This article is for the purpose of sharing of investment
philosophy, knowledge and experience. A stock may be used as an example
to illustrate some principles but it has nothing to do with any
individuals.
There were these comments from the most active commentator in i3investor three months ago,
Comment 1
Posted by qqq3 > Sep 20, 2018 11:23 AM | Report Abuse
waiting for what?
action now turns to Sendai
market no more KYY phobia, now looking for KYY stocks....
Sendai is interesting in that last result is disappointing....but I do not know if they have accounted for sale of the lift boat.....can be a huge positive surprise in next result......
Comment 2
Posted by qqq3 > Sep 20, 2018 05:07 PM | Report Abuse
$1 coming
Comment 3
Posted by qqq3 > Sep 26, 2018 02:43 PM | Report Abuse
all below 0.8 is extrenmely cheap
“Sendai at 80 sen is damn cheap. Where are the followers of Water Buffalo? Why they so “scary cat” and not buying Sendai?” So, he shouted.
Warren Buffet only buys good stuff, not cheap stuff. Good stuff isn’t necessary cheap stuff, although sometimes cheap stuff can also be good stuff. Does a Water Buffalo like the commentator know? Obviously not.
I wrote my first article on Sendai, “Banging on Eversendai, Risk and Return” just to share my opinion more than a year ago on 12th September 2017 in the link below when it was trading at RM1.03 then,
https://klse.i3investor.com/blogs/kcchongnz/132084.jsp
Below summarise my points of view then,
So, how was your “$1.00 coming” as posted in comment 2 above?
With such a big drop of the share price to 53 sen now, is Sendai a good buy for the followers of Water Buffalo, with the release of its latest quarterly result on 29th November 2018?
It does appear so as commented by one Water Buffalo below,
Comment 4
Posted by qqq3 > Nov 29, 2018 07:41 PM | Report Abuse
actually PL and BS looks good for its price....
But is the result really that good? Let us examine it.
Sendai third quarter result ended on 30th September 2018
Sendai made a profit before tax of RM16.4m from a turnover of RM432m, or 1.7 sen per share, down by 17% from last corresponding quarter. The net profit margin is as usual, very low at 4%.
However, profit is not what we should look for in this case of Sendai. It is the cash flows. Cash flows is the lifeblood of a company, especially for Sendai at its state now. So, for true accountants, they don’t only look at Income Statement and Balance Sheet as commented but also the cash flows statement.
In the last nine months, net CFFO of Sendai is a negative of RM41m. After capital expenses, its FCF is again in the deficit to a tune of a whopping RM91m.
The cash-sucking business results in total borrowings of RM1.2billion as on 30th September 2018, a one thousand two hundred million Ringgit interest bearing debts.
What happen? With so much consistent earnings for the last few quarters, borrowings remain high?
This, any accountant would be able to find the answer from its latest balance sheet as posted in “Comment 1” above.
The contracting work for the first lift boat (not to build and sell as stated) by Sendai for its major shareholder, a related party transaction, had completed more than a year ago. In accrual accounting, all profits should have been booked. So, there won’t be any “huge positive surprise” as stated.
But it doesn’t seem that all money has been received as its trade receivables and amount owed by customers have increased by another RM120m from December 2017 to 30th September 2018.
Poor earnings, cash sucking, and debts increasing. I was very surprise there is no cash calls from the shareholders or private investors recently for the company.
Is the latest financial performance and financial position good as stated by the Water Buffalo in his comment 4 above?
The followers of Warren Buffett will not think so. I am not sure of those followers of Water Buffalo.
Is it a good time to sailing and margin on Sendai?
You make your conclusion.
For me, I think the next margin calls on Sendai are coming very soon. As it was mentioned, margin call is a vicious cycle.
I wish it won’t.
Good luck.
KC Chong
ckc14invest@gmail.com
There were these comments from the most active commentator in i3investor three months ago,
Comment 1
Posted by qqq3 > Sep 20, 2018 11:23 AM | Report Abuse
waiting for what?
action now turns to Sendai
market no more KYY phobia, now looking for KYY stocks....
Sendai is interesting in that last result is disappointing....but I do not know if they have accounted for sale of the lift boat.....can be a huge positive surprise in next result......
Comment 2
Posted by qqq3 > Sep 20, 2018 05:07 PM | Report Abuse
$1 coming
Comment 3
Posted by qqq3 > Sep 26, 2018 02:43 PM | Report Abuse
all below 0.8 is extrenmely cheap
“Sendai at 80 sen is damn cheap. Where are the followers of Water Buffalo? Why they so “scary cat” and not buying Sendai?” So, he shouted.
Warren Buffet only buys good stuff, not cheap stuff. Good stuff isn’t necessary cheap stuff, although sometimes cheap stuff can also be good stuff. Does a Water Buffalo like the commentator know? Obviously not.
I wrote my first article on Sendai, “Banging on Eversendai, Risk and Return” just to share my opinion more than a year ago on 12th September 2017 in the link below when it was trading at RM1.03 then,
https://klse.i3investor.com/blogs/kcchongnz/132084.jsp
Below summarise my points of view then,
- Sendai is in a competitive industry, a dog-eat-dog world. Not a wonderful industry to be in.
- It has huge order book but its margin is very low at less than 4%. Hence its bottom-line is not good at all.
- It made huge losses in 2016. Not a good precedent.
- Its cash flows were very poor. Even cash flows from operations (CFFO) were often negative. After capital expenses, free cash flows (FCF) were in huge deficit, almost every year.
- The above leads to precarious balance sheet with total borrowings of RM1.2 billion!
- Trade receivables were huge too at RM584m, and amount owed from contract works of RM1.05 billion. Very precarious kind of business.
So, how was your “$1.00 coming” as posted in comment 2 above?
With such a big drop of the share price to 53 sen now, is Sendai a good buy for the followers of Water Buffalo, with the release of its latest quarterly result on 29th November 2018?
It does appear so as commented by one Water Buffalo below,
Comment 4
Posted by qqq3 > Nov 29, 2018 07:41 PM | Report Abuse
actually PL and BS looks good for its price....
But is the result really that good? Let us examine it.
Sendai third quarter result ended on 30th September 2018
Sendai made a profit before tax of RM16.4m from a turnover of RM432m, or 1.7 sen per share, down by 17% from last corresponding quarter. The net profit margin is as usual, very low at 4%.
However, profit is not what we should look for in this case of Sendai. It is the cash flows. Cash flows is the lifeblood of a company, especially for Sendai at its state now. So, for true accountants, they don’t only look at Income Statement and Balance Sheet as commented but also the cash flows statement.
In the last nine months, net CFFO of Sendai is a negative of RM41m. After capital expenses, its FCF is again in the deficit to a tune of a whopping RM91m.
The cash-sucking business results in total borrowings of RM1.2billion as on 30th September 2018, a one thousand two hundred million Ringgit interest bearing debts.
What happen? With so much consistent earnings for the last few quarters, borrowings remain high?
This, any accountant would be able to find the answer from its latest balance sheet as posted in “Comment 1” above.
The contracting work for the first lift boat (not to build and sell as stated) by Sendai for its major shareholder, a related party transaction, had completed more than a year ago. In accrual accounting, all profits should have been booked. So, there won’t be any “huge positive surprise” as stated.
But it doesn’t seem that all money has been received as its trade receivables and amount owed by customers have increased by another RM120m from December 2017 to 30th September 2018.
Poor earnings, cash sucking, and debts increasing. I was very surprise there is no cash calls from the shareholders or private investors recently for the company.
The followers of Warren Buffett will not think so. I am not sure of those followers of Water Buffalo.
Is it a good time to sailing and margin on Sendai?
You make your conclusion.
For me, I think the next margin calls on Sendai are coming very soon. As it was mentioned, margin call is a vicious cycle.
I wish it won’t.
Good luck.
KC Chong
ckc14invest@gmail.com
https://klse.i3investor.com/blogs/kcchongnz/186378.jsp
