Koon Yew Yin's Blog

Why Xingquan is not giving dividend? - Koon Yew Yin

Koon Yew Yin
Publish date: Fri, 14 Feb 2014, 11:18 AM
Koon Yew Yin
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An official blog in i3investor to publish sharing by Mr. Koon Yew Yin.

All materials published here are prepared by Mr. Koon Yew Yin

Koon Yew Yin

On 20th Dec 2013 Xinquan held its AGM which was the longest AGM I ever attended. All the shareholders were disappointed that the company did not give any dividend while the cash value is about Rm 1.54 per share.  Look at this report: 



 During the AGM, All the shareholders wanted to know why the company was not giving out dividend while the company had about Rm 462 million cash which is equivalent to Rm 1.54 per share.  Some even doubted if the cash was really there.

The Chairman gave a long explanation in Mandarin and one of the directors translated the speech into English. I think most of the attendees could not really understand and got more agitated.

I took the opportunity to express my view. I said that 12 of the 30 largest shareholders as shown in the annual report, were members of my family. We still owned about 30 million shares. This was my worst share investment in my life but I still have some hope in Xingquan.

I said that I was willing to keep our shares if you could give us free convertible warrants which could be sold for cash. It was like giving cash to all the shareholders.

The Chairman after consulted with the other officials said that the board would consider my proposal of issuing free warrants.

The Chairman invited me to have lunch with the whole board after the AGM. During lunch he explained that they needed to conserve the cash for the following reasons:

1.     Although they have been profitable ever since the company was listed and their cash pile was increasing every year, they needed cash to do business in China because the company, being relatively small, could not borrow money from the banks. Moreover, they also needed cash to purchase raw materials. In China buying on credit or delay payment would cost a lot more which the company wanted to avoid in order to remain competitive.

2.     While still maintaining the existing sale system, the company is embarking on a new sale strategy by opening their own shops in new shopping malls. Most of the new shopping malls want only to accept the sales of branded goods so that they can uplift their own image. The company plans to open up about 5 new shops per month and they believe this new sale strategy will improve their bottom line. Besides paying rental deposit, the cost of a new sale outlet includes refurbishment, decorations and stocking up goods for sale.   

3.     The Chairman’s family being the largest shareholders also would like to have some cash dividend but his primary duty is to make sure that the company remains competitive in China. In the process, he is protecting the interest of all the shareholders.  All he asked from all the shareholders is to be patient and understanding. He must be doing something right to be able to accumulate so much of cash profit.

4.     He also said that the board would meet and consider my proposal of issuing free warrants which would benefit all the shareholders and when the warrants were converted the company would have additional cash to expand its business.

A few days ago, the price of Xingquan shot up more than 15% in one day after the Chinese papers carries an article about its free convertible warrant issues. I was told that the board of directors will be meeting on 27th Feb and they will make the announcement on 28th Feb.

CIMB were the underwriters at Rm 1.85 for the IPO and Fund Managers have bought most of the shares at the IPO. The latest annual report shows that its NTA is Rm 2.76 while its cash value is Rm 1.54 per share.

To allay your doubt of its cash pile, one of the founder of the Auditors S J Grant Thornton is my cousin who is a Chartered Accountant. His son is now the senior partner.  

Would you buy it at the current price of about Rm 1.00?    

I am obliged to tell you that my family members own about 30 million  Xingquan shares and I am not asking to buy it and if you buy you are doing it at your own risk. 

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7 people like this. Showing 50 of 59 comments

Fat Cat Tim Buddy

a) Mr. Koon Yew Yin, holding 30 million shares which constitute slightly more than 10% of Xingquan's paid-up capital,
b) Dato Koh Kin Lip (a major shareholder of Coastal Contracts and a savvy investor)
c) Madam Lai Poh Lin (a director in IOI Corp) and
d) New York Bank of Mellon (holding 8% of Xingquan)


2014-02-14 21:47


Anyone can confirm why there is interest in XDL lately. XDL also one of China stocks all of you condemn.

2014-02-14 22:00

Steven Yong

no dividend and China starts to slow down. This company should be slowing down also. And they use expansion for excuse not to give dividend....

2014-02-14 23:01


those who dont know who Dato Koh Kin Lip is, he's a director of MAEMODE.

2014-02-14 23:07


talking so much, but at the end still talk only ! Only share price will tell the truth

2014-02-14 23:19

sense maker

A few points I would like to highlight to Mr Koon:

1) Its interest income does not reconcile with its cash pile, suggesting its cash likely being moved in and out before and after quarterly accounts closing.

2) Call warrants, free or otherwise, would be dilutive to mother shares. Mother share price would move down to the extent of the dilution, resulting in no gain no loss to the shareholders.

3) A company with RM462m cash is not small even in China. There is no excuse to sacrifice dividend. Opening own store is the way forward, yes, as entrance fee in big malls is expensive. But, it makes sense to do it incrementally and conservative to not burn too much cash on start-up costs too fast. Branding is important but if quality of its products is there, it will succeed. The fear of shareholders is they may drain away the cash on expansion capex and marketing expenses, without corresponding profit increase. If the biz is and will be under severe or cut-throat competition, it is better to close the biz and distribute all its assets back to its shareholders now.

4) Much smaller companies in China with good biz model could get bank loans in China. XQ has track record (unless its books are cooked) and big cash pile as security to get any bank loan it wants. They should use not more than half of the cash to get bank loans and the rest put in fixed deposits and give out dividend.

I am merely giving my perspective and I have spent 6 years working in commercial sector in China. I hope it helps.

2014-02-15 00:16


seems like this ex gamuda boss is desperately selling off xing quan, so many hanky panky articles, at the end just to ask u buy some of his 30 million shares.

but, this company is very fishy.

but again, who knows how the share price will go in the coming days.

the best option is, i stay sideline and invest in other more mature stock.

2014-02-15 00:24

Koon Yew Yin

If you read my article carefully, you will notice that I only made one statement which could mean that I believe the account is not cooked, but the rest of the article is merely the Chairman's explanation for not paying dividend. The only statement I made quote "One of the founders of the auditors S J Grant Thornton is my cousin, who is a chartered accountant and his son is the senior partner".

Like any serious investors, I also must made sure that the auditing company, the underwriter CIMB for the IPO and Mercury Securities Sdn. Bhd. who are recommending buy, are all trust worthy.

Can you believe the Chinese controlling shareholders could cook the books for the IPO and every year since IPO to deceive the auditors and the auditors and the few Malaysian directors could not detect?

AS I said Xinquan is my worst share investment in my life but I still have some hope. Share investment is always risky. Every smart investor has to balance the risk and reward whenever he decides to buy, sell or hold any share. In this case, I decide to hold and take the chance. In fact, I have given a large part of my holdings to my daughter and Grand Children.

Again I am not asking you to buy Xinquan and if you buy I am not responsible for your losses and I also do not want a share of profit.

2014-02-15 05:13


It's not difficult to fool the underwriter or auditors by incorporating some reasonable creative elements in the system. Everything can be nicely prepared and tally each other. What can an external auditor do if they have obtained relevant evidences from the company and the audit job is done as stated in their SOP? Keep their mouth shut is the only way. In addition, the role of the external auditor is NOT detecting fraud.

You are a super investor because you know the tricks to make money from the stock market. It is similar to a businessmen in China, they know tricks and dare to execute it.

With such a huge amount of cash in bank, how the management can justify the interest received is reasonable.

2014-02-15 10:53


If you read my article carefully, you will notice that I only made one statement which could mean that I believe the account is not cooked, but the rest of the article is merely the Chairman's explanation for not paying dividend. The only statement I made quote "One of the founders of the auditors S J Grant Thornton is my cousin, who is a chartered accountant and his son is the senior partner".

Like any serious investors, I also must made sure that the auditing company, the underwriter CIMB for the IPO and Mercury Securities Sdn. Bhd. who are recommending buy, are all trust worthy.

Can you believe the Chinese controlling shareholders could cook the books for the IPO and every year since IPO to deceive the auditors and the auditors and the few Malaysian directors could not detect?

I want to said that it can be possible..............look at Megan Media. The company making profits for 5 years above and with low PE making it attractive to investors even myself. But the problem is the $400 mil of Bond that was issued to finance purchase/expansion of plant and machinery that are not even physically existed. Only merely book entries. And the Auditors even not detected this until the share prices collapsed and the frauds uncover.

Therefore, this is a good lesson to learned not to trust companies that reporting profits but no dividends in stored for the shareholders.

Something is not right somewhere.

No amount of reputation of the Auditor's is in question here, no matter how well-known the auditing companies is concerned it all boils down to analysing the report well enough to warrant a investment in the company .

This is my own opinion after investing in a few China owned listed companies like XingGuan and CAP. CAP is still okay because their gives free warrant to mitigated my losses but XingGuan is totally unacceptable.

2014-02-15 11:10

Koon Yew Yin

Seminar at 11am on 16th Feb Sunday at Ipoh St John Ambulance hall. I have rearranged the seating, now I can offer another additional 40 seats, totalling 220 seats. Those who are interested can write to me, especially those whom I have turned down. koonyewyin@gmail.com.

2014-02-15 12:07


My Dad is a seasonal accouting veteran who have near to 40 years experience. He had told me it is no hard for him to fool the big 4's auditors! They will just send the fresh graduates who do not have much experience for auditing. The worst thing is the staff will change every year! According to him the SOP can't detect any wrong doing at all.

In this case they are so many redflags to show the company are problematic. Like warren said if you found you are digging hole, stop doing it.

2014-02-15 12:36


I agreed with you Imenwe. Anyone can do some creative accounting treatment in the books without the auditors detected it. They audit on random basis and done by the junior staffs. So how do the top senior Auditor's knows about anything except signing and signified the reports for public disclosure.

So when Konn Yew Yin said that his cousin is in the top 4 Auditing firm and also a senior partner that audited XingGuan accounts and straight acknowledged it books is correct, i feel let down by his comments as a senior person in the corporate world.

I really let down this time Mr Koon.:((((((((((

2014-02-15 12:47


I wouldn't invest in this share or any china share listed in bursa if I were u
A company which is reluctant to reward its shareholders either it has cashflow issues or maybe they don't have no real profits . Eg their receivables is cooked to make it look good..
Secondly , I know china co are very low in transparency
Even for china the growth rate is quite artificial
They build roads and ghost cities which ppl don't need , so that their GDP growth looks good
When u buy a company , u look at the product itself
How many ppl actually buy their shoes ? Vs say Nike , reebork, or Adidas ,
Then u will know if it's waste of time to buy their shares
Again : dont believe in financial advisors or analyst reports
Sometimes they were ordered to write something good

2014-02-15 13:02


You must be kidding for claiming everyone can do a creative without the detection from the auditor. Experience auditors are not easy to fool man. If an auditor has sufficient knowledge or experience in an industry, you can't bluff him easily. They are not so gullible.

2014-02-15 13:04


Some of the other con co caught other than Megan media includes
Transmile, patimas computers , etc
Prior to being discovered as fraud they operates regularly and nobody know the hanky panky unless u are inside the company
I was once inside patimas and long time ago, I saw what they did to "increase" revenue I know this company is fraudulent
I can't state the reason here as its illegal just mentioning what they did u will be shock Today it's pending delisting hahaha

2014-02-15 13:17


stock without dividen only good when one buy from below and keep moving up .. no dividend no matter how good is stock - people easily get bored and this will leave them without money to buy other stocks to counter many things as not many are lucky to buy low, sell high - 2cent kaki lima thoughts.

2014-02-15 13:20


All these high profile irregularities are involved by a team of experts from various profession with extensive knowledge and experience in an industry. It's not a normal accountant can do it alone. The team knows where the loophole. How to cover this and that....

2014-02-15 13:32

sense maker

Most common tricks used by China-based companies (not just those listed overseas) to trick banks or shareholders:

The major shareholder may set up around 10 companies to buy from the company before selling off to external customers, and another 10 companies to sell to the company after buying from external suppliers. This way, reported sales, selling price, profit, production and purchase cost, cash and banks, accounts receivable and accounts payable of the company can be controlled at ease.

The flight risk is high. Overnight, the controlling shareholder may decamp and disappear into thin air, likely in overseas and no one can track him down, much less from Malaysia. The company may be left in the lurch with just factories, equipment, loads of bank borrowing and a long line of workers waiting for their salaries.

Chinese are too poor for too long. So, they would do almost anything for money. Overtime, their ethics should improve. With religions pretty much banned in China, the process may take longer than other countries. It is important therefore for China-based companies to pay decent, consistent dividend to show they want to be shareholders-oriented. Only then would they be worth considering for equity investment. There is no other way, as I see it.

2014-02-15 13:52


I am an ordinary ppl...

With the company having 300~400 millions in cash..why the interest the company received in their book records was so small amount ?? Not even 1 million yearly??

The company did not deposits the cash in the financial firms??
They just carry their cash within their office or outlets ??

Logical thinking...pls...

Retail investors pls beware of...especially those china company.

2014-02-15 13:58


sense maker. i am fully agree. You seem know well.

2014-02-15 14:02


上週抽空去出席了星泉国际(XINQUAN)的股东大会。原以为又是个没看头的会议,不料出席的小股东却提出一些尖锐的问题,发人深省。其中一位小股东里的“大股东”,是在公司新股上市时以1.80令吉买进。聽他细说当年,至今账面上亏损高达2千萬令吉,因此不再保持沉默,今年出席股东大会,冀能讨个公道。摊开公司这幾年来的业绩,星泉其实表现很好,上市4年来每股盈利在33-44仙之间;每股资产从1.12令吉逐年提高到2.50令吉,公司净现金更增加到约8.8亿人民币,即每股约2.87人民币。许多大马子民,对中国公司手持大把现金,宛若雾里看花,不明所以,原因是如果在马来西亚。通常不只小股东会施压,大股东也希望把现金转入自己的袋子里,皆大欢喜。但中国公司呢,钱似是永远不够用,现金越增越多,却皱眉对别人说必须缩紧腰带、度过艰难,以迎向更强的未来。这在大马的行情是很难接受的。我们这里,股价80仙,却拥现金约1.50令吉,同时净资产2.50令吉,是很不可思议的,因此就产生了担心公司做假账的想法,毕竟中国公司在海外上市後,发生了许多舞弊的案件,令投资者信心大受打击。眼看公司赚大钱,现金一直增加,股价却如此不济,因此这位年长股东忍不住在今年前来要求公司派发股息。他认为公司应该在成长和回馈股东得到平衡,扩张业务之余也该派些股息安慰股东。由於现金这麼多,派个10仙也不过是用掉现金的6-7%左右,不算过份。力争上游看来他是要失望了。董事局认为公司现在处於高成长阶段,不进则退;因为要公司继续壮大,力争上游,所以现金必须保留,不然,将会被排挤下去二、三线的队伍,要追上去就难了。这个说法,在大马这现金为王的国家,当然很难接受的。执行董事再带出他的家族也是大股东(58%),如果派股息的话,最大受益人就是大股东;连大股东也可以牺牲自己的利益,小股东应该有点耐心,一起等待。所谓“一计不成,二计又生”,这位股东话锋一转,埋怨公司不只股息不派,连派个免费凭单也为之缺如,太不会取悦股东了。他即时叫董事局一定要派免费凭单,因为这不用本钱的动作将为股东增值,股东可将它变卖或当公司有价时,把股东转换为母股。这的确是时下流行的企业活动,许多小股东也非常欢迎。董事局却不甚以为然,只说会考虑。这当然引起那位股东的不满,心想:我给你这麼好的建议,怎不快快接受?逼得急了,执行董事只是指出这类动作都是要用一笔花费的;我们还没赚,银行顾问先赚了。说得也是,派凭单,老实说,市场大可算出个平均价,到头来还是除权前股价=除权後股价+凭单价,並没包赚这回事。如果说可以转换,我想,目前业绩这麼好,股价这麼烂,不如直接进场买星泉母股好了,何必画蛇添足,硬多造个凭单出来。而且,大股东手持58%,他有必要多拿58%的凭单,等待日後才换?不换的话,谁要承托大股东的卖压?自己塞高枕头想想吧。文:陈金阙 (专业财务规划师)

2014-02-15 14:08



Possible of earning peanut interest:
1. Keeping all cash in the office, outlets or factory.
2. Majority of the Debtors pay before ending of each quarter. It seems not reasonable after comparing with turnover.
3. Transfer cash outside company to do Ah Long business and bring back cash before ending of each quarter .
4. Cash balance is fabricated.

2014-02-15 14:10


This article mentioned uncle is Mr Koon.He stuck on $1.80,paper losses 20 millions.

2014-02-15 14:11


no.. cpng

They have must have warehouses full of cash...... and pray that termites dont eat all thier money. hahaha.

Seriously there is like >50 china based companies already found to be fraud and cooking the books in the last 5-8 years. Especially US listed ones where they have activist shareholder looking for fraud.

Why not another one?

Seriously Mr. koon, you should make a trip to china and see if you can locate even 10 of the 100's of stores they claim to have. 30 million is no small change, if I am in your shoes, I will have already engaged a fraud accountant to do background check.

2014-02-15 14:24


Engage some private investigators should be sufficient to reveal the facts.

2014-02-15 14:29

Fat Cat Tim Buddy

nothing to be ashamed of.. uncle, many also kena by china stocks, including me.. not to mention the stock god.. coldeye , he also kena before..

2014-02-15 14:29

Fat Cat Tim Buddy

董事局却不甚以为然,只说会考虑。这当然引起那位股东的不满,心想:我给你这麼好的建议,怎不快快接受?---- im sure at that time .. uncle already going to muntah blood, like this http://www.xfastest.com//data/attachment/forum/201209/02/173442l9w99wb906usae6e.jpg

2014-02-15 14:33


Another china co that looks fraudulent is CSL.
Same case : claim to have plenty of cash
But share price movement suggest otherwise
Plenty of cash doesn't means it will be returned to shareholders
While u are buying the shares for ur children , the directors are also there to ensure that their children get that cash
Very seldom they will return the cash especially china co
Even if they do maybe it's like 1 cents or less
Which printing the dividend statement maybe more expensive
If someone has 30 mil shares, he shld make more noise
And threaten to dispose the share totally if no dividend at all
See how the directors may panic if the share limit down

2014-02-15 15:37


Also a real good company can get their financing for business by borrowing from the banks at low interest rather than ask money from shareholder or keeping the cash
It is quite unusual for a cash rich company to be stingy on dividend
Take for example a well manage company like Amway
They give quarterly dividend as their cashflow is strong and in net cash position
They don't go around telling strange tales eg they need the money etc as the company is a cash generating machine by itself
Shld slowly cutloss on xingquan before they close down

2014-02-15 15:48

Fat Cat Tim Buddy

uncle no way out already, bought so much of it, now wanna dispose also hard, no ppl want to buy from him....

2014-02-15 15:56


pity uncle...

2014-02-15 17:03


China dolls nice to see and look.. :D
But make sure, see and look only

2014-02-15 19:45


Kalau China boleh harap..lembu pun boleh naik atas pokok..kekeke...

2014-02-15 20:27


Apart from asking the half past six mgmt to give warrants perhaps mr koon u can also ask them to do share buy back ..
Since if they really have $1.50 per share there shldnt be any excuses
Unless they don't think it's worth even $1.00 buck

2014-02-15 22:23


U have to whack the board and the mgmt hard :)

2014-02-15 22:24


D answer to d question if d major shareholder is capable of cooking d books wld b....... Has he lived thru d hardship of d old Communist era whr everybody was for himself. Tat kind of condition wld hv really hardened a man, and d worst kind of perpetrator is a victim turned perpetrator. A victim turned perpetrator is capable of anything, n he wld carry out his crime wit a vengeance n without remorse. Think Russian Mafia..... n u get d picture

On d other hand while one is claiming XQ was not big n is in fact empty... but at d same saying its banks hv colluded wit it wld beg d question.... Why did d banks want to confirm d fake cash balances wit them? Wat is in it for d banks???

2014-02-16 12:22


Tak kira market hot ke market crisis ke, kalau silap pilih saham memang ikan masin betul. Ini contoh saham yang dalam list jangan beli sama sekali. China stocks dah ramai masuk parit.

2014-02-16 16:25


Oh I baru fikir nak beli sikit tunngu 25 Feb....

2014-02-16 16:50


Oh salah sikit.. mtg 27 Feb announcement 28 Feb..

2014-02-16 16:51


started to buy in recently at rm1.00. hope it will go up further.

2014-02-16 18:54


You people have been taken for a ride.
Acknowledge it and move on with your investment lives.

2014-02-16 21:07


Post removed.Why?

2014-02-17 04:01


delaying your mistakes/wrong judgement till your next generation and beyond doesnt make it a right judgement. why pass down obscure stocks to them? dump this lousy stocks n pick up some bank stocks for your grandchildren, for you may not want them to worry on their investment. or it may b non existence then. what about a cash call or 10 lot become 1 lot? do u not cut lost on your wrong judgement? after proven it wrong for so long. the fund can b re deploy in better places. u know of opportunity cost?

2014-02-17 04:07


mr k: u no nid teach me, i eat salt more than u eat rice. when i founded abc xyz u still not borned.

mr o: ok

2014-02-17 04:11

Fat Cat Tim Buddy

uncle very rich la, that kecik meow money he no rasa lo

2014-02-17 04:14


must be la. but he is teaching ppls how to be good investor mah. so like that a good investor example meh?

2014-02-17 04:15

Fat Cat Tim Buddy

good and bad is very subjective 1.. just let him be la, u also no rugi ma.. aiya leave him alone la..

2014-02-17 04:19


ok la fatcat. he said i stupid ma. ok ok la, dont bother him anymore,

2014-02-17 04:22


Did you lose you Bentley deposit on Hohup?

2014-05-25 15:59

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