When looking at the 2015 Annual Report (page 74) under Invest in Subsidiary, Inovatif Mewah.
The financial result is very weird:
Revenue - 47,856,000 Loss - (12,017,000)
The construction of this campus should have been completed as there was not much increase in total assets of this subsidiary, so the revenue were expected to be as the following:
1. Availability Charges 2. Maintenance Charges
In general, the availability charges are 1% or more on top of the finance charges & the maintenance charges should command more profit as minimal maintenance cost is expected for new building.
Technically to say, both incomes should bring profits to the company.
It is quite a SHOCK to me as these monthly concessional incomes should be kind of guaranteed profits, no matter how we count or calculate.
If the company cannot make profits after the construction is completed in this concession, all other 2 concessions will be very likely the same story.
Please take note that the company is making profits during the construction period via the recognisation of paper profits. (Refer to IC Int 21 on concession accounting treatment)
Like its brethren triplc crest builder etc, it owns uitm concessions, in this case three of them which have been completed stretching for a period of 20yrs
Like most of these deals, no info. on annual availability nor maintenance charges are given (man you gotta love these tongkat deals). But the balance sheet provides where others may not......
IC12 based on operating assets only, concessions would be worth rm226mil (and im assuming here all borrowings are taken up for the concessions...)
Plus cash of rm56mil = circa rm280mil value
And this excludes entirely its investment property, land, inventory and all other assets totalling a few hundred mil...
If you factor in just a fraction of those...a ballpark rm300mil market cap is conservative
Vis-a-vis menang current market cap ~ 220mil
This is how real world on-the-fly valuations are done
No not even going to quote PE using earnings thats for conman nuubs
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Aldrin Chan Wei Yin
34 posts
Posted by Aldrin Chan Wei Yin > 2015-09-10 00:33 | Report Abuse
Have to be patient. Slow counter.....for the moment.