HALEX - The Story of Rice
Let me introduce. There was a company called Halex, it was listed on Bursa Malaysia since.. etc. etc. Then it aborted its gaming business plan in Cambodia. Now it has a rice story to tell..
Halex seals rice supply deal
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PETALING JAYA: Halex Holdings Bhd will be supplying imported rice to Koperasi Majlis Belia Felda Malaysia Bhd (KMBFMB) under a collaboration agreement.
In a filing with Bursa Malaysia yesterday, Halex said its wholly–owned subsidiary Halex (M) Sdn Bhd had accepted the offer from KMVFMB to procure and package rice under the food bank project launched by the Government.
According to announcement made on Nov 19, 2015, the contract worth RM184mil to supply and package 160,000 tonnes of rice for two years, could be extended for another year.
Edible, but hard to swallow
The trading business can be tricky
The trading business has its advantages. The business model requires an efficient distribution network that is cost-effective. Even the working capital requirements can be minimised if payments to suppliers can be done on long-term credit and cash received immediately upon the sale of goods.
However, margins are thin. Hence, there is no room for mistakes or there cannot be too many receivables because it would result in cash-flow problems.
In this regard, it is interesting to note that Halex Holdings Bhd has entered into a collaboration agreement with Koperasi Majlis Belia Felda Malaysia Bhd (KMBFMB) with the purpose of importing and distributing rice.
This is under the Food Bank Project launched by the Government.
According to the disclosures so far to the exchange, the rice will be sourced from neighbouring countries such as Cambodia, Vietnam, Thailand and Myanmar. Generally, the price is determined based on what Padiberas Nasional Bhd or Bernas offers to the market with a premium added to it. The premium is RM200 per tonne.
Bernas is the incumbent rice importer and distributor of the country. On the face of it, it would seem that the distribution price set by the joint venture will have a small premium compared to what Bernas offers to the market.
So right from the start, it would appear that the already-thin margins earned from distribution will come under pressure. This is unless Halex and KMBFMB can come up with a business model that ensures their distribution of rice is super efficient and more cost-effective compared to Bernas.
This cannot be discounted entirely. With digital technology in place, any company can upstage the incumbent. This is especially so in the area of distribution. We have seen how some small companies such as GD Express Carrier Bhd have taken the shine off their bigger rivals in the area of delivery of parcels.
However, it is a game for those who have the tenacity and financial means to sustain the business. It is not something that will bring a windfall to the bottom-line of Halex overnight.
Halex was going to distribute rice.. many people were excited..
Substantial Shareholders as at 31 March 2016 (Annual Report 2015)
1. Kenanga Nominees (Tempatan) Sdn Bhd Pledged Securities Account For Olive Park Development Sdn Bhd 14,559,606 (13.739%)
2. Kenanga Nominees (Tempatan) Sdn Bhd Solaris Cemerlang Sdn Bhd 12,843,493 (12.119%)
3. Citigroup Nominees (Asing) Sdn Bhd Exempt An For UBS Ag Singapore (Foreign) 6,785,596 (6.403%)
Solaris Cemerlang Sdn Bhd was the second largest shareholder in Halex..
Change in Boardroom
A change in leadership occurred and things change from there..
Type of transaction
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Description of Others
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Date of change
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|
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Disposed
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17 Aug 2016
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|
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Disposed
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21 Sep 2016
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|
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Solaris Cemerlang Sdn Bhd who was the second largest shareholder in Halex has been selling from 12,843,493 (12.119%) to 6,271,493(5.92%).
So we can conclude that the selling pressure from the disposal by a major shareholder is the reason for the falling of the price.
Let's take a further look into it's financial performance..
Financial Results
30 Aug 2016
|
31 Dec 2016
|
2
|
30 Jun 2016
|
18,593
|
-467
|
-0.44
|
02 Jun 2016
|
31 Dec 2016
|
1
|
31 Mar 2016
|
17,277
|
-616
|
-0.58
|
31 May 2016
|
31 Dec 2016
|
1
|
31 Mar 2016
|
17,277
|
-616
|
-0.58
|
29 Feb 2016
|
31 Dec 2015
|
4
|
31 Dec 2015
|
20,203
|
-3,159
|
-2.98
|
30 Nov 2015
|
31 Dec 2015
|
3
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30 Sep 2015
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22,885
|
198
|
0.19
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A bleeding Qoq after Qoq.. Losses and losses.. another factor for the falling of its share price.
What's gonna turn out in Halex?
http://landofinvestments.blogspot.my/2016/10/halex-story-of-rice.html
Mini Bull
buy
2016-10-20 22:54