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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.
