Friday, 3 July 2015

JES: will the CEO take action against her father?

In Singapore SGX listed (China based) company JES announced that an employee of the company has run away with the company's account books, chequebooks and financial seals, delaying the probe into financial irregularities of Mr. Jin Xin.

Apparently the books were not digitally stored in the "cloud", in which case a simple back-up would have been enough to preserve the data.

The company promised to take necessary action against Jin Xin:

Strong words by the CEO, and certainly a great assurance for the beleaguered shareholders (JES's shares are suspended for four months already) that appropriate action will be taken, until one realizes that Jin Yu is actually the daughter of Jin Xin.

From the Straits Times:

A female employee has delayed an investigation into dubious payments to the former boss of Chinese shipbuilder JES International by "absconding" with the company's books.

JES International has begun legal proceedings in China against the woman, administrative officer Ju Li Li, to recover the documents.

After Mr Jin Xin, the group's former chief executive and chairman, resigned in March, Ms Ju "absconded" with the group's administration records and seals of all its Chinese subsidiaries, JES told the Singapore Exchange last night.

JES, now helmed by Mr Jin's daughter, Ms Audrey Jin Yu, said it had intended to investigate its financials after uncovering possible irregularities during a periodic review. These included "questionable transactions" between the group and companies in which Mr Jin's interests were not declared, JES said.

But "the financial records of the group, including account books, chequebooks and financial seals, had been removed... by relatives of Mr Jin", JES said in its filing.

Mr Jin, who resigned from his post as executive director due to "health issues" on May 25, is not the only one to have quit.

On May 15, JES appealed to the Singapore bourse to extend its deadline for announcing first-quarter earnings, citing "a severe shortage of manpower" after half of its finance department resigned.

JES assured shareholders yesterday that if the books are recovered and Mr Jin is found at fault, "necessary action" would be taken. Trading of JES shares has been suspended since March 4. The shares last traded at 2.6 Singapore cents.

Thursday, 2 July 2015

Ire-Tex: MD resigns and is reappointed same day

A remarkable set of events, the company has provided the following clarification:

Reference is made to the Company’s announcement on 29 June 2015 in relation to the retirement of Dato’ Dr Yap Tatt Keat (“Dato’ Dr Yap”) as Managing Director and his subsequent re-appointment on the same day.

The Board of Directors wishes to inform that Dato’ Dr Yap had expressed his intention for early retirement effective from 29th June 2015, post the Company's 13th Annual General Meeting (“AGM”) after 20 years of service with the Ire-Tex Group. Hence, he did not offer himself for re-election at the AGM.

However, due to concerns raised by key stakeholders namely bankers, customers and suppliers, to Dato’ Dr Yap's unexpected early retirement, the Board of Directors had persuaded Dato’ Dr Yap to defer his retirement plans. Consequently, in the best interest of Company, Dato’ Dr Yap had accepted his re-appointment as Managing Director of the Company in the Board meeting held immediately after the AGM. As such, he will remain in the Board until a succession plan is put in place.

Ire-Tex is a company with several, possibly large, problems.

It has just acquired subsidiaries which don't seem to be performing well at all:

There was a large variation in results, always a red flag:

Many changes in directorship in the last year:

The accounts were qualified (always a large red flag):

In addition to that, the following "emphasis of matter":

An investigative accountant has been appointed, with a very wide scope, 28 action points in total, including allegations in an anonymous letter.

The largest shareholder of Ire-Tex is Tey Por Yee, the third largest is Ooi Kock Aun, the same duo we already met in the Protasco affair:


GrabTaxi worth more than AirAsia?

According to this article in the Wall Street Journal:

More cash is pouring into the increasingly competitive ride-hailing business in Asia, fueling local competitors to global market leader Uber Technologies Inc.

Southeast Asia-focused ride-hailing app GrabTaxi is getting an infusion of over $200 million in fresh capital in its latest fundraising round led by U.S. hedge fund Coatue Management LLC, according to a person familiar with the situation. The investment values the company at over $1.5 billion including the fresh capital from the latest fundraising, according to the person.

USD 1.5 Billion is equivalent to RM 5.7 Billion, clearly higher than the current marketcap of AirAsia, which is RM 4.4 Billion.

Is that really fair, if we look at revenue, profits, assets, barriers to entry (landing rights) etc?

I have doubts about that, but time will tell.

Regarding a company operating in the same industry (but on a global level), Uber, an article asks the question:

"Uber is seeing $470M in operating losses: Can it ever be profitable?".

Thursday, 25 June 2015

When will Hibiscus bloom?

Interesting interview on BFM Malaysia with Dr Kenneth Pereira, Managing Director of Hibiscus Petroleum Berhad, one of the SPACs listed on Bursa.

Its share price performance so far:

Hibiscus has booked losses throughout its history (except for one year where paper profits were booked under "other profits" due to some revaluation).

That is disappointing, given the fact that the company is listed for four years already, but also given the large amount of hype surrounding its 3D Oil partnership, as for instance described here:

... has demonstrated that its Rex Virtual Drilling Technology significantly increases the chances of success in drilling for oil and gas.

Hibiscus said that tests of the technology conducted over a period of several months by Oslo stock exchange listed North Energy.

It showed that Rex Virtual Drilling technology repeatedly and accurately predicted the presence or absence of oil without physically drilling a well.

Rex Virtual Drilling is a software-based tool which relies on the phenomenon of resonance in seismic data to detect hydrocarbon deposits and predict oil quality as well as in-place volumes.

The Rex technology package is available to Hibiscus’ jointly-controlled entity, Lime Petroleum Plc, which has exclusive use of the Rex Technology package for all concessions in the Middle East and in Norway on a project basis.

The licensing agreement which gives Lime exclusive use of the technology in 15 Middle East countries is for a period of 5 years from 24 October 2011, with automatic annual renewal thereafter.

In some eight ‘blind’ tests conducted on previously drilled wells in the Norwegian Continental Shelf by North Energy, the technology was successful in all cases in predicting whether each well was dry, had traces of oil or if it had substantial oil reserves.

Hibiscus had also done its own blind tests with successful outcomes.

While average success rate for exploration drilling is estimated to be around 15%, or one successful discovery for every seven wells drilled, the Rex Virtual Drilling tool could change the dynamics of successful exploration drilling.

I have been very sceptical about SPACs from day one and see no reason yet to change that stance.