Or banks cancel their credit facility . Many banks have strict covenants that need to be adhered to such as max gearing. Once facility is cancelled all amounts due are payable immediately on demand. Their operational profit this quarter will be low it's a matter of whether they can find any more one off gains such as revaluation or disposal to fool people again
Robbin, ivory traditionally made about RM30m net profit (I would say this is their natural capacity, before Penang World City). It is only these one year plus they screwed up the P&L. A lot of people felt that they mismanaged. But I choose to give them benefit of doubt that it was expenses incurred to nurture Penang World City. If you looked at their previous quarter carefully, you will notice they already turned around operationally (about RM12m PBT, which translate into RM8m net profit), However, there were losses at JV level and associate level of about RM7m. Hence last quarter they only break even. This quarter the associate and JV losses are not there, hence they reported RM8m net profit
Don't pop the champagne yet. Based on my experience, companies at this stage usually produce erratic results, until the mother of all big profit comes into full force (in this case, their 45% in Penang World City). Then their profit will shift decisively from the current level to a totally new level. We haven't reached that stage yet, so there is risk of up and down over next one to two years.
Icon8888, well done. i like to read lot of your posts on different counter page. You are really got the point. Thanks for the good contribution. Gambadesu. :) thx
Robbin, don't read too much into the expenses. There must be a reason behind that number. Until we have concrete proof that they are mismanaging, let's give them benefit of doubt.
Not that I am siding with ivory boss. I am just being objective. The same principle applies to ALL companies I invested in
There is something very unique about ivory JV with Tropicana. Ivory is not only the developer (45%), it is also the contractor. Meaning that they not only book in their share of development profit, they also make money from construction. In this latest quarter financial notes, the company used a very unusual term to describe their contracting activities for the JV "Tropicana Ivory (the JV entity) awarded us a whopping RM400m contract".
The word "whopping" almost make me spill my coffee
Implication is that while waiting to book in property profit in phases, they can at the early stage continuously recognize construction profit, which smoothen out their earnings.
Ivory has borrowings of RM300m. Certain people feel that this could be an issue as shareholders funds is not that big, meaning gearing will be correspondingly high.
However, based on my experience, usually banks won't simply lend money to developer without ascertaining source of repayment. In other words, these loans are likely project debt (backed by cash flow from various projects) and had no recourse to holding company. I did a quick check of the annual report, there is zero debt at company level. So there is possibility that those are indeed project debts.
However, let's not rush into conclusion. Let's remain vigilant and keep an eye on this item in the future. Being objective is important
If I am not mistaken, the land cost for Penang World City is repayable over 10 years. The land in Penang Island has appreciated and will continue to be high due to scarcity of land for development. It is a RM10 Billion project
Another potential catalyst for ivory is their bid for Plaza Rakyat (abandon project next to pudu raya). That project is of course potentially very lucrative. However, I have mixed feeling, as ivory balance sheet not exactly that strong to gear up further. However, the company has indicated that they might resort to equity. So either this come in the form of rights issue (they already did one around two years ago) or private placement. Too early to ascertain what is the impact.
Every year 130m revenue. Based on 5% net margin, about RM6.5m net profit enhancement per annum.
But RM400m is only the beginning. The entire contract is RM10 billion, over eight years (not really ten years, yunnan, according to circular for previous rights issue)
dont know the exact figures woh... lack of info... (nobody covers this stock). But they have multiple projects ongoing (100% owned) and the 45% Tropicana Ivory JV. Tropicanaa released investor presentation few days ago, whcih shed some light on thr JV Co. please refer link below
according to page 40, the JV Co launched RM620m in September 2013 (at RM700 psf, if I remember corerctly) and had acheived 97% take up rate. They are launching RM122m in Q1 2014. Another RM636m by 2H 2014. By end of 2014, total launched would have been RM1.38 billion. But of course I couldnt be wishful thinking and say that the 2014 launch will have high taken up rate (I leave it to different people to make different assumption). But my guess is that properties facing the sea shouldnt be difficult to sell loh....
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....
kk123
1,964 posts
Posted by kk123 > 2014-02-22 19:10 | Report Abuse
Insolvency can be caused by poor cashflow
If many buyers cancel their unit
Then ivory will be finish