesday a special accounting audit had found there may have been an overstatement in its revenue by 30 percent in 2006 and by 36 percent in 2005.

TransMile and its receivables was blown wide open here: Transmile Receivables

• Validity of Transmile's 87 per cent higher pre-tax profit of RM206.7 million for the 12 months to December 31 2006, was questioned following the logistics group's failure to furnish its auditors with required data to substantiate the figures, Transmile told Bursa Malaysia yesterday.

Here's the 4th quarter report of the fiscal year earning, Quarterly rpt on consolidated results for the financial period ended 31/12/2006

Below is a snapshot of Transmile's balance sheet!



Fiscal year 2006 receivables were reported at 381.247 million, which is much more than the previous year fiscal year 2005 receivables of 111.113 million!

WOW!

I can understand why the auditors want to see more data!

Transmile opened limit down at 9.10 this morning. It is now trading at 9.95. A crisis buying opportunity? This is really risky because at this moment we do not know how drastic this issue is!

I was then asked, How about TransMile?

• Any chance of light for transmile?? I still like the biz model despite the recent hoopla..

Given what is happening, from an investing perspective, what I believe we have is a whole bunch of unknown factors. At this moment of time, we do not know exactly what is happening and neither do we know the extent of the troubles, if any.

So frankly, I do not see how I would want to invest in Transmile at this moment of time because there is no way I could make a rational investing decision.

But the greatest risk is if TransMile is guilty of wrong doing. IF. And if that happens, one cannot really treat TransMile as a quality stock anymore. For the issue of integrity is then gone. Ah yes, the business model will still have value. But then it becomes a case where one is forced to value a company whose integrity has been shot to pieces!

Of course, if forced to, I could speculate and I could guess but all I am doing is I am speculating what would happen.

And frankly, this is simply beyond me and it's certainly beyond me to speculate if there is a chance of light for TransMile now.

On May 14th, I did the following posting, TransMile

The following table is taken without that quarterly earnings reported on Feb 2007. Have a look.

1. Clear built up in receivables.

2. nett debt kept on increasing!

Now the most important thing I would ask is where is the wealth generated?

From 04 Q3 to 06 Q3, the company said it generated sales of 1.476 billion ringgit and it said it earned 200.881 million.

Good numbers but look at the cash position. For a company earning 200.881 million, this company went from a nett debt of 123.861 million to 680.819 million!

The following table showed the inclusion of 06 Q4 earnings.

Quarterly rpt on consolidated results for the financial period ended 31/12/2006

Profits and cash increased substantially. nett debt decreased. Somehow.. the numbers do not tally... And given such data... perhaps... an investment in transmile could be questionable!

And then I wriote this other posting More on TransMile

• ......there is speculation that management was perhaps under pressure to keep its numbers high to please investors and possibly facilitate a placement of shares completed in November last year that was largely taken up by foreigners.

In all honesty, all I can do is speculate what has had happened. And most of it is based on quoted stuff from news.

Which is really not intelligent at all.

Which is why the main grouse so far is perhaps best said by the Spore Btimes reporter saying why had the management not saying anything at all. And why had Bursa and SC remained silent?

That it had dragged on for so long indicates something was wrong in their accounts.

Right now, the issue would be, two things.

1. How badly stated was their account?


2. Was there intent?

Now those two issues would have a huge barring.

1. Transmile has had been priced for a growth stock. If their accounts were badly overstated then would it mean that the status of it being a growth stock is tarnished? And if so, then Transmile would probably not command the higher price earnings multiple it had enjoyed previously. And as noted, Transmile had done several placement issues in recent times. The POS placement was done around 30% and several various form of placement has been done. All of which will have an impact if one were to use the pe multiple as an indicator.

2. The issue of intent. This is by far more serious. The fact that Transmile went limit down on the first day and as mentioned by the press, foreign funds sold out. Damage has been done. If the allegations of intent were proven, I would seriously believe that these foreign funds would avoid Transmile like plague. So how much can our kampung fund do? And also, a lot of other investors would avoid this stock simply because it makes no sense to be an investor of a company whose owner/manager has been proven guilty in an attempt to cook their books. The issue of trust is but gone.

And if one adopts the rational approach, perhaps it simply makes no sense trying to be a hero in a hard place. Market is hot. Perhaps there is much better investment around for our hard earned money.

And what is the flipside of such a safer approach?

Well one missed an opportunity, that's all.

Does it hurt?

Nope.

The Market is always there, my friend. Other much better opportunities will arise in the future.

And then there was the question of a 50 Million Adjustment for TransMile?

So the Edge Weekly is suggesting that perhaps a 50 million adjustment is required.

Let's do some simple calculations.

The following table shows TransMile earnings.

\

So a 50 million adjustment could see fy 2006 earnings adjusted from rm157 mil to rm 100mil.

Now TransMile current number of shares is extremely tricky since it is ever expanding.

So as it is today, there are 270.118 million shares.

This means that TransMil eps 'could' be adjusted to a mere 37 sen, IF its earnings is adjusted by rm50 million to rm100 million.

So what PE multiple do you reckon TransMile could command after the adjustment?

Do you reckon it could command a pe multiple of 20x after this adjustment?

But if market take the adjustment poorly, TransMile could trade as low as a simple 15x multiple.

20x on an eps of 37 sen = 7.40

15x on an eps of 37 sen = 5.55!

How? Me? Honestly, I would rather not guess in such a fashion for I do not really know what is happening but a 50 million adjustment, could do some damage on TransMile in my opinion.

Last night:

• Malaysian air cargo firm Transmile Group Bhd said on Wednesday a special accounting audit had found there may have been an overstatement in its revenue by 30 percent in 2006 and by 36 percent in 2005.

See The Full audit Statement on Transmile!

It's one terrible mess and I do not think it is advisable to hunt for value in such a stock!

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The Full audit Statement on Transmile!

My Dearest Moo Moo Cow,

Here it is.

• On 4 May 2007, the Directors of the Company received a letter from the Company's auditors, Messrs. Deloitte & Touche ("D&T") stating that D&T was unable to obtain the supporting documents from the management to satisfy D&T as to the fairness of the trade receivables and related sales to 18 companies identified by D&T. D&T also informed the Directors that they were unable to obtain satisfactory supporting documents for purchases of property, plant and equipment which amount was correspondingly credited to the unpaid balance owing by the 18 companies identified by D&T.
  
  As a result, the Board of Directors of the Company ("Board") expressed its concerns through the announcement dated 7 May 2007 as to the reliability of the unaudited consolidated results for the financial year ended 31 December 2006 announced on 15 February 2007, in particular, the items highlighted by D&T.
  
  On 7 May 2007, the Board appointed Moores Rowland Risk Management Sdn Bhd ("MRRM") to carry out a special audit on the issues mentioned above.
  
  This announcement is made in view of the Board's intention to maintain transparency of the findings by MRRM.
  
  1. FINDINGS OF SPECIAL AUDIT
  
  On 25 May 2007, MRRM issued a first interim report on its findings, a copy of which was submitted to the Securities Commission following a request by the Securities Commission.
  
  In the interim report, MRRM reported that:
  
  · In the financial year ended 31 December 2006, invoices were issued and recorded for purported services to 20 companies (comprising the 18 companies identified by D&T and 2 additional companies identified by MRRM) totalling RM333 million and representing 30% of the consolidated revenue stated in the unaudited consolidated results announced on 15 February 2007. This may result in an overstatement in the consolidated revenue by RM333 million;
  
  · Based on the unaudited consolidated financial statements as at 31 December 2006, the trade receiveables from the above 20 companies totalled RM236 million; and
  
  · In the course of the special audit, MRRM also noted that in the financial year ended 31 December 2005, invoices were issued and recorded for purported services to 19 companies (including 17 of the 20 referred to above) totalling RM197 million and representing 36% of the audited consolidated revenue of the Company for the financial year ended 31 December 2005. This may result in an overstatement in the consolidated revenue by RM197 million.
  
  For the purposes of illustration based on the above findings, on the assumption that TGB makes full provisions relating to the revenue recorded in respect of the companies mentioned above, the unaudited consolidated profit before taxation of the Company will be reduced by RM333 million for the financial year ended 31 December 2006, from RM207 million profit before taxation to a loss before taxation of RM126 million and the audited consolidated profit before taxation of the Company will be reduced by RM197 million for the financial year ended 31 December 2005 from a profit before taxation of RM120 million to a loss before taxation of RM77 million.
  
  The above illustration of the impact to profit before tax is subject to changes that may arise from the on-going special audit and the statutory audit for the financial year ended 31 December 2006 and does not take into account tax implications.
  
  The special audit by MRRM is still on-going in respect of the financial statements arising from the above.
  
  2. ON-GOING AUDIT
  
  The Company wishes to highlight that the special audit of MRRM is presently still on-going. Updates of any further material findings will be made in due course.
  
  In conjunction with the special audit, the Company will work towards finalising the annual statutory audit of the financial statements of the Company for the financial year ended 31 December 2006. With the findings of MRRM, the audited financial statements of the Company for the financial year ended 31 December 2006 are likely to include prior year adjustments.
  
  3. OPERATIONAL FRAMEWORK
  
  The Board has instituted the following:
  
  (a) A formation of an Executive Committee ("Exco") which assumes the authority of the Chief Executive Officer, arising from governance issues relating to the release of the announcement on the unaudited consolidated results for the financial year ended 31 December 2006, dated 15 February 2007 by the Board. The Executive Committee will be chaired by Mr Kuok Khoon Ho, and will comprise two other members of the Board, namely, Tan Sri A. Razak bin Ramli and Datuk Abu Huraira bin Abu Yazid. All of the Directors on the Exco are non-executive Directors of TGB;
  
  (b) The appointment of Mr Ong Teng Ping as the acting Chief Financial Officer. Mr Ong has been seconded from Chem Quest Sdn Bhd (a subsidiary of PPB Group Berhad), where he is a Director and the Group General Manager; and
  
  (c) On-going review of the systems to strengthen operations and internal controls of TGB and its subsidiaries ("TGB Group").
  
  4. CONTINUITY OF BUSINESS
  
  The TGB Group is keen to ensure the continuity of its business in providing express air cargo transportation services comprising international express freight services, chartering of aircraft, aircraft leasing and general freight services. The other services that are provided by the TGB Group include aircraft ground handling, aircraft maintenance, supply of aircraft parts, equipment and warehousing. In this respect, the TGB Group is presently actively engaging various stakeholders for its businesses including its principal customers, who are multinational cargo integrators, freight forwarders and courier companies, as well as its bankers, its shareholders and regulators, through appropriate channels.
  
  The TGB Group has in excess of 600 people with 49 managerial staff. It has its operational head office at Subang Airport and corporate head office in Damansara Heights.
  
  The Board is confident that the day-to-day business and service levels of the TGB Group will remain uninterrupted with the help of Group Chief Operating Officer, Robert Hyslop and the management team. With its landing rights and fleet of aircraft, the TGB Group is expected to continue to benefit from its niche within the express air cargo transportation market by providing its express air cargo transportation services.
  

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Screaaaaaaaaaaaamyx!

My dearest Ngyok Yee,

Many thanks for you video clip.

Love it too much!

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Gurus Explain Why They Were Wrong About the Stock Market

My Dearest Moo Moo Cow,

Here is a hilarious top-10-posting. Gurus Explain Why They Were Wrong About the Stock Market

10. You took my statement out of context, leaving out all the obfuscatory elaboration, conditional clauses, counterpoints and equivocations. Your judgment is unfair.

9. I was close enough. You should give me credit.

8. I will be right eventually; I just don't know when. (Or sometime later: I was right, but my timing was off.)

7. I may be wrong on some little things, but I'm dead right on all the big ones. You shouldn't count the little ones.

6. I provide risk assessments based on historical tendencies, not forecasts. You should not call it wrong. The low probability scenario happened, so it was just bad luck.

5. My public statements may be sometimes wrong, but I am 100% right in my private newsletter. You have to pay for the good stuff.

4. Since I am rich and famous, I must be smart. Since I am smart, I must be right. Quid est demonstrandum. No need to check up on me any more.

3. If brokers weren't so manipulative and investors so gullible, what I said would happen would have happened. You should give me credit for my compelling argument.

2. The Plunge Protection Team (or the President, or the Vice President and his cabal, or the Treasury Secretary, or the Federal Reserve, or the Japanese, or the Chinese) intervened to prop up the market. You shouldn't count that against me.

1. What forecast? Let me tell you about a great new investment opportunity!

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US$100 mil contracts?

My Dearest Moo Moo Cow,

Sometimes I really wonder how easy it is to win US$100 million contracts!

Take this article posted on Star Bizweek, US$100mil contract for Mesdaq's Daya Materials.

• LITTLE-KNOWN Mesdaq-listed Daya Materials Bhd is close to securing a US$100mil (RM350mil) contract from national oil company Petroliam Nasional Bhd (Petronas). The contract is for Daya Materials to supply catalyst to Petronas’ oil refineries.
  
  Daya Materials is in the process of acquiring Seca Dyme Sdn Bhd, a company that is currently in talks with Petronas to secure the contract. Daya Materials has been in talks to acquire Seca Dyme from Datuk Mazlin Md Junid and Datuk Muhammad Junid Mohammad Yusof for RM24mil since August last year.

So the reporter, Jose Barrock is saying that this company, this little-known Mesdaq company, Daya Materials in in talks to acquire this company called Seca Dyme for rm24mil.

And what's interesting in this Seca Dyme is that the company is close to securing a US$100 mil contract from Petronas!

WOW!

So easy to make money eh?

Say why don't you my dearest Moo Moo Cow offer rm30 mil for this Seca Dyme???

And the reports then continues..

• For the financial year ended December 2006, Daya Materials posted a net profit of RM2.9mil on the back of RM29.3mil in sales. In its notes, which accompany its financials, company officials state that with some RM30bil allocated for transmission, distribution and rural electrification under the 9MP, the outlook for the polymer industry, Daya Materials included, seems bright.

Exactly! Daya Materials made only 2.9 million! Which is less than 1 million USD!

And isn't this why Daya Materials is so little known?

And what do you think of the reporter usage of the title, "US$100mil contract for Mesdaq's Daya Materials"??

!!!!

Yeah, yeah I thought so too!

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Reading stuff for the Weekend

My Dearest Moo Moo Cow,

I have not covered much on Berkshire Hathaway Annual Shareholder Meeting this year. Yes, I have been lazy. Extremely lazy.

I do believe that these 3 links would prove to be extremely great weekend reading!

Enjoy!

1. http://www.bankstocks.com/article.asp?type=1&id=9881373
2. http://groups.msn.com/BerkshireHathawayShareholders/general.msnw?action=get_message&mview=0&ID_Message=30738&LastModified=4675622861790577809
3. http://groups.msn.com/BerkshireHathawayShareholders/general.msnw?action=get_message&mview=0&ID_Message=30739&LastModified=4675622861904712588

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Investing Real Money vs Paper Portfolio

My Dearest Moo Moo Cow,

Here is a nice quote taken from Warren Buffett's 2007 AGM.

Read everything you can. I read every book on investing in the Omaha Public Library. Fill up your mind with competing thoughts and decide what makes sense. Then jump in the water and start investing real money, rather than a paper portfolio. The difference between investing real money and is the same as reading a romance novel and actually dating. There’s nothing like experience. The earlier you start, the better. - Warren Buffett 2007 AGM.

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Second biggest Bubble?

My Dearest Moo Moo Cow,

I noted that FSO has a new market commentator and Mr. Gary Dorsch decides to do an editorial on the current hottest topic in the financial world, Greenspan on China:

Guru Greenspan Turns Bearish on Shanghai Red-Chips

• Guru Greenspan is now predicting that the world’s second biggest bubble, the Shanghai Red-chip stock market is about to deflate in a very big way. “It is clearly unsustainable. There’s going to be a dramatic contraction at some point,” adding that a market correction could also cause problems for Chinese personal wealth. The Shanghai Red-chip market soared 130% in the past year, hitting an all-time high of 4,205 on May 24th, and is up 56% so far in 2007.

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Music Video On The Chinese Stock Market

My Dearest TK,

Many thanks for your link to the music video on the Chinese Stock Market!

http://www.tudou.com/v/_J5S3lNeb1s

Hope that everyone else enjoys the video!

regards

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How Much Did They Want Your Maxis Shares?

Here is a simple question.

How much do you want to pay for a company that has an operating cash flow of 951 million per quarter?

Have a look at the numbers yourself.

An operating cash flow of 951 million is simply awesome!

Again it's simply so sad that whenever there is an IPO, the investing public is USUALLY asked to invest at the most priciest price based on the most optimistic pricing.

And during privatization, they want you, yes you, the minority shareholders, to sell your shares back to them at the cheapest price possible based on the most pessimistic pricing!

Fair? Life is never fair, yes?

A free market?

One day... just imagine.. there might not be anyone interested in investing in the share market!

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Megan Media

My Dearest Moo Moo Cow,

The Edge Weekly has an article on Megan Media here.

rgds

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HLG Research and Symphony

My dearest Moo Moo Cow,


I need to give back some credit to HLG Research.


Yesterday i blogged on Symphony Again.


I need to point out that HLG Research had on 24th November 2006, downgraded Symphony House Bhd (RM0.32) to a SELL. Here's a screenshot of their research report on 24th November 2006.






And today, they released another report on Symphony House. Here is a screen shot of that report.

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Privatization puts Bursa's Relevance at Risk!

My dearest Moo Moo Cow,

I was forwarded this article which was posted on the Singapore Business Times. I would like to share it with you.

• Delistings put Bursa's relevance at risk
  
  By PAULINE NG
  KL CORRESPONDENT
  
  IT'S only mid-way into May and three listed companies have announced that their major shareholders would like to buy out minorities and exit the stock exchange. There have been five so far this year, and this is a noticeable acceleration of a trend from last year.
  
  On the positive side, it reflects the maturity of the market, say some bankers and top government officials. Although that might be undeniable, so are the longer-term consequences for the local bourse if good companies continue to be taken off it.
  
  One long-standing gripe of foreign funds is the market's lack of depth - its pool of liquid big cap stocks being too few - a point Standard & Poor's again highlighted last week when it commented on the proposal to take the country's most valuable mobile company Maxis Communications private and then to de-list it.
  
  While not entirely bad, since current merger and acquisition activities add fresh interest to the market, Maxis's eventual delisting 'does not help global investors' view that Malaysia has a dearth of large-cap issues and this may reduce the weighting of Malaysia in regional indices', S&P vice-president of equity research for Asia Lorraine Tan observed.
  
  Last year's estimated RM35 billion (S$15.8 billion) worth of M&A activity is expected to increase threefold this year, many of which are likely to involve delisting.
  
  Maxis stunner
  
  Maxis Communications has been the biggest shocker thus far, for when it exits the bourse, it will take some 4 per cent of the market capitalisation of the Kuala Lumpur Composite Index along with it. Coming on the heels of Malakoff's and PPB Oil Palms's proposed delisting, the absence of three institutional favourites from Bursa in a short space of time cannot be underestimated.
  
  Even though the exchange has over 1,000 listed entities - admittedly too many for a market its size - only a small group qualifies as sufficiently big and liquid enough for most funds. And of that lot, only a fraction has the fundamental ingredients to make them institutional favourites.
  
  The huge number of listed companies aside, only some 10 per cent are actively traded, so the recent moves by major shareholders to take less active ones private will not be missed.
  Second Finance Minister Nor Mohamed Yakcop believes that there is no need to sound the panic button yet as listings and delistings are the norm in any capital market. But he did say that the local bourse needs sufficient vibrancy and appeal so that companies, including hopefully a number of good foreign ones, would be attracted to list on it.
  
  Locally, there are fewer than a handful of large companies left that can be listed. Besides hard disk drive maker JCY Holdings, which is set to list later this year, the other government-linked companies such as Felda or Petronas's unlisted subsidiaries show little signs of going public.
  
  One engineered giant cap that is already attracting strong investor interest is Synergy Drive - the special purpose vehicle for the merger of the Sime Darby group, Golden Hope Plantations and Kumpulan Guthrie. The share prices of the companies involved in the merger have shot up since the proposed merger in November, pushing Synergy Drive's market cap to around RM48 billion - the third largest on the bourse and on par if not slightly bigger than the country's biggest banking group, Maybank.
  
  Many are already anticipating a warm reception on the bourse when it lists in October and more so if it can demonstrate the enormous savings and greater efficiencies that can be leveraged from the merger.
  
  
  Bursa challenge
  
  In the interim, Malaysia must act quickly to ensure that the local exchange continues to be relevant. The increasing number of corporate buyouts is welcome if minorities are taken out at a fair price and the exercise helps trim the number of inactive companies. Fewer companies on the bourse is not necessarily a bad thing. But fewer quality companies certainly is - especially since the original pool was not big to begin with.

As you know, I am totally against these delistings!

Here's a good blog posting by StockTube: http://stocktube.blogspot.com/2007/05/privatization-gaining-momentum-junk.html

Past blog postings here:

Posting on Bumi Armada

• http://everything27.blogspot.com/2006/09/pirates-which-siezed-armada.html
  
• http://everything27.blogspot.com/2006/09/more-on-privatisation-issue.html

Posting on Privatization issues

• http://everything27.blogspot.com/2006/08/privatisation-heathy-trend.html
  
• http://everything27.blogspot.com/2006/09/more-on-privatisation-issue.html

Posting on MetroJaya Privatization issue.

• http://everything27.blogspot.com/2006/11/muis-purchase-of-metrojaya_02.html
  
• http://everything27.blogspot.com/2006/11/muis-purchase-of-metrojaya-ii.html

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Symphony Again

Last year I wrote the following post. eResearch, Symphony and HLG

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

How do you rate Bursa's eResearch program ?

Good? Bad? Or a waste of time? ( see this posting last month: Research Reports Good For Stocks?? )

I was organising my personal stock notes when I came upon this old issue on Symphony House write-up done by HLG Research under Bursa eReseach program.

On Sept 7th 2005, HLG initiated their coverage on Symphony. ( click here for the report ).

Symphony was trading at 0.415 when the article was written.

Here is the snippet of recommendation.

• There is no pure comparison to pit Symphony against, due to its diversified earnings base. While its IT peers are trading at 7.2x, there are no listed BPO companies. Consequently we have derived a fair PER of 12x for Symphony. Based on 12x FY06 EPS, the stock is valued at RM0.57. This provides 37% upside for the stock from current levels.

The stock is considered cheap because based on 12x FY 2006 EPS, the stock's potential value is 0.57.

Fair statement. But point for me, is how realistic is HLG's projection of Symphony's earnings?

Firstly, it was known that Symphony's 2nd quarterly earnings (announced in Aug 2005) was poor.

Symphony announced that ...

• For the six months to June, net profit fell 48.6 pct to 5.18 mln rgt from 10.1 mln a year earlier and pretax profit also declined 42 pct to 7.96 mln, despite a 65 pct jump in revenue to 88.31 mln.

So..

1. Symphony made only 5.185 million for the first 2 quarters of fy 2005.
2. HLG is projecting a net profit of 25.7 million for fy 2005. (see page 4 of that pdf file)
3. HLG is projecting a net profit of 31.3 million for fy 2006. (see page 4 of that pdf file)

So do you think HLG projection of 31.3 million for Symphony's FY 2006 earnings is realistic or not?

In Nov 2005, Symphony announced their 3rd quarter earnings.

Quarterly rpt on consolidated results for the financial period ended 30/9/2005

Symphony made a net profit of 2.679 million. Which means for the first 3 quarters of fy 2005, Symphony only earned 7.864 million (do note, last fiscal year 2004 Symphony made 14.849 million!)

Now... 7.864 million very far from HLG's rosy earnings projections of 25.7 million!
HLG made another write-up on 24th Nov.

• Symphony reported a 9-month net profit of RM7.1m (-56.9% yoy) on the back of revenue of RM130.7m (+42.3% yoy). Operating margin was significantly lower at 6.2% vs. 23.4% a year ago largely due to the growth of its managed services division which normally carries lower margins compared to its higher margin IT business. Annualis ed net profit was 59% short of our full year net profit forecast.


• The variance against our forecast was due to lower revenue recognition from its IT division. 9-month revenue for its IT division was RM70.9m, or only 57% of our full year forecast. We suspect that this could be due to some delays in the start up of certain projects as well as timing of recognition due to its lumpy nature, as the group has some RM150m of IT solution contracts in hand. Contribution from its managed services division was in line with our expectations. Besides the higher effective tax rate of 31.9% vs our forecast of 27% was another factor.


• We are downgrading our forecast to take into account the delays in recognition of its IT contracts, and therefore lowering our net profit estimates by 37.2% for FY05 and 19.8% for FY06. Consequently, FY05 net earnings is expected to register a decline of 19.9% over FY04.

Waa... lowering their net profit estimates by 37.2% for fy05 and 19.8% for fy 06.
Which means...

1. Symphony made only 7.864 million for the first 3 quarters of fy 2005.
2. HLG is projecting a net profit of 16.1 million for fy 2005. (Waa...25.7 -> 16.1 !!!)
3. HLG is projecting a net profit of 25.1 million for fy 2006. (Waa...31.3 -> 25.1!!!)

Huge adjustments, eh?

Symphony's price now is 0.335 (down from 0.415).

So when you downgrade the earnings by so much, what do you think should be the logical recommendation?

Well... here is HLG recommendation:

• Despite the downgrade, we are keeping our BUY recommendation on Symphony. We believe that there is no change in fundamentals for the stock and only a problem of timing for recognition of earnings. Although FY06 PER valuations at 8.8x are on par with its IT peers, this has yet to take into account the strong growth potential from its Business Process Outsourcing. (BPO). Bear in mind that the Asia BPO business is expected to be worth some USD110bn by 2008.

Now this is extremely puzzling for me. If you downgrade by so much, why is it still worth a BUY? And secondly, it there is no change in fundamentals, then why did Symphony missed their earnings projection by so much???

A couple of weeks ago, on Feb 8th 2005, HLG did another company update on Symphony

• Earnings Outlook
  FY05 net profit likely to be within expectations. For the 9-mths of FY05, Symphony has achieved 64.8% of our full year revenue forecast and 44.1% of FY05 net profit. Despite that, we believe full year FY05 earnings should fall within our expectations, as this will be underpinned by the commencement in major IT contracts from EPF and MCMC, worth some RM115m, which were previously delayed. These contracts should also arrest the declining EBIT margin trend for its IT division (14% 1Q05; 9% 2QFY05; -7% 3QFY05). Its FY05 result is expected to be released later this month.




• Valuation & Recommendation
  More expensive than peers, but premium justified Symphony is currently trading at FY06 PER of 9.1x while its peers are trading at an average PER of 7.8x. Despite that, we think that Symphony deserves to trade at a premium as its peers are mere IT firms with more volatile earnings (and hence earnings risk) whereas Symphony has an edge with its exposure into the steady and growing global BPO market. As of 3QFY05, the contribution of BPO business to Symphony’s overall EBIT has increased to 41%, rising from 26% over the same period in FY04. We maintain our BUY rating on Symphony, but with a lowered target price of RM0.41 vs RM0.57 previously, based on a reduced assigned fair PER of 11x. (a 20% discount to our fair KLCI PER of 13.9x). Share price is at its all time low, pricing in the delay in the IT contracts rollout and under-delivered unit - Global Impact.

Ahem... so.....

1. Symphony made only 7.864 million for the first 3 quarters of fy 2005.
2. HLG is still expecting Symphony to earn a net profit of 16.1 million for fy 2005.
Amazing isn't it? This means that despite all the data, HLG is still insisting that Symphony will make some 16.1 million for their fy 2005. Since Symphony's 3 quarters total earnings for fy 2005 is at 7.864 million, HLG is expecting Symphony to make 8.24 million for its 4th quarter fy 2005.

Which means ... err.. symphony's quarterly net earnings is to jump from 2.679 million (fy 2005 q3) to 8.24 million (fy 2005 q4)! Er... excuse me Doc but isn't this a bit way too optimistic?

Oh... and did i not mention that Symphony price is around its all time low? :p

So back to Burs eResearch thingy.

Yes, it's great to see more companies given coverage by the local analysts but on the other hand, what good is the coverage to the investor if the recommendations are written in such a rosy and optmistic manner?

Oh... of course this issue is more complicated than this... for example, for whom are these analyst writing for? Who are their targeted audience? etc etc... but for me... I'm mumbling form an investor point of view!

ps...
Symphony should be announcing their earnings sometime this month... so do stay tuned!


--------------------
Update: 21st May 2007

So how did Symphony do for it's fy 2006? Have a look, Quarterly rpt on consolidated results for the financial period ended 31/12/2006. It lost 4.607 million for the quarter and made only 2.116 for fy 2006!

Symphony just announced its earnings. Any better?

Have a look ....

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Update on Dufu

Here's an update to the posting Reagrading Dufu.

DuFu announced its quartely earnings. Here is the snap shot of it's quarterly earnings.

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Investing In China

My Dearest Moo Moo Cow,

I just came across this news article from Associated Press posted on Yahoo!. ( 1st-time investors buy up Chinese stocks )

Some of interesting comments were made.

1. watching Chinese stock prices gallop upward for months, Ding Xiurui wanted a piece of the action. The 45-year-old office worker stood in line at a bustling brokerage Friday to open her first trading account. She brought her sister, who opened an account too. They joined millions of other novice investors who are jumping into a market that has soared to dizzying heights, with prices up nearly 50 percent this year.

"We still can make money," Ding said as she stood at the counter at Tiantong Securities with the paperwork for her new account. Asked what stocks she would buy, Ding said, "I don't know. I'm still learning."

2. Economists say the government should take steps to moderate the price surge or risk a sharp fall that could hurt millions of small investors.
"This is a very critical time. If policy adjustments take place now, the market can still have a sustainable development," said Hong Liang, a Goldman Sachs economist. "The longer they wait, the harder the eventual landing will be."

3. Enthusiasm for stocks is fueled in part by a lack of other investments in a heavily regulated economy. Famously frugal Chinese families save up to 40 percent of their incomes, but bank accounts pay just 3 percent interest — less than the rate of inflation.

4. "I have a stable income but in China now a stable income doesn't mean a good life," said a 26-year-old government employee who was opening an account at Tiantong Securities and would identify himself only by the English name Leon. "Seeing other people earning a lot of money, all you can think is, you're earning so little and how can you make more?"

5. A 60-year-old cleaning woman in the southwestern city of Chongqing is being feted in the media as a market wizard after doubling her 20,000 yuan ($2,600) investment in two months.
"At a time like this, who can lose money?" the newspaper Chongqing Morning Post quoted her as saying.

6. The Beijing Youth Daily carried a photo of a Buddhist monk opening a trading account last week at a brokerage in the western city of Xi'an.
In Nanjing in the east, a man in his 70s mortgaged his apartment to raise 60,000 yuan ($7,800) to play the market, the Web site Shenzhen News Net reported.

7. "It might be dangerous, but who knows? People thought it was dangerous in March," Leon said

8. Stock prices are 30 to 40 times earnings, an unusually high ratio for many major markets, which some say makes them unrealistic. "But that is not paying attention to earnings growth, which is very, very strong," Liang said.

9. "We hear that before 2008, the government won't let prices fall," said Ding's sister, Ding Jingxian. "We're not afraid."

And the most interesting point in my opinion is number 10.

10. "We are opening 40 to 50 new accounts a day," said Zhang Jun, the branch's deputy manager. "Six months ago, it was four to five a day." Nationwide, the number of trading accounts has soared by 30 percent over the past year to 95 million, one-sixth of them opened in the past four months, according to the China Securities Depository and Clearing Corp., which is owned by China's two stock exchanges.
On Wednesday alone, investors opened 552,559 new accounts, the company said.

WOW!

95 million trading accounts.

Yes, it does sound massive ... but ... so is the China's population.

I wonder.. if just one quarter of China population were to open a trading account and buy some shares.. I wonder ... the impact on the market.

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What Kind of Warning is This?

My Dearest Moo Moo Cow,

I was just told about this newsclip on Star Biz. Bursa Malaysia cautions investors on Transmile

• Friday May 18, 2007
  
  Bursa Malaysia cautions investors on Transmile
  
  KUALA LUMPUR: Bursa Malaysia has warned players to be cautious of their investment decisions on Transmile Group Bhd's securities in view of the non-availability of reliable financial information on the latter.
  
  In a statement yesterday, the exchange said it viewed this seriously and had reminded the company to make necessary disclosures on its actual financial position to the market as soon as possible.
  
  On Feb 15, 2007, the company announced an unaudited pre-tax profit for the year ended Dec 31, 2006 of RM206.73mil.
  
  Subsequently, on May 7, the board expressed concern on the reliability of the unaudited consolidated results.
  
  Transmile is involved in providing air-freight, aircraft engineering and maintenance services. – Bernama

TransMile receivables issue was known on May 7th. ( See Transmile Receivable. )

A warning to the investors only on May 18th?

Seriously my dearest, I wonder for whom this warning serves?!

Really!

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Strike Two For Megan

MEGAN MEDIA HOLDINGS BERHAD
MATERIAL LITIGATION The Bank of East Asia Limited versus MJC (Singapore) Pte Ltd

• The Board of Megan Media Holdings Berhad wishes to announce that its subsidiary, MJC (Singapore) Pte Ltd ("MJC"), has been served with a writ of summons on 11th May 2007 pertaining to a suit filed by The Bank of East Asia Limited ("BEA") for a claim amounting to S$3,039,403.83 in respect of banking facilities granted by BEA in 2006.
  
  MJC have obtained legal advice on this action and have engaged solicitors to defend the suit. The appointed solicitors have entered a Memorandum of Appearance on behalf of MJC with the High Court of The Republic of Singapore on 15th May 2007.
  
  The said action is not expected to have any financial or operational impact on the Group.
  
  This statement is dated 17 May 2007

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Strike Three For KarenSoft

KRNSOFT - APPEAL AGAINST DE-LISTING DISALLOWED

• The company wishes to announce that we had today received a letter from Bursa Securities dated 17 April 2007 in respect of the above matter.
  
  Bursa Securities had earlier announced on 17 April 2007 its decision to de-list the securities of KRNSOFT from the Official List of Bursa Securities as the Company had failed to comply with the extended timeframe granted by Bursa Securities until 16 April 2007 to make the Requisite Announcement in accordance with Rule 8.16 of the Listing Requirements of Bursa Securities for Mesdaq Market and GN3.
  
  Bursa Securities further announced on 24 April 2007 that the Company had submitted its appeal against the decision of Bursa Securities to de-list the Company's securities from the Official List of Bursa Securities and given the appeal, the removal of the securities of the Company shall be deferred pending the decision on the appeal by Bursa Securities.
  
  After having considered all the facts and circumstances of the matter, Bursa Securities has resolved that the appeal by the Company be disallowed and that the securities of the Company be de-listed from the Official List of Bursa Securities as the Company does not have an adequate level of financial condition to warrant continued listing on the Official List of Bursa Securities.
  
  In this connection, the securities of KRNSOFT will be removed from the Official List of Bursa Securities at 9.00 am on Tuesday, 29 May 2007. The Company is required to communicate Bursa Securities' decision to their shareholders.
  
  With respect to the securities of KRNSOFT which are currently deposited with Bursa Malaysia Depository Sdn Bhd (Bursa Depository), the securities may remain deposited with Bursa Depository notwithstanding the de-listing of the securities from the Official List of Bursa Securities. It is not mandatory for the securities of a company which has been de-listed to be withdrawn from Bursa Depository.
  
  Alternatively, shareholders of the Company who intend to hold their securities in the form of physical certificates, can withdraw these securities from their Central Depository System accounts maintained with Bursa Depository at anytime after the securities of the Company has been de-listed from the Official List of Bursa Securities. This can be effected by the shareholders submitting an application form for withdrawal in accordance with the procedures prescribed by Bursa Depository. These shareholders can contact any Participating Organisation of Bursa Securities and/or Bursa Securities' general line at 03-2034 7000 for further information on the withdrawal procedures.
  
  Upon the de-listing of the Company, the Company will continue to exist but as unlisted entities. The Company is still able to continue its operations and business and proceed with their corporate restructuring and their shareholders can still be rewarded by the Company's performance. However, the shareholders will be holding shares which are no longer quoted and traded on Bursa Securities.

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Cymao

My Dearest Totomaster,

The above table highlights Cymao earnings performance. And as can seen, the recent fy 2006 showed that Cymao has performed pretty well after its dismal fy 2005 performance.

The above quarterly earnings highlights Cymao's performance. Actually if you look at it, perhaps one would say that Cymao's earnings hasn't been too outstanding.

Anyway, as mentioned by you, Cymao has got their 'forest consession' now.

Yes, in my opinion, the ability to get the supply of logs is rather crucial for a plywood player like Cymao. In a buoyant timber market, without the supply of logs, the plywood manufacturer margins will be squeezed by the higher prices of logs. And in the competitive plywood market, passing the buck down to its customers is rather difficult.

I see two announcements for Cymao.

Logging and Marketing Agreement between Magarida Timbers Limited and Kupiano Forest Products (PNG) Limited, a wholly-owned subsidiary of Cymao Holdings Berhad for the logging and downstream processing operations in Papua New Guinea.

• Cymao group is in the business of plywood production where logs are the main source of raw material for its manufacturing. Logs procurement has always been purchased from third party concessionaires in the State of Sabah where the prices are subject to market conditions. Thus, the margin is highly affected by the log prices. In order to better control the cost of raw material, Cymao group is compelled to venture upstream of the business by securing its own supply of logs by way of having a full control over the operation of logging of logs. In addition, this is also an opportunity to trade timber logs to provide additional income stream to the Cymao group.

ACQUISITION OF 6,000 ORDINARY SHARES OF RM1.00 EACH REPRESENTING 60% EQUITY INTEREST IN SYABAS MUJUR SDN BHD WHICH HAS A TIMBER SALE AGREEMENT

• The Acquisition will be very strategic to Cymao Group's existing operation. The Licensed Area contains log species which are suitable for plywood production as well as export. Log costs form a major cost of production to Cymao Group and logs procurement are made with third party concessionaires where prices are subject to market conditions. Thus, the margin is highly affected by the log prices. Therefore, in order to control the cost of raw material efficiently, the Cymao Group is compelled to venture upstream by securing its own supply of logs.
  
  The prospect of the Acquisition will be positive as the Licensed Area is located in Sandakan where the Cymao Group's plywood production facilities are situated. It is expected that the Acquisition will contribute positively to the Cymao Group by way of savings on log costs which are expected to be about 20-25%. In addition, sale of logs of export grades can provide additional revenue stream to Cymao Group's income.

Will this two said venture pay-off?

I cannot answer you because as you can see, that's all the information I have. (The potential is there for Cymao to perform better, this I have to admit.. but will Cymao turn this potential into reality? )

rgds

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On Shanghai Again

My Dearest Moo Moo Cow,

Everyone is talking about Shanghai again and FSO Market Commentator, Mr.Frank Barbera, has made some brief comments on his write-up today, A Little Bit of This, A Little Bit of That...

• Yet, as we noted last week, the Shanghai Stock Exchange looks dangerously unstable, and in my view, that is a key market to be watching as the volatility there continues to increase, with prices tumbling last night by nearly 4%. Again, it is very possible that the Shanghai Market may continue to move higher still, expanding its parabolic arc to the 4,500 level, but if that is to happen, it will happen soon as the parabolic bust is now knocking on the proverbial door -- with mid-to-late June a prime candidate.
  
  

  

  
  

  Above: The long term weekly chart of the Shanghai Composite…perhaps a few more weeks, then POW! Right in the kisser. Expecting a 30% sell off in Shanghai early this summer; it will not be pretty and it will likely not go unnoticed by other markets.

Fellow blogger Sal, has made some interesting posting too.

• http://malaysiafinance.blogspot.com/2007/05/t-he-emperor-is-very-naked-naked-is.html
• http://malaysiafinance.blogspot.com/2007/05/nasdaq-vs-shanghai-there-is-not-much.html
  
  

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50 Million Adjustment for TransMile?

My Dearest Moo Moo Cow,

So the Edge Weekly is suggesting that perhaps a 50 million adjustment is required. Let's do some simple calculations.

The following table shows TransMile earnings.



So a 50 million adjustment could see fy 2006 earnings adjusted from rm157 mil to rm 100mil.

Now TransMile current number of shares is extremely tricky since it is ever expanding.

The follow screen shot shows TransMile current number of shares today.



So as it is today, there are 270.118 million shares. This means that TransMil eps 'could' be adjusted to a mere 37 sen, IF its earnings is adjusted by rm50 million to rm100 million.

So what PE multiple do you reckon TransMile could command after the adjustment? Do you reckon it could command a pe multiple of 20x after this adjustment?

But if market take the adjustment poorly, TransMile could trade as low as a simple 15x multiple.

20x on an eps of 37 sen = 7.40
15x on an eps of 37 sen = 5.55!

How?

Me?

Honestly, I would rather not guess in such a fashion for I do not really know what is happening but a 50 million adjustment, could do some damage on TransMile in my opinion.

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More on TransMile

My Dearest InvestBullbear,

You wrote the following.

......there is speculation that management was perhaps under pressure to keep its numbers high to please investors and possibly facilitate a placement of shares completed in November last year that was largely taken up by foreigners.

Extracted from the Edge this week:

• Extracted from the Edge this week:
  
  On Monday, May 7, while the counter was suspended, it announced that the unaudited results showing a pre-tax profit of RM 206.734 million for last year were unreliable.
  
  The clues for solving Transmile’s mystery lie in the company’s announcement, particularly in the part where the auditors state that “they have not been able to get hold of supporting documents from the management on certain transactions relating to trade receivables and related sales and additions to property, plant and equipment”.
  
  What exactly is the “accounting relation between trade receivables and related sales, and additions to property, plant and equipment” that the company is talking about?
  
  “Some amount of trade receivables was paid not in cash, but in the form of property, plant and equipment where the documents are not available. That is the problem,” a source says.
  
  The said amount is about RM 50 million.
  
  An accounting official says there could be a related party transaction with Transmile, for example, in which it provided a service to the related party. The payment for the service may have been made later in the form of property, plant and equipment. However, the absence of proper documentation to substantiate the transaction could have prompted the auditors to refuse to sign off the accounts.
  
  This begs the question: Are the accounting woes of Transmile simply a matter of poor record-keeping or a scheme to obliterate the paper trail, which could raise doubts about the legality of those transactions?
  
  There is also another view that the problem could have started in FY2005, which explains why the documents cannot be found.
  
  More importantly, is the amount so big that it will impact Transmile significantly?
  
  To get an idea of the quantum of the amount in dispute, analysts are looking at Transmile’s trade receivables, which ballooned to RM381 million in FY2006 from RM111 million the previous year. This is despite an 80% increase in revenue to RM 989.2 million in FY2006 from RM550.1 million the previous year.
  
  The point to note here is that the receivables accounted for much of the company’s sales growth. Hence, if a large part of the figures has to be provided for, Transmile’s net profit of RM157.5 could be revised down significantly.
  
  With no guidance from the company on the worst-case scenario, analysts are looking at a complete wipe-out of Transmile’s profits for FY2006 amounting to RM157.5 million.
  
  JP Morgan’s Lucius Chong believes that a 5% restatement of Transmile’s earnings is the best- case scenario.
  
  In FY2006, Transmile’s cash and bank balance almost doubled to RM417.7 million from RM261.2 million in the previous year. Its property, plant and equipment figures showed a slight decrease to RM 1.55 billion from RM1.57 billion a year ago.
  
  But in FY2005, Transmile’s property, plant and equipment revealed an increase of RM1 billion due mainly to the purchase of aircraft, parts and equipment. (In May 2005, Transmile took delivery of four MD11 aircraft. In the same year, it also acquired two Boeing 727 aircraft, which were supposedly delivered in 2006.)
  
  The facts and figures are at the disposal of investors. Still, it may not be easy to detect any discrepancies due to the lack of information on the accounts.
  
  Another point to note is that if it is a matter of unsubstantiated transactions, how can the appointment of another accounting firm help solve the matter in about a month?

In all honesty, all I can do is speculate what has had happened. And most of it is based on quoted stuff from news.

Which is really not intelligent at all.

Which is why the main grouse so far is perhaps best said by the Spore Btimes reporter saying why had the management not saying anything at all. And why had Bursa and SC remained silent?

That it had dragged on for so long indicates something was wrong in their accounts.

Right now, the issue would be, two things.

1. How badly stated was their account?
   
2. Was there intent?

Now those two issues would have a huge barring.

1. Transmile has had been priced for a growth stock. If their accounts were badly overstated then would it mean that the status of it being a growth stock is tarnished? And if so, then Transmile would probably not command the higher price earnings multiple it had enjoyed previously. And as noted, Transmile had done several placement issues in recent times. The POS placement was done around 30% and several various form of placement has been done. All of which will have an impact if one were to use the pe multiple as an indicator.

2. The issue of intent. This is by far more serious. The fact that Transmile went limit down on the first day and as mentioned by the press, foreign funds sold out. Damage has been done. If the allegations of intent were proven, I would seriously believe that these foreign funds would avoid Transmile like plague. So how much can our kampung fund do? And also, a lot of other investors would avoid this stock simply because it makes no sense to be an investor of a company whose owner/manager has been proven guilty in an attempt to cook their books. The issue of trust is but gone.

And if one adopts the rational approach, perhaps it simply makes no sense trying to be a hero in a hard place. Market is hot. Perhaps there is much better investment around for our hard earned money.

And what is the flipside of such a safer approach? Well one missed an opportunity, that's all.

Does it hurt?

Nope.

The Market is always there, my friend. Other much better opportunities will arise in the future.

rgds,





**** this blog posting is reproduced from a Sahamas posting. please feel free to voice your opinions. ****

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Sea of Debt!

My Dearest Moo Moo Cow,

FSO Market commentator, Mr. Tony Allison has written a timely reminder, A Sea of Debt.

• Prepare for the Ebbing Tide

  The solution is not to go the ostrich route and ignore the problem, but to take prudent action while you go on about your life. The drill should be familiar. While Uncle Sam can’t get out of debt, the average citizen would be well advised to do so, or at least lower one’s debt profile. Next would be to invest in areas that will mitigate against rising inflationary trends, such as the natural resource sectors and other tangible assets. Thoughtful, ongoing preparation is the key. It’s somewhat analogous to getting punched in the mid-section. If you know its coming and prepare yourself, the punch may hurt a bit, but it’s manageable. If you are totally blind-sided, you end up writhing on the ground, gasping helplessly for oxygen. If you believe inflation will be a major issue in the years ahead, now is a good time to get started on protecting yourself.

  Noting the aforementioned wisdom of Warren Buffett, when the great global tide of liquidity finally ebbs into reverse, make sure you are one of the forward-looking swimmers dressed for the occasion.

  “No generation has a right to contract debts greater than can be paid off during the course of its own existence.” George Washington to James Madison, 1789.

  
  

  U.S. NATIONAL DEBT CLOCK

  
  

  The Outstanding Public Debt as of 14 May 2007 at 10:13:53 PM GMT is:

  
  
  
  

  The estimated population of the United States is 301,880,797
  so each citizen's share of this debt is $29,225.94.

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