May 28 2017, 09:06 PM
QUOTE(Boon3 @ May 28 2017, 08:28 PM)
ASSUMING you have do not own any stocks of OLDTOWN before but was interested cos it's a 'INVESTMENT' stock plunging big time.
And obviously, the mindset is to think that whenever there's a huge fall, there must be some sort of bargain. Sometimes the answer is yes BUT many times the answer is no. A rather IFFY strategy cos you can get it more wrong than right.
First thing first...
Now that's the BIG fall... but the thing to note is the chart below...
As we can see the stock was driven high the past couple of months, which coincided with OLDTOWN's super duper result recorded in Feb 2017.
Now if we are interested in it now, now that the latest result is said to be 'disappointing', we need to check out Feb results.... key is don't be a sucker and simply dive in chasing numbers....
Again, for me, everything is about comparing numbers....
As can see
1. OTHER GAINS.....
that boosted profits by some 5.336 million. Well the amount is significant given the total size of Oldtown's profits. Which means we need to read that note B.
And comparing it with the same quarter last year and also comparing it with the total ytd figure, it's best one not to expect these to occur regularly.
2. Purchase of trading merchandise, food , beverages and consumables
I was interested in that amount. Oldtown purchased so much less for that period.
* This is an expense item. Obviously, the lesser the expense, the more the profits! *
Now this is where I jump to the most recent report...
What is shown is rather REVEALING.
For the latest quarter, this expense item SHOT up. Remember the quarter in Feb, the purchase figure was only 3.3 million. This quarter it was 21.9 million.
There you go. Expense shot up, profits came down.
Now 2 things to consider.
Was it intentional that Oldown purchased so much lesser for their Feb Q results? Did they attempt to boost profits? If the company is guilty then..... why on earth do we want to trade/invest in this stock?
If it was not intentional then ok. Oh yeah, thngs like this could happen. Suppliers no stock, suppliers shipment problem etc etc...
Then of course, for the Feb Q report, despite the handsome quarterly profits, it was really reflected in its cash balances.... see below.
Cash was actually lower.... BUT what stuck out sorely was the massive, massive rise in TRADE RECEIVABLES....
from 63 million to 92 million in 3 months.... is bloody scary.
So there we have it..... this stock jumped from 1.90+ to 3.40+ in just 3 months. The earnings reported was impressive but when we go thru its quarterly report, was this HUGE JUMP IN OLDTOWN'S STOCK PRICE JUSTIFIABLE?
This needs to be answered before even considering an attempt to trade this stock.
Oh back to the receivables issue. In the most recent result quarterly, the company said...
The Group has provided for doubtful debts of the overdue trade receivable accounts
amounted to RM4.76 million
Huh !!!!
In Feb report, trade receivables jumped from 63 to 92 million. Now we read the company needs to provide for doubtful debts. So the profits is adjusted lower by 4.76 million.
WOW!
If we put 2 and 2 together, ie put the purchase issue and this trade receivables issue together.........
2 and 2 together And obviously, the mindset is to think that whenever there's a huge fall, there must be some sort of bargain. Sometimes the answer is yes BUT many times the answer is no. A rather IFFY strategy cos you can get it more wrong than right.
First thing first...
Now that's the BIG fall... but the thing to note is the chart below...
As we can see the stock was driven high the past couple of months, which coincided with OLDTOWN's super duper result recorded in Feb 2017.
Now if we are interested in it now, now that the latest result is said to be 'disappointing', we need to check out Feb results.... key is don't be a sucker and simply dive in chasing numbers....
Again, for me, everything is about comparing numbers....
As can see
1. OTHER GAINS.....
that boosted profits by some 5.336 million. Well the amount is significant given the total size of Oldtown's profits. Which means we need to read that note B.
And comparing it with the same quarter last year and also comparing it with the total ytd figure, it's best one not to expect these to occur regularly.
2. Purchase of trading merchandise, food , beverages and consumables
I was interested in that amount. Oldtown purchased so much less for that period.
* This is an expense item. Obviously, the lesser the expense, the more the profits! *
Now this is where I jump to the most recent report...
What is shown is rather REVEALING.
For the latest quarter, this expense item SHOT up. Remember the quarter in Feb, the purchase figure was only 3.3 million. This quarter it was 21.9 million.
There you go. Expense shot up, profits came down.
Now 2 things to consider.
Was it intentional that Oldown purchased so much lesser for their Feb Q results? Did they attempt to boost profits? If the company is guilty then..... why on earth do we want to trade/invest in this stock?
If it was not intentional then ok. Oh yeah, thngs like this could happen. Suppliers no stock, suppliers shipment problem etc etc...
Then of course, for the Feb Q report, despite the handsome quarterly profits, it was really reflected in its cash balances.... see below.
Cash was actually lower.... BUT what stuck out sorely was the massive, massive rise in TRADE RECEIVABLES....
from 63 million to 92 million in 3 months.... is bloody scary.
So there we have it..... this stock jumped from 1.90+ to 3.40+ in just 3 months. The earnings reported was impressive but when we go thru its quarterly report, was this HUGE JUMP IN OLDTOWN'S STOCK PRICE JUSTIFIABLE?
This needs to be answered before even considering an attempt to trade this stock.
Oh back to the receivables issue. In the most recent result quarterly, the company said...
The Group has provided for doubtful debts of the overdue trade receivable accounts
amounted to RM4.76 million
Huh !!!!
In Feb report, trade receivables jumped from 63 to 92 million. Now we read the company needs to provide for doubtful debts. So the profits is adjusted lower by 4.76 million.
WOW!
If we put 2 and 2 together, ie put the purchase issue and this trade receivables issue together.........
. Purchase Issue: Rising raw materials cost hence increase in trade materials? However, looks intentional
Trade receivables Issue: From the problems in their cafe chains? Franchised outlets having trouble to pay Oldtown?
Two together: Less profit
This post has been edited by Coup De Grace: May 28 2017, 09:18 PM
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