Thursday, 27 November 2014

China Ouhua: red wine and red flags (3)

China Ouhua (about which I wrote before, here and here) announced its quarterly results.

That these results again are bad will not surprise many.

As usual the downtrend in wine consumption in China is mentioned as the scapegoat. Although there is indeed a downtrend, I don't think it can sufficiently explain why China Ouhua can barely turnover RM 1 Million in one quarter.

Another matter is that I doubt if anyone at China Ouhua even checked the announcements:



iCapital: questions regarding adjourned AGM and expenses (2)

I wrote before about these issues regarding iCapital.

According to The Sun Daily website:


City of London Investment Management Co Ltd has written a letter to fund manager Tan Teng Boo to explain why it and Laxey Partners Ltd, the single largest shareholder of icapital.biz with 11.39%, plan to vote against the reappointment of Tunku Abdul Aziz Tunku Ibrahim as a director was due to the length of time he has been retired.

"Directors should not start a new term in office if they have retired from active employment for more than five years. City of London believes that the skills and contributions of a director outside this criterion may be too far removed from current business practices or thinking to truly add value to the board over the long term," City of London's portfolio manager Oliver Marchner said in a copy of the letter sent to SunBiz.

It also pointed out that Tunku Aziz as a board member has no "requisite experience and knowledge of a listed closed-end funds (CEFs) and has retired from active employment for more than five years.

In relation to the composition of the board, City of London's portfolio manager Oliver Marchner made reference to Section IV paragraph 2a of its Statement on Corporate Governance and Voting Policy for Closed-End Funds (9th Edition).

The Statement on Corporate Governance and Voting Policy for Closed-End Funds can be found here.



I hope that the letter is public, and that iCapital will publish the letter in an official announcement at Bursa's website. Since the last AGM was adjourned because of the question why City of London decided to vote against the director, other shareholders should be informed about their answer.

Wednesday, 26 November 2014

Protasco: messy, messier, messiest

Protasco announced yesterday its quarterly results.

In it a RM 85 Million impairment on its messy "adventure" in Indonesia. No word about the guarantee that was given in the form of shares in a listed Indonesian company, PT Inovisi Infracom TBK.

Pages 13, 14, 15 and 16 contain details regarding the many court cases that are on going.

Today Protasco announced that its first EGM (there will be two) was twice postponed.

It can't really get much worse than that.

Was the management warned? Yes, please check this posting where lots of critical questions were asked by the reporter of BFM (the almost two years old interview is still available) to the General Managing Director.

One question from that interview and my comment:

"The deal is subject to renewal of the concession, which will expire in 2014 (again, why the hurry, why not first renew the concession?)"

Someone informed me that the reason the whole deal did not go through was that the concession was only renewed for a short period (again, this information is not revealed by the company, as so many other details).

So again, why the hurry, why did Protasco not wait for the renewal details, why did it want to close the deal so quickly and transfer RM 50 Million to the vendor (details of which are still not revealed)? And why did it (much later) even increase the potential loss further to the current RM 85 Million?

Unworthy for a Bursa listed company, if one would ask me.

Where are the regulators?

Monday, 24 November 2014

MOL Global's share price crashes 54% (2)

The nightmare of every analyst: posting a buy recommendation and immediately the share tanks due to some news.

On November 20, 2014 Deutsche came with a "Buy" recommendation for MOL Global:


And the next day already they had to come with an "Alert", although they did stick to their recommendation:



Deutsche was one of the IPO underwriters, according to SeekingAlpha.


The 40-day quiet period on underwriter analyses that began with the October 2, 2014 IPO of MOL Holdings Inc. will come to an end on November 13, allowing the firm's IPO underwriters to publish analyses of the of the company on November 14.

MOLG's share prices may see a brief rise, in response to the release of the underwriter opinions.

MOL Holdings IPO underwriters, including Citigroup Global Markets, Credit Suisse Securities, Deutsche Bank Securities, UBS Investment Bank and CIMB Securities, will seek to capitalize on the stock's recent growth through the release of positive reports beginning with the conclusion of the quiet period.


An insider informed me that the above research might have been outsourced by Deutsche to a third party research provider.

Valuation-wise, we can see from the above Deutsche link that at USD 8.86 the company was trading at an expected PE of 86 times. That has come down of course since the share price crashed.

But that would also imply that the company IPO-ed on a forward valuation of 121 times. That is if the company indeed makes a net profit of RM 21.2 Million, as forecasted.

The profit in 2013 was RM 12.2 Million, meaning that the IPO price on the realized profit was a whopping PE of more than 200 times. A sky-high valuation in which everything has to go perfect.

Good articles by "Serious Investing" on MOL Global, here and here.

I wrote before about Mark Chang (here and here), founder of Jobstreet. Mark is linked to MOL Global since he had agreed to be on the board of MOL Global.

For more information what MOL Global is doing, here is a presentation.