haha geshen got hit hard from last quarter forex exchange gain. So next stock will be chinwel.

haha all expected too much from the forex exchange gain. Next stock should be chinwel

Veim82k6: gross profit will improve by abit. But the main point is realised and unrealised portion will gone in next quarter and replace by realised loss. Hence the profit will go back to square in next quarter.

Currently the share price have go up by 32percent since release of last quarter result. Imagine next quarter result come out, the profit same with last year, what is the impact to share price?

Think carefully

From huge forex gain to forex loss. What is the impact? U calculate yourself.

RainT: but the minimum wages already pass through. Hence some of the labour ( i dont know how many percent) will be forced to increase their wages to the amount that set by vietnam authorities

For your information, the cash recorded as rm4.40 as at 30 sep 2015. As per 31 dec 2015, the rate dropped to rm4.28. Hence unrealised loss on cash will incurred

YOLOOOO: Realised forex gain will become negative (All trade debtor will adjusted to the rate when they made payment which is around RM4.28)

Unrealised one will become near to zero. (Average USD for Oct to Dec 2015 and closing rate for Dec 2015 almost the same)

RainT: exactly what i mean. The unrealised forex will impact on the next quarter result which is the coming 31 Dec 2015 result.

Desa2021956: What i mean is that 9mil is translation gains which is derivatives from reserve or retained earning.

It is not real gain on Vietnam side as it should not included in calculation of earning per shares. Also, the tax authority will not consider this part of profit to calculated chargeable income. Why consider as the profit of the company?

Hence real gain from vietnam side is only RM8mil not RM18mil

Please see page 36 on the equity section. It shows that there is 9mil of forex gain and 8mil of profit for the year for NCI. Do you understand that the section?

If that one is NCI profit and loss, then what is NCI profit disclosed in page 59? RM8million.

Then what is the double entry to adjust the retained earning brought forward from foreign operation?

Credit retained earning and debit what?

People go accounting school to learn to read income statements. Not business school. Also, im talking about the facts. I dun wan to attack you.

Please remain calm.

That 17.8mil included the adjustment for the retained earning.

Example the opening balance for Chinwel for Vietnam side is USD100,000

The currency is USD1 = RM3.50 on 31 Dec 2014 which is RM350,000 x 40% = RM140,000

On 30 September, let's assume the retained earning remained the same.

The currency is USd1 = RM4.40 on 30 Sep 2015 which is RM440,000 x 40% = RM176,000

The RM36,000 differences will recorded in statement of comprehensive income in NCI.

Also, the amount included the profit generated from Vietnam side during the year.

Hence you cannot use that figure to say that the profit for 40% is RM18mil.

The real NCi profit is RM8mil not Rm18million. (pages 59 and page 27 of the annual report)

Desa20201956: From the result from last few quarter, I dont see Chinwel have any pricing power. Their profit margin remain almost the same. Hence the gain on forex did not give any impact to Chinwel.

Noby: Revenue increased did not necessary mean the profit will increased. If the revenue increased, profit remain or drop. How can you convince shareholder to buy at higher price?

Desa20201956: In the annual report right? The 18mil included the calculation for the retained earning brought forward, current year profit and others in the balance sheet. I did not necessary show how much is the profit and loss generated for the year.

See note 6. The real NCi is RM8mil not Rm18million. (pages 59 and page 27 of the annual report.

http://klse.i3investor.com/blogs/letitgo/89514.jsp

Icon8888：I agreed with your shares, comcorp. In my opinion, comcorp's profit margin will not only lasted for one quarter as most of the profit did not derivatives from realised and unrealised gain. It come from core profit

fayetan: For chinwel case, yes please excluded the forex gain. You look at the past trend. From RM3.3 to RM3.7. Does the core profit improved for Chinwel? The answer is NO.

Why the profit improved significantly for Chinwel for current quarter? Because when the payment made by client, exchange rate suddenly increase. Hence it bring more profit to the company.

The pricing method determine by Chinwel is based on certain percentage of profit margin. Hence i predicted this will be a bad quarter for Chinwel as unrealised and realised loss on forex exchange will incurred for Chinwel for the quarter 31 Dec 2015. U will be surprise on it. (Closing rate for Sep 30 :RM4.40. closing rate for Dec 31: RM4.28)

Desa20201956: I understand what you talking about. But do you understand what is unrealised and realised gain on forex?

Appreciation in ringgit does not help the factory in Vietnam earn more money. Unless it's full operation in Malaysia. Currently vietnam having increase in 12.4percent in minimum wages. Plus the profit margin did not improved for Chinwel. Unless the price goes up. But will Chinwel do this?

Last thing. Please show me the 18mil minority interest that you mention just now. Thanks

Desa: One more thing.

http://www.vietnam-briefing.com/news/vietnam-minimum-wages-increase.html/

Kindly refer to the news below. The minimum wages for Vietnam have been increased by 12.4percent during 2016. Why u still believe that the profit of Chinwel will improved?

Desa: keep in mind that the new shares of RM27mil will diluted the earning per shares for Chinwel.

Also, where is the minority interest in P&L of 18mil? Please show me. Thanks.

YOLOOOO: You know how is the figure come out?

USD net exposure : RM20.5mil
Eur net exposure : RM19.9mil
AUD net exposure : RM246.44mil
SGD met exposure : RM23,379mil

Total : RM40.758 million

MYR 10% changes (USD) : RM2.05mil
MYR 10% changes (Eur) : RM1.99mil
MYR 10% changes (AUD) : RM0.2464mil
MYR 10% changes (SGD) : RM0.2638mil

Total : RM4.0758 million

The calculation count like this.

The impact only for the Dec 2014 balance sheet figure, it does not explained the impact on revenue and cost of sales.

Alone: 你可以看得出chinwel的销量增加数量，但是利润没有增加。有什么用？股价会起吗？

Probability: I will discuss with you in the next article. I need time to find all research on it.

For your information, forex exchange gain effect differences from company to company. Some company will have huge benefit from gain on forex. Some company just a temporary gain. Best example for temporary gain is Chinwel.

Probability: If your analysis the past trend for chinwel, you will know that chinwel priced their product based on certain percentage of profit margin. This applied for certain company only. They do like that due to:

1) High competition from others competitors. If they priced their product lower, they are able to compete with others as they maintain their quantity or even increase their quantity.

2) Cost of sales denominated in USD. If most of their cost calculated in USD, how can their profit margin increased?

ckwan11d: Kindly refer to my article. I explained it already

yktay1: thank you for your understanding. Hope i bring some info to the i3vestor

Rosmahmansur: U know which company really benefit from currency gain? Best example is comcorp. Profit margin have improved and minimum amount of realised and unrealised gain

Probability: For flbhd, I will do another analysis on it. For now please focus on chinwel.

RosmahMansur: Everyone can make mistake even KYY. This thread purely for discussion. If you dont agree please stated your point.

YOLOOOO: not all, but some of the export company. What I wan to inform is that please do not consider realised and unrealised gain in the next quarter result in the calculation of profit margin. U will be surprise when this amount gone from your total profit.

We are using average currency rate in calculating the revenue and cost of sales.

Realised and unrealised gain is only one off gain. Keep in mind that the operation in vietnam, profit margin will not improved. Why? All of the labour cost, rental, electricity, machine using Vietnam Dong to calculate.

So why is the increase in 40% stake will increase the profit for chinwel?

You can do analysis over the year. Chinwel's profit margin did not increased throughout the year. It remain stable even the profit from Vietnam calculated although the currency rate improved.

lmao: This quarter result already included the 40% of stake from vietnam. But the result profit still did not come

Probability: Please read carefully my view. It not only applied to Chinwel, i also applied to alot of company such as geshen, sam, flbhd. Use your rationality to think about this.