I am a former employee of Muhibbah Engineering (M) Bhd (12737-K). During my tenure in the company, I discovered that the company submitted fraudulent invoices to multiple banks, among its 13 panel banks, for its Bankers Acceptance, BA, applications.
Evidenced in its 2020 annual report, total proceeds from BA's drawdown (bills payable's), 2020: RM1.2B & 2019: RM1.7B, of the company in both years are greater than corresponding years' revenue and cost of sales, 2020: RM0.7B & 2019: RM1.0B, exceeding by RM1.2 billion. As the notion of BA is financing trade transactions, that financed amount during the year is significantly greater than total trade transactions (both sales & purchases) amount warrants serious scrutiny into this matter.
I understand that overlapping might not have occurred in purchase BA applications, because bank disbursements are made directly to suppliers. But, fraudulent invoices are often requested by the company's account department, with my involvement in getting vendors’ cooperation in doctoring billed items of invoices to match banks’ requirement: material in nature. Moreover, most, if not all, invoices date is manually typed or stamped by the department on the same day of application. Confronted by vendors, the company's management responded that those practises are not illegal and reasoned on a flawed logic that the parent company's bank facility is utilised by a fully owned subsidiary. However, deliberately submitting an fraudulent invoice for trade financing, whose stated information is not accounted for in the borrower's book and used by the bank as basis for lending approval, is utterly wrong.
Stakes are even greater in sales BA applications, in which individual bank lacks visibility into another bank's BA applications of which the company applied simultaneously with fraudulent or genuine invoices, the banks ought to preempt further compounding of such overlapping, fraudulent lending. I have informal inside its account department telling me the incidents of overlapping sales BA applications. Requesting the company's auditor to provide segregated BA proceeds from drawdown, into sales and purchases, is the most straightforward way to discover that total amount of sales BA application by the company is higher than its group external revenue, excluding FFB's, confirming overlapping submissions while assuming that logic of its management is plausible.
To compensate on financial loss, Muhibbah's shareholders are advised to contact minority shareholder watchgroup at https://www.mswg.org.my/ to file a case lawsuits against its directors who are liable under law for fraudulent conducts.
I have some working experience in banking facilities and as a long term shareholders of Muhibbah, perhaps I could share some of my knowledge on BA with Nur.
Many bankers do approve holding company’s banking facilities could be utilised by their subsidiaries for ease of administration. Therefore, the holding Co ‘s BA can fund the whole group working capital requirement.
Based on audited accounts, you could work out that there is no overdrawn of BA as the year end outstanding BA @RM600 m is well within the working capital requirement of the group. Take note that there is actually net repayment of BA in year 2020, as whole year repayment of BA was more than total amount drawdown.
For BA financing purpose, documents are required to substantiate and describe the nature of the trade transactions in format required by bankers, which could varies from bank to bank. It is also compulsory for all bankers to confirm the amount of all banking facilities outstanding ( including BA ) to the Company ‘s external auditors in every annual audit . So there is strong evidence that there is no understatement of liabilities in this aspect.
As shareholders, am really appreciate and thankful to the directors and managements’ efforts to pursue BA financing as BA interest rate is lower by 1.5 % to 3 % as compared to other financing products such as revolving credits and overdrafts. Therefore, you shall realize that - in contrast to the loss as alleged by you, there is saving of many millions of interest costs to Muhibbah over the years instead .
Even BNM auditors acknowledged that it is extremely challenging for banks to verify or authenticate local trade financing via BA instrument. Kiting for cheap financing and roll over of financing is not uncommon. So long as the "music" has not stopped, everybody is happy, but the real risks is when the music stops, some bankers will be ended up without a chair (the unsecured ones). Even for BA to finance purchases and you said funds are routed to the "Suppliers", there are ways to verify but I shall keep this as my secret for now. Let us be honest, how many lenders and trade finance personnel at banks know how to "smell out fraudulent trade financing transactions? I will be pleased to offer my 2 cents worth sharing for those willing to pay.
Any traders/investors should already know Cambodia Airport concessionaire is the Crown Jewel's of Muhibah Eng. No need introduction.
Now eagerly awaiting green light from their tourism board. Shouldn't be long.
It maybe slow initially, but according to TE modelling and analysis, numbers will leap bound to 200% once enter 2022. Majority tourists are from East Asia and SEA countries where they can choose their flight carrier to travel to Cambodia but must go thru one of the 3 international airports operates by france/muhibah consortium.
Torism attractions :
1) Phnom Penh - Administrative capital 2) Siem Reap - Angkor Wat 3) Sihanoukville - casinos, night life and beachfront resorts.
Inbound tourists need to do transit if their itinerary involve all the above cities on their vacation cos land travelling a bit tough.
Cambodia has a population of 16.7m and tourism contributed to 10.5% of GDP. (Growing) 2019
Including domestic and international travel by cambodia citizens, the numbers flights registered and handled by 3 AP in total exceeded 15m in 2019.
Keys take away : 1) muhibah portion of consortium = 30% 2) In 2019, all 3 airports handled 11.6 million passengers, served 600 destinations and welcomed 53 airlines. 3) Key drivers for Cambodia’s economy and profile, the airports contributed in 2015 to 17% of the country’s total GDP. More than 1.7 million jobs, representing 20% of the country’s working population, were related to their activities.
*** cambodia government will prioritize reopening of tourism sector for it's significant contribution to its GDP.
SCA( Société Concessionaire I'Aeroport) general revenues : PSC( passenger service charge), baggages, carriers landing charge, cargo, refuelling & maintenance, rental, transportation and etc.
share price plunged from RM2.31 on Jan 21 to as low as RM1.59 on Feb 4 before settling at RM1.96 last Thursday
*** trading at rm1 now is a steal!!
Worried of competition of new airports at 2023 onwards. SCA has been granted the build-operate-transfer concession rights to manage three airports in Cambodia, namely in Phnom Penh, Sihanoukville (both on an exclusive basis) and Siem Reap (non-exclusive) until 2040.
*** for exclusive basis, can't run away from compensation, where else for Siem Reap can opt for low cost terminal. Still 2 years to go.
Concessions division : This segment contributed a pre-tax profit (before group eliminations and minority interest) of RM142.6 million (or 59%) to Muhibbah for its nine months of financial year 2019 (9MFY19).
*** almost 50m per quarter and if one see it's now endemic phase the earning stated valid once's recover. Remember tourists arrival is at uptrend 4 Cambodia.
At RM2. 35, as we tweak our profit contributions/valuation for its Cambodia airport concessions. To put things in perspective, our implied price-earnings ratio (PER) valuation of 11 times for the airport concession business (given its smaller size) appears reasonable relative to calendar year 2020 PER of 17 times for Malaysia Airports Holdings Bhd and 36 times for Airport of Thailand based on consensus earnings. — Kenanga
*** its only PER 4.7 now
The earning from SCA is growing proportionate with numbers of passengers handled.
*** thus its very save to assume Muhibah earn RM17 nett for every head counts at Cambodia. Potential income lost for Muhibah part for next 19 years.
RM17 x 11.6m x 19y = RM3, 746,800,000.00 assuming no rate height and passengers remain constant.
Besides that there is big chunk of retaining earning remains in SCA account.
MARKET ALREADY SPOKEN, it start trending UP SLOWLY WHEREBY IF ONE BUYING AT RM1, THE RISK IS 10% LOST AND UPSIDE FAIR VALUE BETWEEN 1.2(52w High) To 1.59(pre-covid price).
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....
limkokthye
6,039 posts
Posted by limkokthye > 2021-07-12 21:40 | Report Abuse
c liao ff selling liao