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For me the two issues I mentioned in Part VI still remains. Here is what I wrote back then. (in blue italics)
So two clear and present issues.
Remember the issue of it's the business that counts?
Well, Yi-Lai's business is struggling in the current tough business environment. The tough business environment is hurting Yi-Lai's profits. Make no doubt about it.
How concern would you be on this issue? How worried are you that Yi-Lai's earnings is hurting?
However, the balance sheet is top draw. Another rarity since we are witnessing an extremely healthy growth in the cash flow despite the tough business environment. It's highly commendable what the management is achieving during current times..
How brown cow?
Same issue for me.
Yes, I think Yilai is still managed brilliantly...
BUT....
I really believe the current ballgame has changed. It's a tough current ball game. The current YiLai ain't as good as the YiLai of the yester-years!
When will it change? How long will it last? And worse still, will the situation worsen?
How?
Here are some commentary from a RHB writeup this morning:
X 9MFY12/06 net profit came in at 78-84% of our full-year forecast and the full-year market consensus. However, we consider the results within expectations as we expect weak performance in 4Q as operating conditions continue to deteriorate.
X Competition in the domestic ceramic tiles industry continues to intensify against a backdrop of massive excess capacity and softening demand on the back of a weak property market. The rising production costs coupled with local players’ inability to penetrate the export market in a major way do not help either. Yi-Lai is not spared.
X However, the weak prospects will not impair Yi-Lai’s ability to pay out a generous gross dividend of 12sen/share per annum, translating into a gross dividend yield of 9.9%. This is because of its net cash of RM58.5m or 37sen/share as at 30 September 2006 coupled with minimal capex projected at only RM4m per annum going forward. Indicative fair value is RM1.16 based on 8x FY12/07 EPS, in line with its 1-year forward historical average PER. Maintain Market Perform.
Jeffrey wrote: Inventories+cannot be converted into profits=no profits (bottle neck)
how long can they keep / store the inventories? can sell overseas (export?)
Someone mentioned to me before that inventories in the tile industry is rather interesting and for folks like us, it's really hard to lay judgement if they do not know exactly what is happening.
Firstly, there is the quality of the inventory. What Kind of inventory are we talking about? Assuming the company integrity is intact, we have to assume that there is no defected tiles are counted as inventory... but then what about the issue of whether the tiles has gone out of fashion, for some tiles do go out of style/fashion. And when these tiles do go out of fashion, the demand or the difficulty in turning the tile into sales, into profits is indeed questionable. Hence the value or the book value of these inventory (some would just call it as dead stock) is questionable. So how would we, the investing public, know if the management is prudent in declaring the exact book value of its inventory?
Rather complex in my opinion..
Regarding 'how long they can keep/store these inventories'. This is difficult for me to answer you for I do not know precisely the exact shelf life of these tiles.
(Bursa Malaysia should start putting up the ruling for earnings warning to these listed counters.) Investors should be treated with a little more respect, then maybe ppl can have more confidence in investing.
Moolah wrote: Jeffrey wrote: Inventories+cannot be converted into profits=no profits (bottle neck)
how long can they keep / store the inventories? can sell overseas (export?)
Someone mentioned to me before that inventories in the tile industry is rather interesting and for folks like us, it's really hard to lay judgement if they do not know exactly what is happening.
Firstly, there is the quality of the inventory. What Kind of inventory are we talking about? Assuming the company integrity is intact, we have to assume that there is no defected tiles are counted as inventory... but then what about the issue of whether the tiles has gone out of fashion, for some tiles do go out of style/fashion. And when these tiles do go out of fashion, the demand or the difficulty in turning the tile into sales, into profits is indeed questionable. Hence the value or the book value of these inventory (some would just call it as dead stock) is questionable. So how would we, the investing public, know if the management is prudent in declaring the exact book value of its inventory?
Rather complex in my opinion..
Regarding 'how long they can keep/store these inventories'. This is difficult for me to answer you for I do not know precisely the exact shelf life of these tiles.
That's when they hold their annual warehouse clearance sale! Very common these days.
Jeffrey wrote: Then a write off is imminent. Oppps!
(Bursa Malaysia should start putting up the ruling for earnings warning to these listed counters.) Investors should be treated with a little more respect, then maybe ppl can have more confidence in investing.
Ooohhh... unless we really know what's happening, i would rather not lay judgement.
Jeffrey wrote: not going to speculate? mmmmmm? not typical of an Malaysian investor,.......:s18:
Eh? These kinda stuff very hard to speculate and in fact it should not be speculated cos if speculated wrongly.. it would mean that a company COULD be wrongly accused of wrong doing...
Quarterly rpt on consolidated results for the financial period ended 30/9/2006
Quarter:
3rd Quarter
Financial Year End:
31/12/2006
Report Status:
Unaudited
Submitted By:
Ms Ang Mui Kiow
Current Year Quarter
Preceding Year Corresponding Quarter
Current Year to Date
Preceding Year Corresponding Period
30/09/2006
30/09/2005
30/09/2006
30/09/2005
RM '000
RM '000
RM '000
RM '000
1
Revenue
34,945
30,785
100,649
87,686
2
Profit/Loss Before Tax
8,942
8,708
24,749
26,060
3
Profit/Loss After Tax and Minority Interest
6,723
7,207
18,034
21,206
4
Net Profit/Loss For The Period
6,723
7,207
18,034
21,206
5
Basic Earnings/Loss Per Shares (sen)
4.20
4.50
11.27
13.25
6
Dividend Per Share (sen)
5.00
7.00
5.00
7.00
As At End of Current Quarter
As At Preceding Financial Year End
7
Net Tangible Assets Per Share (RM)
1.1300
1.1100
And
5048 YILAI YI-LAI BHD
Quarterly rpt on consolidated results for the financial period ended 30/6/2006
Quarter:
2nd Quarter
Financial Year End:
31/12/2006
Report Status:
Unaudited
Submitted By:
Ms Ang Mui Kiow
Current Year Quarter
Preceding Year Corresponding Quarter
Current Year to Date
Preceding Year Corresponding Period
30/06/2006
30/06/2005
30/06/2006
30/06/2005
RM '000
RM '000
RM '000
RM '000
1
Revenue
35,092
29,148
65,704
56,900
2
Profit/Loss Before Tax
9,041
8,796
15,807
17,352
3
Profit/Loss After Tax and Minority Interest
6,375
7,164
11,311
13,998
4
Net Profit/Loss For The Period
6,375
7,164
11,311
13,998
5
Basic Earnings/Loss Per Shares (sen)
3.98
4.48
7.07
8.75
6
Dividend Per Share (sen)
0.00
0.00
0.00
0.00
As At End of Current Quarter
As At Preceding Financial Year End
7
Net Tangible Assets Per Share (RM)
1.1200
1.1100
Annual PER; 6.99 and Nett Asses per share 1.11 (from RHB Securities)
TA, (sorry the Java chart cannot be posted here - I dunno how to do it, nor not enabled)
Yilai was highest at 192 in 05 FEB and it slid down to 107 (+/-) in May 06, (In hand with contiuous declining profits) Jun 06 - Nov 06, base building around 107-110sen.
Can this be 1, the bigger picuture, Yilai is making tiles which are not popular anymore or, 2, the housing/construction market going through a soft patch?
This is where the croupier will call, ladies and gentlemen, place your bets,......
Last edited on Sat Nov 18th, 2006 22:04 by Jeffrey
