Friday, 29 May 2015

Hanergy: SFC is investigating

It seems that the SFC has started an investigation in the remarkable rise and fall of Hanergy, according to this article in The Financial Times. Some snippets:

Hong Kong’s securities watchdog has confirmed Hanergy is under investigation — hours after the troubled solar panel maker’s chairman dismissed any such probe as “purely rumour”.

In the interview with Xinhua, China’s official news agency, Mr Li lashed out at reports that followed the spectacular crash of its share price, which wiped nearly $19bn off Hanergy’s market capitalisation.

He said: “We can say that in Hanergy has never in its history been better than it is today, our business is prospering, and this is a great time for Hanergy.”

In his interview Mr Li said it was impossible for any investigation to be under way without his knowledge — a sentiment undermined by the SFC statement.

“This is purely rumour, there is no such possibility,” he said. “I would be the first to know if the authorities were really planning a probe. But I know nothing about such news.”

Mr Li, in the Xinhua interview, also appeared to address concerns that he had used shares of the company as collateral to secure loans, saying the company did not owe overdue bank loans or interest payments to any bank.

We never did before, we don’t now and I believe we won’t in the future,” he said.

If those statements are "entirely true", I have strong doubts about that, time will tell. The stock is still suspended.

In the mean time, at least one complaint has been filed in Hong Kong, by none other than David Webb.

Wednesday, 27 May 2015

AirAsia X: is the rights issue enough? (3)

I wrote before:

".... its 2014 loss is 1.3 times the amount the company wants to raise through its rights issue. The obvious question would be: how long will the rights issue last? The company still has not shown a single year of profit (corrected for one-off items and deferred tax)."

AirAsia X announced today another large quarterly loss, RM 126 Million this time.

The company will soon receive the much needed RM 391 Million cash from it's rights issue.

But how long will that last?

After taking out the deferred tax assets (which I think it never should have counted in the first place), the company lost RM 1.07 Billion over its life time.

And then, there are capital commitments running in the tens of Billions:

How is this going to end?

Icon Offshore: former CEO "to focus on personal matters"

The company announced today:

To put in "a bit more perspective" why the formed CEO might have opted not to be re-elected, please read:

"Icon Offshore: CEO and COO remanded".

Icon Offshore is listed less than one year ago, and now already the CEO is gone.

People who invested in the company when it was listed will be very disappointed.

The share is currently trading at RM 0.53, a far cry from its IPO price of RM 1.85.

Monday, 25 May 2015

The Forgotten Depression

Great presentation by James Grant, one of the good guys. I subscribed to his newsletter, but unfortunately had to discontinue it, since it was too US centric and the recommendations too often involved bonds (I always have been more of an equity guy).

If you've never heard of the Depression of 1921, it's because the federal government and the (then new) Federal Reserve did the opposite of what they did in 2008: federal spending was cut, the federal budget was balanced, and interest rates were allowed to rise. In other words, real austerity measures were implemented. The result? A short economic contraction that healed itself.

Also interesting is his remark about John James Cowperthwaite:

He was asked to find ways in which the government could boost post-war economic outlook but found the economy was recovering swiftly without any government intervention. He took the lesson to heart and positive non-interventionism became the focus of his economic policy as Financial Secretary. He refused to collect economic statistics to avoid officials meddling in the economy.

In line with this is Marc Faber's comment that close to 100% of the economic data is collected by institutions like the FED and national banks. These are institutions that are not exactly known to rock the boat, so we should have a healthy dose of scepticism regarding their numbers.