(27-08-2013, 10:21 PM)mikh Wrote: [ -> ]thank you for your comments about Sino's depreciation rate. I looked up their AR 2012. Page 43 states depreciation at 15m RMB. Their notes on page page 44, 2(a) and further on page 50 states depreciation of machinery and equipment as 10 years.
I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
thanks I0nEr,
~10% depreciation for plants and machinery is what they claim. so that's about right. no, I do not think cashflow is affected. main concern is that they DO take depreciation properly into account. And at least, the "books" confirm this, as they should.
(28-08-2013, 08:16 AM)l0nEr Wrote: [ -> ] (27-08-2013, 10:21 PM)mikh Wrote: [ -> ]thank you for your comments about Sino's depreciation rate. I looked up their AR 2012. Page 43 states depreciation at 15m RMB. Their notes on page page 44, 2(a) and further on page 50 states depreciation of machinery and equipment as 10 years.
I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
http://investingsidekick.com/more-on-sino-grandness/
Now when it comes to Sino Grandness, I don’t personally believe it is a fraud as Goldman Sachs have made an investment themselves, but that doesn’t mean there hasn’t been any manipulation of accounts.
For an individual investor like myself it simply isn’t possible to confirm either way. What I do know is that the risk is real and the first rule of investing is don’t lose money. If there is manipulation going on then the listing of Garden Fresh in Hong Kong will fail and huge debt will be piled on the company – in the best case scenario. It’s not a risk I’m willing to take.
The rules and conditions(SGX) are such that it is hard for minority shareholders to address their rights if something bad happens.....if the first rule of investing is don't lose money why jump in bed with the 'devil' in the first place?
Look at Dukang.....nice numbers......positive cash inflows....fast growth company but director decide to sell out.....why not distribute cash and continue holding the company till a better valuation....like when the company slows down.....that would be a better time to sell......and why no dividend
I always joke with friends that the S-chips that I know that has truthful numbers is Full-Apex but how did the management treat the minority shareholders? What did they do when they are not able to delist the company? If you have the time you can dig out the news and read......
SGX is not going to protect you from S-chips or others.....they are too busy with making $$$.....so one got to really open their eyes(third eye also if you happen to have) in order not to LOSE MONEY.....
Look at Swing Media....been sucking money....warrants, rights, placements.......yes it is 'profitable' and giving dividends and it will be able to do so if they are able to 'suck' in more money......does it look like a pon........z.......ooops
I was reading about Next-Generation Satellite(Former Ban Joo) in The Edge.....The company put $27m in a finance company but found out they could not withdraw it.....Then they found that the significant shareholder owns the finance company and has borrowed from the finance company.....wtf SGX is doing......
Rule Number XXXX of investing.....If you respect your money, your money will respect you......
(28-08-2013, 08:16 AM)l0nEr Wrote: [ -> ] (27-08-2013, 10:21 PM)mikh Wrote: [ -> ]thank you for your comments about Sino's depreciation rate. I looked up their AR 2012. Page 43 states depreciation at 15m RMB. Their notes on page page 44, 2(a) and further on page 50 states depreciation of machinery and equipment as 10 years.
I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
depreciation doesn't really affect cashflow as the depreciation expense is always "removed" from the profit before tax as an adjustment. hope that helps
(21-10-2013, 10:14 AM)hatauh Wrote: [ -> ] (28-08-2013, 08:16 AM)l0nEr Wrote: [ -> ] (27-08-2013, 10:21 PM)mikh Wrote: [ -> ]thank you for your comments about Sino's depreciation rate. I looked up their AR 2012. Page 43 states depreciation at 15m RMB. Their notes on page page 44, 2(a) and further on page 50 states depreciation of machinery and equipment as 10 years.
I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
depreciation doesn't really affect cashflow as the depreciation expense is always "removed" from the profit before tax as an adjustment. hope that helps
Depreciation expense is a non-cash expense that is added back to net profit after tax in the computation of cashflow from operations.
BUT as it is embedded in COGS and operating expenses, depreciation affects cashflow by impacting the amount of taxes that the company needs to pay.
(21-10-2013, 10:39 AM)Aldar Wrote: [ -> ] (21-10-2013, 10:14 AM)hatauh Wrote: [ -> ] (28-08-2013, 08:16 AM)l0nEr Wrote: [ -> ] (27-08-2013, 10:21 PM)mikh Wrote: [ -> ]thank you for your comments about Sino's depreciation rate. I looked up their AR 2012. Page 43 states depreciation at 15m RMB. Their notes on page page 44, 2(a) and further on page 50 states depreciation of machinery and equipment as 10 years.
I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
depreciation doesn't really affect cashflow as the depreciation expense is always "removed" from the profit before tax as an adjustment. hope that helps
Depreciation expense is a non-cash expense that is added back to net profit after tax in the computation of cashflow from operations.
BUT as it is embedded in COGS and operating expenses, depreciation affects cashflow by impacting the amount of taxes that the company needs to pay.
I don't think it has any impact in taxes payable either. Taxable profit is different from accounting profit and depreciation is a non-deductible expense.
(21-10-2013, 12:04 PM)Clement Wrote: [ -> ] (21-10-2013, 10:39 AM)Aldar Wrote: [ -> ] (21-10-2013, 10:14 AM)hatauh Wrote: [ -> ] (28-08-2013, 08:16 AM)l0nEr Wrote: [ -> ] (27-08-2013, 10:21 PM)mikh Wrote: [ -> ]thank you for your comments about Sino's depreciation rate. I looked up their AR 2012. Page 43 states depreciation at 15m RMB. Their notes on page page 44, 2(a) and further on page 50 states depreciation of machinery and equipment as 10 years.
I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
depreciation doesn't really affect cashflow as the depreciation expense is always "removed" from the profit before tax as an adjustment. hope that helps
Depreciation expense is a non-cash expense that is added back to net profit after tax in the computation of cashflow from operations.
BUT as it is embedded in COGS and operating expenses, depreciation affects cashflow by impacting the amount of taxes that the company needs to pay.
I don't think it has any impact in taxes payable either. Taxable profit is different from accounting profit and depreciation is a non-deductible expense.
Could you please elaborate on how 'taxable profit' differs from 'accounting profit'?
I think there's some confusion between effective tax rate (computed based on net profit after tax in financial statements) and the statutory tax rate (stated by govt) but I'm not really sure of the difference between 'taxable profit' and 'accounting profit' that you have stated.
Also could you please explain in further details what you mean by depreciation being a non-deductible expense? In the income statements, depreciation can be reported as a separate operating expense or COGS line item or it could be embedded within other operating expense or COGS line items.
Thanks!
(21-10-2013, 12:28 PM)Aldar Wrote: [ -> ] (21-10-2013, 12:04 PM)Clement Wrote: [ -> ] (21-10-2013, 10:39 AM)Aldar Wrote: [ -> ] (21-10-2013, 10:14 AM)hatauh Wrote: [ -> ] (28-08-2013, 08:16 AM)l0nEr Wrote: [ -> ]I looked at note 6 of their 2012 annual report.
Did some quick computations...
For motor vehicles, they seem to be depreciating at about 5% per year (i.e. 20 years).
For plant and machinery, the huge addition in 2012 distorts the entire picture. Not sure when they added that RMB 107 million worth of PPE, so not sure how long to depreciate those new assets for (will have to dig through quarterly announcements). But prior to that, it seems as though they depreciate at slightly below 10% in 2011 (using 4,153,191 divide by 44,695,093).
in any case, i thought depreciation doesnt really affect cashflows. And you probably can just factor a quick 10% haircut to their EPS to adjust their to industry standards.
comments?
depreciation doesn't really affect cashflow as the depreciation expense is always "removed" from the profit before tax as an adjustment. hope that helps
Depreciation expense is a non-cash expense that is added back to net profit after tax in the computation of cashflow from operations.
BUT as it is embedded in COGS and operating expenses, depreciation affects cashflow by impacting the amount of taxes that the company needs to pay.
I don't think it has any impact in taxes payable either. Taxable profit is different from accounting profit and depreciation is a non-deductible expense.
Could you please elaborate on how 'taxable profit' differs from 'accounting profit'?
I think there's some confusion between effective tax rate (computed based on net profit after tax in financial statements) and the statutory tax rate (stated by govt) but I'm not really sure of the difference between 'taxable profit' and 'accounting profit' that you have stated.
Also could you please explain in further details what you mean by depreciation being a non-deductible expense? In the income statements, depreciation can be reported as a separate operating expense or COGS line item or it could be embedded within other operating expense or COGS line items.
Thanks!
Taxable profits are earnings reported to tax authorities in compliance with the relevant tax codes.
Some expenses are recognized for accounting purposes but not for tax purposes. For example, parking tickets, fines for legal violations etc.
In the case of fixed assets, for each class of fixed asset, different tax jurisdictions provide different capital allowances. Think of capital allowances as depreciation rates for tax purposes. In general, capital allowances claimed by an enterprise and the depreciation charged on it's P&L are not the same amounts.
It generally behaves something like this:
Profit before tax <--- P&L profit
Add non-deductible expenses
Add depreciation
Less Capital allowances and other tax credits
Taxable profit. <---- Reported to tax authorities in tax filings.
Taxes will then be assessed on taxable profits.