28 May 2019, Kajang, Selangor, Malaysia : Debt ridden Protasco Bhd once again draw down another RM34mil bank loan as per latest Q1'2019 financial report. The group total bank borrowing stood at RM322mil, which shows year to year (Y-to-Y) increase of RM106mil additional bank loan.

The shocking RM322mil bank borrowing added up the group's other debt, loaded a total liabilities of RM620mil as of 31 March 2019 to the company balance sheet.

Such gigantic bank borrowing resulted in RM2.9mil interest cost for the quarter, or an increase of 52% Y-to-Y comparison.

Despite taking on more and more debt, Protasco registered RM166mil revenue for the quarter, up 5.7% Y-to-Y, but only eke out a petty RM1.2mil profit after tax attributable to "Owners of the Company (Protasco shareholders)". Notably, compared to RM2.8mil profit after tax attributable to "Non-controlling Interests (Not Protasco shareholders)", the huge "SHIFT OF PROFITS" paying to "OUTSIDER" seems to get wider and wider and "someone outside" enjoy majority portion of the "profit sharing", despite putting all bank borrowing risk on Protasco Bhd. How bizarre?

The jaw dropping disparity shows as if there is serious secret profits left outside of Protasco and paid to certain related parties through transfer pricing.

Protasco Bhd once again relied solely on Maintenance Contracts with JKR, which came with very high cost yet significantly less profit margins for Protasco Bhd shareholders. The controversial PPA1M Phase2 is once again became the' "public relation tool" to camouflage the huge questionable spendings within Protasco Bhd.

Controversial newspaper Malaymail, as usual, mislead the public by quoting RM7.7mil "gross profit" (before tax and paid 2/3 to outsider), instead of the actual RM1.2mil profit attributable to "you - the Protasco shareholders". Of cause, such petty profit (of RM1.2mil out of RM166mil revenue) has to glue Dato Sri' Chong Ket Pen's name in the news article. (refers to: https://www.malaymail.com/news/money/2019/05/28/protasco-q1-net-profit-triples-on-stronger-operational-performance/1757144)

More Cash Stripping Ahead

As far as CASH is concerned, Protasco Bhd continue to take on more and more debt, and paying out more and more cash. Besides the up coming RM48.6mil cash purchase of a piece of land in Tampin from Protasco major shareholder cum Executive Director Chong Ket Pen to be voted by Chong and his nominees on 30 May 2019 EGM, Protasco Bhd also declares an outsized 0.6% dividend (despite reported a 0.25% earnings per share for the quarter). Which means investors shall expect "MORE BANK BORROWING AHEAD" to finance such lavish CASH SPENDING. 

Notably, such up coming cash stripping exercises estimated RM48.6mil (cash buy) + RM29.7mil (dividend) = RM78mil (total cash), about 75% or RM59mil would be paying to just 1 man by the name of Chong Ket Pen. 

Investors are concerned the debt ridden Protasco Bhd would be out of hand if such cash-stripping exercises continue to eke out every single cents from the public listed company, instead of use the cash to pay off the mountain of bank borrowings. The RM2.9mil quarterly "bank interest" is already annualised to RM12mil. The paid down of existing bank borrowing might just save the company RM12mil annually.

Perhaps investors shall ask Protasco board on 30 May 2019 AGM "What is the rush to take out all the cash like no tomorrow?"

[ Accounting Forensic report ]

Source: Bursa Malaysia Protasco Bhd's Quarter 1 2019 Financial Report

http://www.bursamalaysia.com/market/listed-companies/company-announcements/6173005

Quarterly rpt on consolidated results for the financial period ended 31 Mar 2019