EB Capital

Saw this news article published on Business Times on EB Capital. ( article link )

• eB Capital sees profit in two years
  By Chong Pooi Koon
  pooikoon@nstp.com.my
  
  September 21 2007
  
  LOSS-MAKING wireless broadband service provider, eB Capital Bhd, says that after raising fresh capital to stay afloat it can break even this financial year.

EB Capital was listed on Mess-Daq on July 2005. Yes, till today, EB Capital is a loss making venture! Aren't you disappointed on how these companies could be listed?

Now get this. For a loss making company, at its peak in 2006, EB Capital was worth some 48.8 million(based on a price of 1.90+ back in 2006)

EB now trades at around 0.155! It's market capital has plunged to only some 12 million!

Not helping is this announcement, EB CAPITAL BERHAD (“EBCAP” OR “THE COMPANY”) ANNOUNCEMENT PURSUANT TO GUIDANCE NOTE 5/2006 ("GN5/2006") OF THE MESDAQ MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD ("LISTING REQUIREMENTS")

• eBTech is unable to service the facilities to the lenders as the group has been facing tight cash flow since 2006 when the company incurred a loss before tax of approximately RM13.9 million for the financial period ended 30 June 2007 (“FPE 2007”). For FPE 2007, eBCap recorded a turnover of approximately RM4.8 million as compared to a turnover of approximately RM10.1 million and loss before tax of approximately RM0.3 million in the preceding year ended 31 December 2005. The sharp increased in losses is due to provision for doubtful receivable, write-down of inventories and equipments of approximately RM7.1 million and decreased in sales.

Incredible eh?

Anyway in today's publications, the company chairman is saying on record that EB Capital can go on to make profit in two years.

• It can then go on to make profit in two years, its chairman Shaifubahrim Mohd Saleh said.
  
  Prospects are more promising now, given the government's plan to widen broadband coverage to the rural poor.
  
  In addition, a rights issue that raised RM8.1 million also eases its cashflow problems and will allow it to focus on growth, he told reporters after a shareholders meeting in Kuala Lumpur yesterday.
  
  The company has also scaled down business by being highly selective with its customers and slashed costs substantially, he said.
  
  It currently has RM4 million worth of projects, including a RM2 million job to provide broadband services in Kepala Batas in Penang.
  
  It will also ride on a virtual network provider arrangement with Redtone Group to give it recurring income in royalty payments.
  
  eB Capital chalked up a RM13.3 million net loss in the 18 months to June 2007, on revenue of RM4.8 million.
  
  The losses arose from sharply lower revenue and a RM6 million provision for doubtful debts.
  
  Shaifubahrim blamed the weak performance on the delay in the government award of new projects and stiff competition from other broadband service providers.
  
  "eB Capital actually owns assets with very good potential. It has the 2.5 GHz and 3.5 GHz spectrums and has traditionally good projects like the smart schools," said non-executive director Zainal Amanshah Zainal Arshad.
  
  "The take-up (of services provided) among commercial and residential customers was poor," he added.
  
  eB will now target more profitable segments like schools, universities and corporate clients.