If you are wondering how low a counter can go, it's RM0.00!

How can you say the fundamental is very strong? For one thing, it has 2 big customers, DHL and POS Malaysia. So far DHL has agreed to extend their contract to give Transmile a chance to turn around. Now do remember, even with these 2 customers Transmile is running at a loss whether due to costs or bad management.

So to turn a company around, it has to cut pay or lay off staff to cut costs, hedge it's fuel for their planes properly, use cheaper equipment and resources, limit expenditure on everything and try to get new customers for its services. Then only it can have a chance to make a profit. Until Transmile actually announce a new customer like maybe Federal Express or UPS, I doubt it can spectacularly turn around it's company to warrant a higher share price.

The good points about Transmile;
- License to fly to several citys in China
- POS Malaysia and DHL contract
- Robert Kuok active shareholder
- ??

Bad points;
- Losing money with 2 big customers in hand
- Costs of operation expected to rise with Crude Oil Price
- Bad reputation from fraud
- Not cash rich
- No dividend expected
- This from the quarterly report ;
"Review Of Performance Of The Group And Its Principal Subsidiaries
The Group revenue of RM444.0 million for the period ended 30 September 2007 is lower compared to RM512.7 million in the corresponding period last year, mainly due to the strengthening of Ringgit against US Dollars and lower charter revenues.
Group loss before tax has increased to RM101.2 million compared to a Group loss before tax of RM38.8 million in the same period last year. The increase in loss was due to lower charter revenues, provision of bad debts and higher fuel cost."

"The directors are not aware of the current status of the investigations undertaken by the Securities Commission and other regulatory authorities, and at this juncture, are not aware of any further adjustments that may be required to be made to the financial statements,.."

I remember when the fraud was first revealed and many didn't believe it was as bad as it was.
From RM13 down to RM10, people thought was cheap they buy some to average down.
From RM10 to RM8, again people thought it was a very cheap stock with good fundamentals!
From RM8 to RM6, people are spurred to buy when they see foreign funds averaging down.
From RM6 to RM5, people thought that was the lowest it can go.
From RM5 to RM3, people thought thats the NTA value, so they think its a god buy.
From RM3 to ???

Trust me, averaging down on a problematic company is the worse decision you can make. Best is to cut loss or wait and see what the situation is. Never average down a problematic company because you are increasing your risks to an already risky venture.

This post has been edited by skiddtrader: Jan 12 2008, 01:55 PM

Yeah, my last post was not about fundamentals but the way people convince themselves that based on the lower price, they think the 'fundamentals' of the company suddenly became better. It's psychological because they want to buy something they think is good at a discount but in actual fact, although the counter became cheaper, the fundamentals are still the same. Meaning it is still not a good share to buy fundamentaly speaking.

Cheaper stock doesn't mean fundamentally better, but people tend to skew their mindset to think it is better fundamentally because it is cheaper. My last post was to show how at every price level Transmile drop to, there are people who would justify the price as a good buy although they know there was a fraud case. Even after they knew the company was making a loss and cash reserves were shrinking every quarter, they still think it is a good buy when the share price drops again. If the company wasnt making money since 2005, what reasons do they have to think the company is going to turn around in a quarter?

Transmile and related stories

Although I see that you seem new and eager to learn. I wouldn't want to spoon feed you and you shouldn't expect it as well. Google is your friend and it will go a long way if you know how to do your own research and form opinions on subject you are interested in. Link above is for the latest article on Business Times on Transmile and also some related stories on the right side of the column.

I would say pure goreng activity with some rumours being spread of privatisation. If the owners really want to take the company private and revamp it, don't you think at the current condition of Transmile, it would be more beneficial for them to get it at a cheaper price. Why would they want to offer a higher price if they can buy it at a lower price?

Remember Maxis and how Ananda Krishna bought it out at a price people thought was good, then sell back a stake at a higher price back to a Arab investor, making a bundle in the process. Owners aren't stupid and will stand to gain in any takeover offer.

If it is in the money, the broker will send you a cheque, if it is out of money nothing happens and you lose your investment.

Currently it is out of money.

Note: Your question should be posted in the stock exchange or HKCW thread, so continue from there, since it is out of topic.

This post has been edited by skiddtrader: Mar 27 2008, 09:45 AM

Did they start making profit?