06-08-2015, 02:49 PM
Kingwan price has now been beaten down to 25cts. Chinese property maybe a drag. But likely due to depressed KTIS share price as expectation of any special div evaporates.
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06-08-2015, 02:49 PM
06-08-2015, 11:28 PM
OK. TA did another impairment to their investment for DSC. $12mil this Q in addition to the $4.8mil from Q1. It seems like the DSC project is doing pretty badly. KWC already did a $12mil last Q. I wonder how much they need to do this round.
I expect KWC share price to face further downward pressure on Tuesday.
I expect KWC share price to face further downward pressure on Tuesday.
06-08-2015, 11:58 PM
(06-08-2015, 11:28 PM)GPD Wrote: [ -> ]OK. TA did another impairment to their investment for DSC. $12mil this Q in addition to the $4.8mil from Q1. It seems like the DSC project is doing pretty badly. KWC already did a $12mil last Q. I wonder how much they need to do this round.
I expect KWC share price to face further downward pressure on Tuesday.
hmmm apparently the news for TA impairment has already been out earlier or the market anticipated it?
Cos KWC share price has already been hit today quite badly
07-08-2015, 10:40 PM
(06-08-2015, 11:58 PM)GFG Wrote: [ -> ](06-08-2015, 11:28 PM)GPD Wrote: [ -> ]OK. TA did another impairment to their investment for DSC. $12mil this Q in addition to the $4.8mil from Q1. It seems like the DSC project is doing pretty badly. KWC already did a $12mil last Q. I wonder how much they need to do this round.
I expect KWC share price to face further downward pressure on Tuesday.
hmmm apparently the news for TA impairment has already been out earlier or the market anticipated it?
Cos KWC share price has already been hit today quite badly
TA did announced a profit guidance so perhaps market dumped in anticipation. This does not necessarily mean KWC will do likewise but chances are high.
15-08-2015, 11:49 AM
KWC handed in quite a decent Q1 results with a NP of $4.5mil. Their M&E are still in good shape (so far).
No impairment was made for their DSC project this Q.
However, they made another $8.5mil advances to associates (A2A). I am not sure how much of it are for their commitment in the DSC project. This is getting worrying as just last year alone A2A is about $15mil and their other receivables has now ballooned up to $81mil. I don't know what portion belongs to DSC as well. This is worth a whole lot more than the KTIS share value now.
Cash decreased from $11.4mil to $5.2mil with an additional $2.5mil bank loan. After payment of the FY15 final 1cts div, cash will have dropped to $1.6mil. A usual half-year interim of div of 0.5cts would cost them another $1.7mil. Depending on how well they manage their WC for Q2, KWC may take up another bank loan.
I expect the half-year interim div of 0.5cts will still be on the plate but it gets tougher each passing quarter with the DSC depleting their cash reserves and KWC relying more and more on bank loans to sustain this project with a low chance of recovering them.
No impairment was made for their DSC project this Q.
However, they made another $8.5mil advances to associates (A2A). I am not sure how much of it are for their commitment in the DSC project. This is getting worrying as just last year alone A2A is about $15mil and their other receivables has now ballooned up to $81mil. I don't know what portion belongs to DSC as well. This is worth a whole lot more than the KTIS share value now.
Cash decreased from $11.4mil to $5.2mil with an additional $2.5mil bank loan. After payment of the FY15 final 1cts div, cash will have dropped to $1.6mil. A usual half-year interim of div of 0.5cts would cost them another $1.7mil. Depending on how well they manage their WC for Q2, KWC may take up another bank loan.
I expect the half-year interim div of 0.5cts will still be on the plate but it gets tougher each passing quarter with the DSC depleting their cash reserves and KWC relying more and more on bank loans to sustain this project with a low chance of recovering them.
15-08-2015, 12:05 PM
Your primary concerns on DSC has been priced into the share price already, even if they didn't this quarter. Doesn't mean they wont in 2H (exact timing when TA amortized their losses) and that alone may derail your expectation on 0.5 cts dividend.
As to the case of loans to associates, its best to query during AGM what the funding is for. My bet is definitely not DSC as it doesn't seem to have any positive visibility in the near term.
Their core on M&E has been strong, Their drivers of KTIS has been a past thing.. KW has been prudent in expansion, until DSC turns positive. KW will not embark on the next leg up. If you are long term investor, you may want to start shopping around. Atm, other good stocks are getting cheaper.
DP
As to the case of loans to associates, its best to query during AGM what the funding is for. My bet is definitely not DSC as it doesn't seem to have any positive visibility in the near term.
Their core on M&E has been strong, Their drivers of KTIS has been a past thing.. KW has been prudent in expansion, until DSC turns positive. KW will not embark on the next leg up. If you are long term investor, you may want to start shopping around. Atm, other good stocks are getting cheaper.
DP
27-08-2015, 03:56 PM
I sold everything one month ago at an average price of 27c. I completely lost faith in this Counter. I am not taking any pride in the fact that I sold before the free fall as my average purchasing cost was close to 32c. This was one and half year ago so even with the dividends received that was a loss for me.
I am not starting any arguing with those who are still vested in this counter and sincerely wish them good luck but I want to share what I learnt from the numerous hours I spent in my researches on KWC when I was still vested in case that can help. I appreciate lots of the below has been already red flagged on this forum.
To me KWC is in a perfect storm:
(1) More than 20% of their total assets (if not more since I do not believe there is no impairment in their receivables) comes from their KTIS stake.
The good thing about this holding is that this is something KWC can easily dispose (KTIS is worth approximately 1.15 B SGD and the counter is quite liquid so this can be sold quickly without depressing KTIS stock price). So even if we know that KWC does not want to sell its stake to pay special dividends (that has never been their intentions and DMG & Partners Research has been very adventurous to project without any material basis that KWC would do so). This has been asked many times in the AG and it became clear since last year that selling a substantial part the KTIS stake was not part of their plans.
They did not sell when it was at 12.5 THB and they will likely not now that it is at 7.6 THB.
So we have to assume they will keep it for a lot longer. KTIS is surely a good company with a decent corporate governance but it is a commodity stock, so without any good prospects for now. Without going too much into the details sugar price is one of the worst performers this year and supply has been forecasted to be higher than demand at least until next year. Lastly THB has not been doing well recently and with political instability I don't see THB performing very well in the coming months. So converted in SGD this may lead to currency losses to KWC
(2) TA posted this quarter a 12M loss on their receivables (from impairments in their joint-venture in Dalian). The impairment made by TA was the consequence of an audit they decided to do on Dalian. This audit was done by an external company to ensure there was no conflict of interests. TA has a 26% stake in Dalian when KWC has a 36.6% stake in Dalian. So this is very surprising that KWC would not have to post an impairment this quarter. Usually impairments made by TA in Dalian were followed in the same quarters by the same pro rata impairments by KWC. The total impairments made by TA and KWC in Dalian are now dangerously differing and this is clearly a red flag of an aggressive accounting method if not a manipulation by KWC
(3) Their receivables have now ballooned up to 81mil SGD. This is 8.5M more just for this quarter. No breakdown is provided by KWC so we have to assume that this has been split somehow evenly between Dalian and their other projects such as their workers’ accommodation business. We can only hope that they will be more successful in their workers’ accommodation business than with Dalian but their tracking record is not very encouraging so far in their property joint-ventures. KWC is not providing any breakdown (another red flag) but from my researches I estimate that more than 50M of KWC receivables are from Dalian. I can give more details about how I reconciled this if anyone is interested but what matters here is that their Dalian project is in a terrible shape and China prospects in Dalian are surely not going to get better anytime soon so i would not be surprised if KWC had to impair at least an additional 30M SGD from their receivables in the coming months. Their gearing ratio would be much higher than now should they have made the necessary impairment on their balance sheet (by decreasing the value of their assets)
(4) Even if they decide not to make these impairments this does not mean they will get their money back so this is already reflecting poorly on their cash flow statements. Also looking at their balance sheet they have 20M SGD in bank borrowings and more than 35M SGD of payables. Their balance sheet is still manageable since they can sell their KTIS stake for 35M but this is quickly deteriorating.
This means that to remain a going concern a deeper look at their receivables will become more and more important.
They have other joint ventures such as skywoods (property development in Singapore Bukit Timah and their workers’ accommodation business venture with TA). Skywood units are selling at a slow price and with a price per square foot close to the breakeven point. This is quite possible that some of their receivables from the skywood project will be impaired. Should their dormitory business not perform well KWC could soon be under pressure with its banks
(5) Having they all of that KWC core business keeps performing well and has been a positive and stable contributor to KWC earnings and CF from operations. So even if KWC lose a lot of money with their joint ventures their core business will likely be able to save the company. However CFs generated from their core business may have to be used to recover the losses from their joint ventures instead of paying dividends to KWC shareholders
(6) I do think that KWC management is honest and know what it's doing with their core business. The red flags I can see in their accounting are probably the result of weakness of their financial and accounting teams for which they cannot be blamed too much looking at the size of the company. The biggest lesson I learnt from investing in King Wan is that it can be very dangerous for a company to venture in different businesses than their core business unless they have a superior corporate governance and management but this is very hard to expect from a small company so my advise is to invest in pure players only and look for diversifications by investing directly yourself in different industry pure players companies
<divested>
I am not starting any arguing with those who are still vested in this counter and sincerely wish them good luck but I want to share what I learnt from the numerous hours I spent in my researches on KWC when I was still vested in case that can help. I appreciate lots of the below has been already red flagged on this forum.
To me KWC is in a perfect storm:
(1) More than 20% of their total assets (if not more since I do not believe there is no impairment in their receivables) comes from their KTIS stake.
The good thing about this holding is that this is something KWC can easily dispose (KTIS is worth approximately 1.15 B SGD and the counter is quite liquid so this can be sold quickly without depressing KTIS stock price). So even if we know that KWC does not want to sell its stake to pay special dividends (that has never been their intentions and DMG & Partners Research has been very adventurous to project without any material basis that KWC would do so). This has been asked many times in the AG and it became clear since last year that selling a substantial part the KTIS stake was not part of their plans.
They did not sell when it was at 12.5 THB and they will likely not now that it is at 7.6 THB.
So we have to assume they will keep it for a lot longer. KTIS is surely a good company with a decent corporate governance but it is a commodity stock, so without any good prospects for now. Without going too much into the details sugar price is one of the worst performers this year and supply has been forecasted to be higher than demand at least until next year. Lastly THB has not been doing well recently and with political instability I don't see THB performing very well in the coming months. So converted in SGD this may lead to currency losses to KWC
(2) TA posted this quarter a 12M loss on their receivables (from impairments in their joint-venture in Dalian). The impairment made by TA was the consequence of an audit they decided to do on Dalian. This audit was done by an external company to ensure there was no conflict of interests. TA has a 26% stake in Dalian when KWC has a 36.6% stake in Dalian. So this is very surprising that KWC would not have to post an impairment this quarter. Usually impairments made by TA in Dalian were followed in the same quarters by the same pro rata impairments by KWC. The total impairments made by TA and KWC in Dalian are now dangerously differing and this is clearly a red flag of an aggressive accounting method if not a manipulation by KWC
(3) Their receivables have now ballooned up to 81mil SGD. This is 8.5M more just for this quarter. No breakdown is provided by KWC so we have to assume that this has been split somehow evenly between Dalian and their other projects such as their workers’ accommodation business. We can only hope that they will be more successful in their workers’ accommodation business than with Dalian but their tracking record is not very encouraging so far in their property joint-ventures. KWC is not providing any breakdown (another red flag) but from my researches I estimate that more than 50M of KWC receivables are from Dalian. I can give more details about how I reconciled this if anyone is interested but what matters here is that their Dalian project is in a terrible shape and China prospects in Dalian are surely not going to get better anytime soon so i would not be surprised if KWC had to impair at least an additional 30M SGD from their receivables in the coming months. Their gearing ratio would be much higher than now should they have made the necessary impairment on their balance sheet (by decreasing the value of their assets)
(4) Even if they decide not to make these impairments this does not mean they will get their money back so this is already reflecting poorly on their cash flow statements. Also looking at their balance sheet they have 20M SGD in bank borrowings and more than 35M SGD of payables. Their balance sheet is still manageable since they can sell their KTIS stake for 35M but this is quickly deteriorating.
This means that to remain a going concern a deeper look at their receivables will become more and more important.
They have other joint ventures such as skywoods (property development in Singapore Bukit Timah and their workers’ accommodation business venture with TA). Skywood units are selling at a slow price and with a price per square foot close to the breakeven point. This is quite possible that some of their receivables from the skywood project will be impaired. Should their dormitory business not perform well KWC could soon be under pressure with its banks
(5) Having they all of that KWC core business keeps performing well and has been a positive and stable contributor to KWC earnings and CF from operations. So even if KWC lose a lot of money with their joint ventures their core business will likely be able to save the company. However CFs generated from their core business may have to be used to recover the losses from their joint ventures instead of paying dividends to KWC shareholders
(6) I do think that KWC management is honest and know what it's doing with their core business. The red flags I can see in their accounting are probably the result of weakness of their financial and accounting teams for which they cannot be blamed too much looking at the size of the company. The biggest lesson I learnt from investing in King Wan is that it can be very dangerous for a company to venture in different businesses than their core business unless they have a superior corporate governance and management but this is very hard to expect from a small company so my advise is to invest in pure players only and look for diversifications by investing directly yourself in different industry pure players companies
<divested>
28-08-2015, 10:55 AM
(27-08-2015, 03:56 PM)ethys Wrote: [ -> ](2) TA posted this quarter a 12M loss on their receivables (from impairments in their joint-venture in Dalian). The impairment made by TA was the consequence of an audit they decided to do on Dalian. This audit was done by an external company to ensure there was no conflict of interests. TA has a 26% stake in Dalian when KWC has a 36.6% stake in Dalian. So this is very surprising that KWC would not have to post an impairment this quarter. Usually impairments made by TA in Dalian were followed in the same quarters by the same pro rata impairments by KWC. The total impairments made by TA and KWC in Dalian are now dangerously differing and this is clearly a red flag of an aggressive accounting method if not a manipulation by KWCHi, can you share how you derived $50m for DSC?
(3) Their receivables have now ballooned up to 81mil SGD. This is 8.5M more just for this quarter. No breakdown is provided by KWC so we have to assume that this has been split somehow evenly between Dalian and their other projects such as their workers’ accommodation business. We can only hope that they will be more successful in their workers’ accommodation business than with Dalian but their tracking record is not very encouraging so far in their property joint-ventures. KWC is not providing any breakdown (another red flag) but from my researches I estimate that more than 50M of KWC receivables are from Dalian. I can give more details about how I reconciled this if anyone is interested but what matters here is that their Dalian project is in a terrible shape and China prospects in Dalian are surely not going to get better anytime soon so i would not be surprised if KWC had to impair at least an additional 30M SGD from their receivables in the coming months. Their gearing ratio would be much higher than now should they have made the necessary impairment on their balance sheet (by decreasing the value of their assets)
KWC did a $12m impairment for DSC in Q4 FY15 but none this Q. TA made a $12m and $4.8m impairment this Q and previous Q respectively for DSC.
21-10-2015, 02:09 PM
Another profit warning from TA.
21-10-2015, 06:31 PM
(21-10-2015, 02:09 PM)GPD Wrote: [ -> ]Another profit warning from TA.
This is quite typical of a contractor... I think many in Singapore has the experience of construction companies marred in repeated losses for a number of years last seen post AFC to just before IRs were concepted during 2005.
Odd Lots Vested
GG