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