As at 31/12/2014, Keck Seng possessed RM 370 million worth of Sing dollars and another RM 260 million worth of US dollars ( 2014 annual report). 1 US$ was worth RM 3.50 and 1 Sing dollar was worth RM 2.64 then. That means Keck Seng was in possession of Sing $ 140 million and US $ 74.3 million on 31/12/2014. As at 31/12/2015, 1 US $ was worth RM 4.29 and hence the exchange gain was 74.3 x 0.79 or RM 58.7 million. As at 31/12/2015, 1 Sing $ was worth RM 3.04. The exchange gain on Sing $ 140 million was 140 x 0.40 or RM 56 million making a total foreign exchange gain of RM 114.7 million for the year, not RM 68.66 million. The foreign exchange loss for the final quarter couldn't be RM 54.69 million. From end Sept to end Dec 2015, US $ dropped by RM 0.11 and Sing$ dropped by RM 0.04. Total foreign exchange loss was thus 74.3 x 0.11 + 114.7 x 0.04 or only under RM 13 million for the quarter. My calculations were based on the assumption that Keck Seng's holdings of US and Sing currencies remained the same throughout the year.
I think there is basically nothing that has gone wrong with the company. The management should have included the impairment of quoted investment in the previous quarterly reports instead of only including it in the final quarter. That made the impairment seem huge for this quarter.The stock market has dropped by over 10% in 2015.
I think the company used US 1 = RM 4 and Sing $ 1 = RM 2.85 at the year end to calculate the company's foreign exchange gain for the year. May be they were being conservative.
Too conservative and smart company, just dont want their profit this year to be so much higher than last year , so as the shareholders wont ask for anything !
The company didn't actually lose any money in the final quarter. Its foreign exchange loss has been overstated by RM 41 million and its share impairment by another RM 40 million ( assuming impairment is spread out equally over 4 quarters). The company actually made a profit of almost RM 30 million during the final quarter.
Keck Seng is a very consevative company. controlled by the Ho family members. Forex impairment means their Accountants used certain forex exchange rate to ascertain the differences. Keck Seng seldoms reward their minority shareholders even during the boom times.
"To my understanding, any impairment losses is not time-based. You can't 'spread it out equally over 4 quarters. If you can spread it over 4 qtr, why can't anybody spread over 8 qtr?"
The company suffered impairment due to falls in the shares it has invested. The drop in share price didn't occur entirely during the final quarter but throughout the whole of 2015. Isn't it logical to include the impairment losses in all its quarterly reports? Since the company didn't do this in the first 3 quarters, I just assumed that the impairment during the final quarter was equal to 1/4 the impairment for the whole year, a fair assumption. Why spread over 8 quarters?
tt101, I am afraid you are mistaken. As at 31/12/2014,Keck Seng had RM 15.565 million in Canadian dollars; RM 370.450 million in Sing dollars and RM 259.581 million in US dollars, making a total of RM 645.596 million held in foreign currencies.
USD worth RM 333,737,000.00, not USD 333,737,000.00 and you still have to deduct US currency forwards amounting to RM 93.653 million. Imagine if Keck Seng has USD 333.737 million and Sing$ 370 million, how much do you think its cash would be in RM?
"What is a 'Currency Forward' A binding contract in the foreign exchange market that locks in the exchange rate for the purchase or sale of a currency on a future date. A currency forward is essentially a hedging tool that does not involve any upfront payment. The other major benefit of a currency forward is that it can be tailored to a particular amount and delivery period, unlike standardized currency futures. Currency forward settlement can either be on a cash or a delivery basis, provided that the option is mutually acceptable and has been specified beforehand in the contract. Currency forwards are over-the-counter (OTC) instruments, as they do not trade on a centralized exchange. Also known as an “outright forward.”"
that is the word. we should not subtract the currency forward to obtain the cash in bank balance. That figure is to let you get the info of net US Forex exposure risk. The USD deposit fund equivalent to RM333,737,000.00 is able to pay off the RM278,896,000.00 long term loan and it could save some interest.
However, to accumulate such a huge cash is not an easy job. It is a well conduct of account. The only thing is not optimize the fund, otherwise more benefit will realized.
Just a discussion, not other means. Thank you for prudentinvestor sharing too.
CKWan11d The first three quarters appeared rosy because Ringgit was steadily losing ground against the US and Sing dollars and Keck Seng has plenty of these currencies. For the first 9 months of the year, the reported foreign exchange gain was already RM 123.36 million, third quarter gain alone was a staggering RM 102 million. The final quarter saw Ringgit gaining some ground and the company incurred a foreign exchange loss of around RM 13 million but the foreign exchange loss for the final quarter was stated as RM 54.7 million or an overstatement of over RM 40 million. Again the company included an impairment of quoted assets amounting to RM 56.7 million in the final quarter. No impairment of quoted assets was included in the first three quarters. Without the overstatement of these two items, the final quarter would still be very profitable.
A word of advice all investors, we should read all available information and not just limit ourselves to the summary of key financial information which could be misleading.
Please read all my earlier comments. If not because of an overstatement of RM 40 million in its foreign exchange loss in the final quarter and an impairment of quoted assets which was included only in the final quarter, Keck Seng would have made almost RM 30 million in its final quarter instead of losing RM 53 million. Correct me if I am wrong and I would be grateful.
In the first quarter of 2014, Keck Seng only made 6.54 sen a share with no foreign exchange loss or impairment of assets. Its share price was over RM 6.50. Wasn't the result bad?
It is encouraging to know so many are still full of hope that the patient Keck Seng holders will one day be rewarded.....and include me too and my hope is that the Company will not decide to go "private".. Is there any Law that will prevent them taking it private without full current revaluation of their assets rather than simply based on the historical traded prices for the last six months?
mmm...super patient i understand that meaning and has rewarded me....BUT "super long term" how long ?? there is a limit to any patience...please forget long term!! Pray hard that Keck Seng will continue to be listed and allow market forces to decide on its price depending on its performance, bonus, share split, etc....whatever.
Keck Seng's latest NTA at RM 5.95 per share, was based on 8,800 acres of plantation land near to the Pasir Gudang industrial estate at RM 5,000 per acre ( market price at least RM 400,000 per acre); menara Keck Seng and Regency tower at RM 55 million each (total market price for two at least RM 300 million) and lots of other undervalued properties/assets. If small investors keep selling Keck Seng at this level, the Directors may be tempted to privatize the company.
Dear Directors, Take good care of us. We are still with you, supporting your company wholeheartedly! Reward us if you can...... We are still waiting patiently for special divdnd, bonus and share split!!!! Prudentinvestor, cefiro22,SUPERDADDY are all faithfully behind you!!!
Keck Seng is trading at a discount of 75% to its actual NTA. I don't think you can find another counter listed on Bursa which is trading at such a huge discount.
We hope the directors don't privatize Keck Seng. Most companies won't revalue the assets they hold in a privatization exercise. Assets would only be revalued only when someone wants to buy Keck Seng.
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leslieroycarter
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Posted by leslieroycarter > 2016-02-29 18:31 | Report Abuse
Got so much reserves also lost money! What the management is doing?