THE INVESTMENT APPROACH OF CALVIN TAN
There is a 50/50 chance that Sendai might go bankrupt like LCL in Middle east (Calvin Tan Research)
calvintaneng
Publish date: Thu, 14 Sep 2017, 10:20 PM
calvintaneng
0 1,791
Hi Guys,
I have An Investment Approach I which I would like to all.
I have An Investment Approach I which I would like to all.
Dear friends & fellow investors of i3 Forum,
It is not a pleasant thing to post this. Especially to those who invested heavily into Sendai. I just want to share from experience what I had learned in life. It's up to you to make your own conclusions by this post.
Sendai was used as a stock challenge by moneykj against my stock pick of bpuri. Because Sendai price was bidded up over Rm1.00 & Bpuri remained in the doldrum does not mean that Sendai or BPuri are good or bad. The actual value of a stock can fluctuate up, down or stay sideway for an indefinite period of time.
However, its intrinsic value, its margin of safety & its future profits or losses will determine its ultimate success or failure.
Because over the short term the stock market is a voting machine. But over a longer period the Share Market will be a weighing machine. I don't want to comment on BPuri for now (although it has just secured another project today)
The Focus is on Sendai.
Will Sendai go the way of LCL Furniture? Calvin thinks there is a 50/50 chance it might.
Sendai has Huge Jobs Awarded. Majority in the Middle East & India. A Big Hardworking Work Force of 15,000 employees. High Receivables. Huge Borrowings. Cash poor. And now getting pp from Macqurie at 10% discount. All these and more show signs of debt distress like LCL once did. It was the Down Turn of Dubai Property Crash that did LCL in. Will the Crash of Crude Oil be the downfall of Sendai? Or due to its poor Cash management? Or the combination of both?
May I give a clearer picture by way of illustration. Illustrations are like windows which let in the sunlight so that we can see things clearer.
I once had a neighbour by name of Martin Jeyaraj. Martin together with his brother Thomas Jeyaraj were both very hard working car mechanics.
I used to pass by Mr Thomas house in Scientex Garden, Cheras when I lived in KL (3 decades ago). I saw lots of cars parked in his workshop. Looks like they were doing roaring business.
Every morning Martin would leave his house at 8 am for work. And only returned home after sunset at 7.30pm - more than 11 hours of work later.
On evening I met Martin and greeted him, "Wow! Martin, your brother & you must be doing very well since I saw your workshop full of cars & you also worked long hours right from early morning till dark"
To my surprise Martin replied, "The more business we get the faster we will go bankrupt!"
"What do you mean," I retorted, "The more business you get the faster you guys will go bankrupt?" scratching my head in disbelief.
Then Martin told me the True Story.
Because most of Martin's customers were relatives they could not charge high fees for the car repairs. So they only make a small profit for each car they serviced - changing piston rings or doing overhaul.
And going deeper he shared this. "When we asked for upfront payments to buy new spare parts, the relatives will tell us to pay first & they will reimburse us back when car is ready for collection".
And words got round that Martin & Thomas fees are cheap & payment can "hutang" many many relatives sent their cars for repair. So their yards are literally overflowing with cars. Business looked so good. To outsiders only. But the real story is another matter.
"And after we completed the job we asked for payments they will ask for time because they only get their salary at the end of the month" "And as relatives we should trust them to pay up". So we allowed them to take the cars with hutang. We have only "paper profits".
At month end when we approach them for payments they started to evade us. In 1988 Hand Phone cost Rm12,000. So only fixed lines. Calls received by their children told us their parents weren't home yet. It was a cat and mouse evasive game. And going there many times they finally got hold of some.
And this is what they got. For Jobs done Rm500 they managed to collect only Rm50 a time. So they have to go a chasing for 10 times to get paid. And many failed to honour their words. Soon receivables (iou) turned into bad debts (And relatives turned into "enemies"?
And while their savings were depleted the workers Martin & Thomas employed still need to be paid their daily wages of Rm10 each. And in no time all Cash Dried Up!
Then Martin & Thomas closed shop for good
Ha! I finally understood Martin's woeful words, "THE MORE BUSINESS WE GET THE FASTER WE WILL GO BANKRUPT"
What is the corelation between Sendai & Martin?
1988 was still a tough year as Malaysia just emerged from the Recession of Rubber & Tin Crash (1985 to 1987)
Now Middle East is still impacted by falling Crude Oil Prices. No Cash. So "Hutang" first.
Martin has used up his Savings for upfront payments of spareparts. Pay his daily waged workers. Sendai must pay for high priced steel (now going even higher) & 15,000 workers' salaries monthly.
Martin wasted lots of time chasing for payments. Sendai waiting for payments till neck also long like Giraffe . One whole year to collect receivables.
Remember, it was receivables turned bad debts that done in LCL
See
LCL Corp Bhd May Fall On Withdrawal Of Bank Facilities
LCL Corp Bhd, a Malaysian interior design company, may fall to psychological 20 sen vs yesterday’s close at 23 sen (+53.3%), in knee-jerk reaction to statement to Bursa from troubled interior fit-out firm that lender Royal Bank of Scotland issued notice withdrawing facilities totalling MYR40.2 million to unit LCL Furniture.
LCL Corp Bhd was severely affected by the financial turmoil in Dubai and plunging property prices had resulted in delay and non-payment of its receivables.
Due to high exposure to Dubai property market, LCL Corp Bhd’s stock price had fallen more than 55% since early November; in December, company says "severely" affected by Dubai turmoil, defaulted on MYR72 million of loans from Affin Bank and Bank Islam. Net debt as at Sept 30 stood at RM376 million with net gearing at 4.7 times.
Read more on Dubai debt crisis at Dubai World Crisis Brings Down the World
LCL Furniture has been in the spotlight after it received a public reprimand from Bursa Malaysia for delaying its submission of financial statements. It had breached listing requirements for failing to submit the company’s annual audited accounts for the financial year ended December 31, 2008 on or before April 30, 2009.
LCL Furniture also has offered so much potential two to three years back but its operations and balance sheet were hit hard after working conditions in Dubai deteriorated rapidly in the aftermath of the 4Q08 property crash.
Beside LCL Furniture, other main contractors in Dubai, including the Korean and Japanese contractors also become a Victim and hit by the Dubai debt crisis.
Given the financial developments in Dubai, analysts don’t think it will be able to recover its debt payments anytime soon.
Dubai on Monday officially inaugurated the centerpiece of its decade-long construction boom, with the surprise revelation that the world-beating 168-story skyscraper in a glitzy ceremony
‘
The tallest building in the world Burj Dubai 2010, celebration opening ceremony biggest
.
.
LCL Corp notified over plans to cancel loan to unit
.
Debt-ridden LCL Corp Bhd (7177), whose share price shot up by 53 per cent yesterday, said it received notice from The Royal Bank of Scotland Bhd (RBS) over plans to withdraw and cancel loan facilities that were granted to its unit.
LCL told the stock exchange after the market closed yesterday that its unit LCL Furniture Sdn Bhd, which is under receivership, had received the notice last Thursday as it was in arrears of RM40.2 million.
The notice came from Messrs Skrine & Co on behalf of RBS. About RM19.5 million of the arrears were guarantee/bond facilities, while the rest was an overdraft facility.
Besides RBS, LCL Furniture also owes Affin Bank Bhd and Bank Islam Malaysia Bhd, bringing its total arrears as at the end of last year to RM112.2 million.
LCL, which last month slipped into Practice Note 17 (PN17) status, denoting its financially troubled position, also announced late yesterday that its board of directors was considering and formulating a plan to regularise its financial condition.
It said it has another 11 months to submit such a plan to the authorities for approval.
Prior to the two announcements, the stock soared by 8 sen to 23 sen on speculation that it might have made headway in its regularisation plan. It was the fifth most actively traded counter.
Dealers said the interest in LCL also came about after a run-up in another PN17 firm, Ho Hup Construction Co Bhd.
Ho Hup jumped 58 per cent to RM1.40 after its shareholders approved two land sales and on talk that it would start a big property project.
Other PN17 firm, such as Talam Corp Bhd (up 10 per cent) and Oilcorp Bhd, (up 26 per cent) were also among the top 20 most actively traded stocks yesterday.
Analysts believe it will take time for LCL to make progress with its debt restructuring or to find a white knight to come in.
Managing director and founder Datuk Low Chin Meng, when contacted, said he did not know the reason for the spike in share price.
He also denied market talk that he might have bought back shares in the company yesterday. "No such thing," he told Business Times.
Low had last year sold off all his shareholdings to help pay off the company’s debts. CIMB Islamic Bank Bhd also force-sold 16 million of his shares that had been pledged as security against financing.
LCL Furniture, a victim of the Dubai debt crisis, had defaulted on payments on its credit facilities after a plunge in property prices there resulted in non-payment by clients.
from:btimes.com.my/Current_News/BTIMES/articles/nolow/Article/index_html
LCL boss: I sold 28m shares to help firm repay bank loan
.
LCL Corp Bhd’s (7177) chairman Datuk Low Chin Meng progressively sold some 28 milion shares a month before major subsidiary, LCL Furniture Sdn Bhd, defaulted in its payment of credit facilities.
"I had instructed for the shares to be sold to help the company pay its loan facilities," Low told Business Times when contacted yesterday.
The move however, did not help steer the group away from defaulting on its loans. The group is now in PN17 status.
LCL Furniture is currently under receivership.
Low raised some RM16 million in the open market through the disposals.
While he has no plans of leaving the group, he would be compelled to adhere to the wishes of shareholders and board members, if they want him to leave. There have been no calls for him to do so yet.
With his own disposals and CIMB Islamic Bank Bhd force-selling 16 million shares belonging to him last Monday, Low no longer owns shares in the interior fit-out company he co-founded 24 years ago.
"Our company still has cash flow, its a little stream that helps us to go about with our job, it’s not a cascading waterfall, which is what the banks want," LCL Corp chief executive officer Paul Lim Pang Kiam said after the group’s extraordinary general meeting (EGM) in Selangor yesterday.
The EGM was convened to approve a change in auditors for the group to Messrs UHY Diong, with the resignation of Messrs Ernst & Young. The resolution was approved in the meeting, which lasted about 20 minutes.
The company is currently engaging all its lenders and creditors proactively to seek an amicable solution and a way out to resolve the critical issues, which includes a global debt- restructuring scheme.
Lim said despite the board’s best efforts of proactively coming up with a debt-restructuring scheme and explaining the situation to their creditors, they could not stop LCL Furniture from going under receivership.
"By pulling the plug, first and foremost, our reputation has been affected. This has set us back and we may have to start from (ground) zero," he said.
The board of directors of LCL group is currently working with the receivers and managers to resuscitate the company.
"We are currently also actively engaging our Dubai clients (on getting payments back on track)," Lim said.
Jobs in Dubai make up about 80 to 90 per cent of LCL Corp’s revenue.
from:btimes.com.my/Current_News/BTIMES/articles/lcl17/Article/
LCL listed as PN17-status firm
.
LCL Corp Bhd (7177), the interior fit-out specialist that defaulted on loans as a result of the Dubai debt crisis, has sunk into Practice Note 17 (PN17) status.
"LCL is considered a PN17 company… as the company is unable to provide a solvency declaration to Bursa Securities," it said in a filing with the stock exchange yesterday.
The company said its board of directors would come up with a plan to improve its financial condition. The debt-ridden company has a year from now to submit the plan to regulators.
LCL has so far defaulted on RM69.4 million worth of loans due to Affin Bank Bhd and RM2.6 million to Bank Islam Malaysia Bhd, as it faces difficulty collecting payments for big jobs it had done in Dubai.
Given the financial developments in Dubai, there is "heightened uncertainty" as to the extent of the debts it can recover from the Dubai segment, it said. Analysts don’t think it will be able to recover its payments anytime soon.
"The company may face financing and legal challenges in the near term, including but not limited to, legal proceedings initiated by lenders and trade creditors," LCL said.
The stock was at its most active ever yesterday after CIMB Islamic Bank Bhd force sold 16 million shares belonging to LCL’s managing director, Datuk Low Chin Meng.
The shares, which represented his remaining 11.2 per cent stake in the company, had been pledged by Low as security against financing.
LCL’s shares rose 8.7 percent to 25 sen on some 41.8 million shares. Two market days earlier, they fallen to a record low of 22 sen.
There was more bad news for LCL yesterday as Bursa Securities publicly reprimanded it for not submitting last year’s annual audited accounts on time.
An analyst from a local brokerge said LCL’s way out of this financial mess is to get the commitment of banks to lend it more money so that it can undertake new projects that will enable it to pay off debts.
LCL plans to continue operating in Dubai, focusing mainly on debt collection.
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Discussions
2 people like this. Showing 27 of 27 comments
without even reading this crap I know there's a 100/0 chance Tan Eng will sing and dance with his untraceable records..
2017-09-14 22:59
nichOlas?
Sounds like
Rich to no rich?
So
nich?
O = kosong?
las = last?
What confusing name is this?
Better change ID to
RichGotFirst lah!
Now let just sell Sendai on rebound & go buy some Palm Oil Stocks to recover from your losses, Ok?
2017-09-14 23:24
Wish you not get ban from i3 forum. Your article is reported to i3 admin. Good Luck.
2017-09-14 23:30
Wish the kind hearted Calvin bad stuff?
See how Calvin warned IFCA sorchai not to chase IFCA over Rm1.00 to Rm1.87
There are over 48,000 comments in IFCA Forum
See
https://klse.i3investor.com/servlets/stk/0023.jsp
While kindhearted Calvin tried to warn them they stopped their ears from listening & plunge headlong into IFCA in total abandonment
Later IFCA crashed 3 times limit down
From
Rm1.87
to
25 sen
And 90% of them fools disappeared from IFCA for forever!
BETTER WAKE UP!
2017-09-14 23:36
Whoa!
Patron confirmed well paid thug here!
i3 forum now infested by crooks, thugs & bouncers?
Don't worry. Almighty God will send His Mighty Angel to protect the just
2017-09-14 23:55
@patron,
got traceable record now.
tun @calvintaneng has bet with me that jcy can go above 70sen within a yr.
u can use this as the first record.
2017-09-15 00:27
I know someone who works in Eversendai. He said the profit margin of their projects is only single digit. I can imagine if any unforeseen incidents happened, all their profit might be wiped off.
2017-09-15 02:20
Calvin speaks his mind & w facts.
He should not fear mid-night knock at the door.
Buy or No buy or Stay decision is yours.
Thanks Calvin.
2017-09-15 04:34
Attention grabbing heading by Calvin.
If he aims to highlight the difficulties faced by Eversendai, he has a point.
But to say that it is at risk of bankruptcy, I don't think so.
However, the management has a lot of work to do to get the ship upright.
2017-09-15 08:07
Correctloh...it is no wonder...sendai need to raise monies, thru private placement, to payoff debts, bcos they cannot or unable to collect from receivable loh...!!
If after 1 yr the trade debtors, still don want to pay u, do u think they will pay u meh ??
KYY is a big dreamer, pls don waste time with this type of company loh..!!
2017-09-15 20:10
@3iii,
u make more sense with ur simple presentation than tun @calvintaneng with his wall of words.
the alarm bell for this company will be at the high st borrowings and ar.
2017-09-15 20:26
Posted by Ricky Yeo > Apr 5, 2018 08:47 AM | Report Abuse
If you manage to read most of KYY articles on HY you will know facts and figures don't tell a shit. Fact and figures doesn't speak, it has to be presented by the person in the way that align with his own interest.
Half a year ago, when HY was roaring, KYY and many others will present you with positive facts i.e high crack spread, low P/E, high growth, earnings growing, and even comparing it to Nestle to emphasis the case.
Half a year later, with HY in a dramatically 'opposite' situation, KYY present you with the facts that earnings this year will not be as good, no growth prospect, low P/E is the past not future etc. So much for the facts that change in 6 months.
Get this. The facts (objective truth) rarely change in the span of 6 months. It is how the person choose to sing the tune. All of these facts are correct, there is no contradiction, future is inherently uncertain, it is just a matter which facts get presented. What has changed is the subjective confidence, not the objective truth. 6 months ago, everyone is hyped up by the share price, hence rosy stories are the way to justify it (human seek certainty). Today, it's the opposite. People sing different tune base on the movement of the share price. Therefore, breaking the rule: When calculating value to challenge the stock price, beware of using price in the calculation (by Stephen Penman). Share price can be a source of influence or a source of information. It has been a source of influence back then as it is right now.
Has the fundamental changed in 6 months? Perhaps, but I would say barely. But the sentiment certainly does, in 180 degrees. This goes back to something I stress about - you can have the all the facts and figures at the back of your hand, but it won't matter if you can't use what's between your ears. Learn how to think well will help you filter out many useless things and focus on what really matters.
UNCLE KYY IS EXPERT
WHEN HE WANTS HENGYUAN (HANG JOHN LU) UP HE WRITES GOOD STUFF. ALL GREEDY SORCHAI CHASED HIGH HIGH!!
AFTER UP AND MADE A KILLING ON HENGYUAN (John Lu hanged) HE THEN WRITES BAD STUFF. ALL GREEDY SORCHAI TRAPPED!!!
SAME APPLIES TO JAYATIASA. WHEN JTIASA WAS RM2.60 - SING ITS PRAISE
AFTER SELLING TO GREEDY SORCHAI & JTIASA CRASHED 60%? NO MORE PRAISE BUT WRITE BAD STUFF ON JTIASA. ALL DIE IN JTIASA KAW KAW
SO LISTEN! LISTEN! LISTEN!!!
UNCLE KYY COMMANDS FEAR & RESPECT LIKE ROBINHOOD OF OLD WHO ROB THE RICH TO HELP THE POOR!) . HE IS OUR HERO ROBBER KOON (ROB ALL GREEDY SORCHAI IN JAKS & SENDAI & HELP POOR POOR STUDENTS!!!)
WELL DONE UNCLE KYY!!!
LONG LIVE UNCLE KYY
SORCHAI DIE!!!
2018-04-05 09:01
After SENDAI NEXT COULD BE YINSON
IF ANYONE GOT YINSON SHARES PLEASE SELL QUICKLY NOW!!
2020-03-31 13:15
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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....
John Lu
LOL...your IC will reveal by Mr KYY soon. Haha...sochai
2017-09-14 22:26