Pintaras Jaya Announced Massive Losses In Their 'Investments'

I had mentioned the following before.

• I have always disliked seeing our local companies dabbling in the stock market and one of the most disturbing issue is that there is ZERO transparency. The companies do not let their shareholder knows the details of their so-called investment. For example, we do NOT even know what share they buy, at what price was the investment made and most important, why.

I wrote the following on Pintaras Jaya back last August 2008.

In which I had stated "So is their dabbling with market securities. I do not like it at all."

Back then one could clearly see that Pintaras had been induldging way too much into the share market. Let me reproduce the facts. ( source: Quarterly rpt on consolidated results for the financial period ended 30/6/2008 )

(a) Total purchases and disposals of marketable securities for the current financial year-to-date are as follows: -

Total Purchases 28.789 million
Total Disposals 29.099 million
Total Gain on Disposal 2.543 million

(b) Total investments in marketable securities as at 30 June 2008 are as follows:-

At cost 27.200 million
At carrying value/book value; and 24.709 million
At market value 25.921 million

Look at the amount purchased and disposed by the company back then. Yes, the company made a tidy 2.543 million in profits but if one look at section (b) one could see that Pintaras back then is already carrying 'paper losses'.

Yes the classical paper loss issue. Is Paper Loss Not A Loss?

Note: no mention was made from Pintaras Jaya on what it purchased and sold. All we know is 'marketable securities'!!!

3 months later, Pintaras Jaya made the following announcement. Quarterly rpt on consolidated results for the financial period ended 30/9/2008

(a) Total purchases and disposals of marketable securities for the current financial period-to-date are as follows: -

Total Purchases 8.656 million
Total Disposals 5.565 million
Total Loss on Disposal (0.464) million

(b) Total investments in marketable securities as at 30 September 2008 are as follows:-

At cost 29.929 million
At carrying value/book value; and 23.815 million
At market value 23.815 million

As at 30th September, Pintaras purchased 8.6 million and disposed some 5.56 million worth of marketable securities. Now that's rather too active at such terrible market conditions, yes?

And it made a loss of dispossal totalling 0.464 million.

However, look at the paper losses. Cost of those securities, WHICH IS NOT STATED, totals 29.929 million. The market value is only 23.815 million! Paper loss is now around 6.11 million!!!

And does Pintaras Jaya state what these marketable securities are?

No.

Last night Pintaras Jaya announced its earnings. It was terrible. A horror show.

Here is a screen capture of what it announced.

Look at the purchases and disposals again!!!!

Look at the loss on disposal! 6.863 million!

And why is Pintaras doing purchasing another 15.239 million in marketable securities again? What on earth is it doing?

And after the disposal, these marketable securities is only worth some 14.117 million. And with a cost of 18.912 million, this would mean that Pintaras Jaya is carrying some paper losses of 4.8 million!!!!!!!!!!!

Clearly Pintaras Jaya has no skills with it's dabbling in marketable securities!

So the question that bags to be asked is why is Pintaras Jaya still purchasing some 15.239 million worth of marketable securities for this reported quarter?

What did it purchased?

Why isn't Pintaras Jaya stating clearly what these investments are?

And don't you think Pintaras Jaya should stop what it is doing now?

And here is the sceen capture of what the management has to say.


How?

Do I have a point when I say the following?

• I have always disliked seeing our local companies dabbling in the stock market and one of the most disturbing issue is that there is ZERO transparency. The companies do not let their shareholder knows the details of their so-called investment. For example, we do NOT even know what share they buy, at what price was the investment made and most important, why.

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Pintaras Jaya IV

Previously blogged on Pintaras Jaya: Pintaras Jaya , Pintaras Jaya II and Pintaras Jaya III

Pintaras reported its earnings last night. It was rather poor.

Net earnings only came in at 1.963 million. It's previous quarter in May 2008, Pintaras made 7.621 million (see Pintaras Jaya III )

Yes this company cash balances is extremely healthy but earnings does matter. I could flawed but net earnings plunging to just 1.963 million per quarter is a massive concern for me.

So is their dabbling with market securities. I do not like it at all.

Here's my opinion on this issue again. Let paste what I had said before.

• I have always disliked seeing our local companies dabbling in the stock market and one of the most disturbing issue is that there is ZERO transparency. The companies do not let their shareholder knows the details of their so-called investment. For example, we do NOT even know what share they buy, at what price was the investment made and most important, why.

Let's have a look at what Pintaras said in its earnings notes and see if my concerns and issues are justifiable or not.

~~~~~~~~~~~~~~~~~~~~~~~~

20. Marketable Securities

(a) Total purchases and disposals of marketable securities for the current financial year-to-date are as follows: -

Total Purchases 28.789 million
Total Disposals 29.099 million
Total Gain on Disposal 2.543 million

(b) Total investments in marketable securities as at 30 June 2008 are as follows:-

At cost 27,200
At carrying value/book value; and 24,709
At market value 25,921

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Pintaras Jaya III

Published on Business Times: Pintaras Q3 net profit surges 62pc

• PINTARAS Jaya Bhd's third-quarter net profit surged 62 per cent due to better contribution from its construction and manufacturing divisions.
  
  It expects to report good numbers for the fourth quarter due to its outstanding orders.
  
  However, it cautions that profit could be hurt by rising costs steel. Pintaras made a net profit of RM7.6 million for the quarter to March 31 2007. Revenue was up 22 per cent to RM44.3 million.

Since I had written on Pintaras Jaya before and I do keep track of this stock, I was confused by that news clip. Was it that good?

Here is the snapshot from Dow Jones News Clip.

And here is my compiled data of Pintaras Jaya.

As can be seen, Pintaras Jaya earnings was decent but it did not surged 62%!!

I wonder where Business Times got that set of information!

The following notes were taken from Pintaras earnings notes:

• For the nine months ended 31 March 2008, the Group's revenue increased by 2% to RM119.3 million from RM116.9 million in the preceding year, while profit before taxation grew by 20% to RM28.7 million from RM24.0 million for the respective period. The improvement is mainly attributable to higher contribution by the construction and manufacturing divisions.
  
  The construction division recorded a lower revenue of RM88.1 million compared to RM89.1 million last year. Despite the decline in revenue, profit before taxation increased by RM6.3 million or 41% to RM21.9 million from RM15.6 million last year due to higher margins achieved.
  
  Sales from the Group's manufacturing division grew by 12% to RM31.2 million from RM27.8 million last year, while profit before taxation rose by 43% to RM4.0 million from RM2.8 million last year. The increase was entirely due to better sales and margins achieved by the metal container operation.
  
  For quoted investments, there was a gain on disposal of marketable securities of RM2.7 million but a loss due to an allowance for diminution in value of RM1.5 million, as against last year's write back in allowance and gain totalling RM4.1 million. The first quarter of 2008 saw one of the worst performances of equity markets in the world. In addition, the March election results triggered widespread selling in our local bourse.

My last posting was posted on Pintaras Jaya II.

Here are some of my thoughts on Pintaras earnings.

1. Sales revenue

Sales revenue is certainly positive, showing growth on a quarter-quarter comparison.

2. Earnings

Current twelve months earnings totals 27.147 million, indicating strongly that Pintaras should record decent growth this fiscal year.

3. Balance Sheet.

Total cash balances is 65.283 million.

This is where I see some issues that needs to be evaluated.

Inventories are higher and most important the receivables has risen quite substantially.

And of course the total cash balances consist of Short Term Investments totaling 27.415 million.

And again this is a massive issue for those who do not like to see our plc dabbling in such investments.

From the company's own notes:

• For quoted investments, there was a gain on disposal of marketable securities of RM2.7 million but a loss due to an allowance for diminution in value of RM1.5 million, as against last year's write back in allowance and gain totalling RM4.1 million. The first quarter of 2008 saw one of the worst performances of equity markets in the world. In addition, the March election results triggered widespread selling in our local bourse.

And here is a snapshot from its earnings notes.

Yes there is gain made on disposal but this has been negated by the current paper loss.

How?

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Pintaras Jaya II

Pintaras reported its earnings tonight. ( see Quarterly rpt on consolidated results for the financial period ended 30/6/2007 )

So here's an update to my earlier posting Pintaras Jaya.

Firstly, i will re-cycle the table again from the earlier posting for a quick and effective comparison.



Pintaras reported its fy 2007 Q4 earnings.

1. Sales revenue

• Sales revenue came for the quarter came in at 30.492 million. Total ytd fy 2007 earnings came in at 147.436 million. ( Last fy 2006, it did 94.462 million)

2. Earnings

• Total net earnings for fy 2007 Q4 came in at 5.287 million. Total ytd net earnings came in at 24.089 million. ( Last fy 2006, it did 10.518 million)

3. Margins

• Net earnings margins for fy 2007 came in at 16.3%.

Much improvements for all key indicators.

Key balance sheet issues. Let's use the previous table posted in the earlier posting again.

Current cash balances is now at 65.317 million (versus 60.820 million the previous quarter)

Here is the breakdown of its cash balances.

• Short term investments.. 24,372
  Short term deposits......... 39,162
  Cash and bank balances.. 1,783

Short term investment equates to total investments in marketable securities as at 30 June 2007. And as per it's earnings notes, this investment had carried a market value of 30.040 million. ( Company noted a gain of 2.1 million from disposal of securities)

Two things. One on hand, it's sitting on a nice gain. On the other hand, however, marketable securities can go down very fast! Would this be an issue?

Debts. No debts for Pintaras.

Dividends. Board has proposed at 10% less tax dividend. Improvement.

Company notes:

• For the twelve months ended 30 June 2007, the Group's revenue increased by 53% to RM147.44 million from RM96.46 million in the preceding year, while profit before taxation grew by 119% to RM31.15 million from RM14.20 million for the respective period. The significant improvement in these results is mainly due to higher contribution by the construction and manufacturing divisions as well as an improvement in the performance of quoted investments over the preceding comparative year.
  
  The Board is confident about the performance of the Group in the financial year 2008. This is in view of the existing strong order book, the numerous tenders submitted and the anticipated implementation of more construction projects under the Ninth Malaysia Plan. The Board expects that the Group's financial performance for the financial year 2008 to be good.

How?

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Pintaras Jaya

My Dearest Lina,

Regarding Pintaras Jaya. Pintaras is a piling and foundation construction expert. You can read the company profile here and for its manufacturing profile here.

Here is their earnings track record.



Which can be broken down into the following segments.



1. Pintaras has done rather well since 2000. Yes, there is a blip in earnings for fiscal 2001. Here is what happened as explained by the company in its earnings notes.

• The fourth quarter loss is mainly due to exceptional losses of RM7.33 million, comprising a provision for write down in the value of an investment property of RM2.58 million, a provision for other charges of an investment property of RM3.0 million and a provision for diminution in value of quoted investments of RM1.75 million.

This can be confirmed if you look at the second table. The property investment arm for Pintaras has been dismal.

Previously, from 2002 to 2006, I always believed that Pintaras has been a decent consturction company but it looked really like a company in their own comfort zone - ie decent with lacklustre or no growth. And the earnings - around 10 mil per annum looked rather smallish.

However, I believe this has changed.

And as can be seen in the second table, the piling and civil engineering sector has been doing pretty well and this does indicate that there is indeed a tremendous change of fortune happening in Pintaras Jaya.

2. Balance sheet.

It's cash balances is highly admirable.

Pintaras Jaya had a 3 for 5 bonus issue in 2002.

However there are 2 disappointments for me. Despite the healthy cash flow, dividends could perhaps be much better.

Secondly, it dabbles in the share market. ( This was discussed on Sahamas ( here ).

3. Yes, you are correct that CIMB had a research article. And as per your request, the following is how they valued the stock.

• Valuation
  
  Immediate beneficiary of 9MP. Pintaras is expected to be one of the immediate beneficiaries of the kick-off of 9MP infrastructure projects over the next few quarters. This is because piling and foundation work is needed before construction work can begin on most infrastructure projects.
  
  Positioned for the upturn. The group has already positioned itself to ride this infrastructure boom, spending RM20m on equipment in the past 18 months that will enable it to undertake as much as RM15m worth of works monthly. Busy with private projects for now… The group is currently busy with piling works for property projects, especially high-rise condominiums. Construction work from the government sector should pick up quickly once 9MP infrastructure projects take off over the next 1-2 quarters.
  
  SOP to value the stock. In view of its strong net liquid asset and cash position, we believe that sum-of-parts valuation (SOP) is the appropriate tool to value the stock. Pintaras’s balance sheet is debt free and has RM60.8m net liquid assets and cash, equivalent to RM0.76/share.
  
  SOP at RM3.42. We have conservatively valued its construction division at 9x CY08
  P/E, a 25% discount to our 12x CY08 P/E target due to its small market capitalisation, the short-term nature of its contracts and its tight free float. We tag a conservative CY08 P/E of 6x to its metal container manufacturing division in view of its flat earnings growth. Based on these low-ball assumptions, Pintaras’s SOP valuation is RM3.42.
  
  This values the stock at 10.7x P/E ex-cash. We estimate that Pintaras could record around RM20m operational net earnings (exclude investment and interest income) or 25 sen EPS in FY08. Our RM3.42 SOP valuation implies a reasonable ex-cash FY08 P/E of 10.7x.
  
  Higher DPS? The company has been paying 5.0 sen final DPS annually over the past three years. We believe it is likely to up its final DPS in FY07, which it can afford to do given its strong net cash position and estimated 30 sen EPS in FY07. Assuming that it doubled its final DPS to 10 sen, gross dividend would be an attractive 5.6%.

Do feel free to join that discussion posted at Sahamas ( here ).

rgds

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Local listed companies dabbling in the share market: II

I found this nice little comment on the issue of local listed companies dabbling in the share market!

• Who care ? It is the other people money & must be fully maximised 2 obtain max. profit. 4 own benefit ????

Well I do care. Other people money? If and when one buys a share of a listed company, they are deemed as shareholders of the company. As a shareholder of the listed company, whose money is it? Is it still OPM (other people's money)??

And for whose benefit? Of course one could argue that the management is doing this for the benefit of the company and the shareholders. But then others could also argue that such practices has no transparency and it leaves the managment the possibility of abusing the company's funds to buy shares in another listed company for personal vested interests or reasoning.

Perhaps let's look at just one company, Pintaras Jaya, who has 'marketable securities' in their balance sheet.

This is a screenshot of Pintaras earnings notes reported on Feb 2006.



And this is a screenshot of their balance sheet then.



How?

1. Total 'cash' company has = 18.869 + 30.408 + 1.291 = 50.568 mil.
Amount invested in marketable securities = 18.869 mil or 37.3%.

2. Result? Market value = 18.869. Cost of securities = 22.205 million! Ahem!

Pintaras Jaya just announced its latest earnings on 11th May 2006.

This is a screenshot of Pintaras earnings notes.



And this is a screenshot of their balance sheet.

How?

1. Total 'cash' company has = 20.628 + 26.813 + 1.589 = 49.03 mil.
Amount invested in marketable securities = 20.628 mil or 42%!! (hmm.. increased a lot, eh? ).

2. Result? Market value = 20.183. Cost of securities = 22.435 million! Ahem!

How? How does one evaluate Pintaras Jaya's dabbling in the share market? Does Pintaras Jaya's current 'investment result' justify their dabbling in the share market?

And what's the alternative? Hmm.. here's a suggestion. Why couldn't Pintaras Jaya make an effort to return more cash to its shareholders?

Consider this. Pintaras Jaya has been paying a 5% less tax dividends per year, which works to some 2.88 million. Now considering the amount of excess cash utilised by the company in the share market, the dividend payout pales in comparison. So for a minority shareholder in Pintaras Jaya, does the minority shareholder has any grounds of displeasure? Why can't the company pay them more in dividends instead of the company losing money in marketable securities? And worse still, does the minority shareholder know how the money is exactly lost?

Isn't this a justification against listed company dabbling in the share market?

Oh yeah, I forgot. Who cares!

Yeah nothing wrong against your view and opinion since you do not care but for those who does care and wishes not to see their invested money used by these listed company as per their whimps and fancy, perhaps it would not hurt the investors to be very prudent if they see the listed company dabbling in the share market.

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