Saturday, 28 February 2015

SUCCESS: Q4FY14业绩检讨 (Q4FY14 Result Review)

这次的差劲业绩(EPS 0.18sen)主要原因是SEB,子公司(汽油业)所导致。




- 这些烂债就如盈利的寄生物,往往所赚的都会被蛀掉部分。
- 就如身体所所制造的血液,不能补回所流失的血。长期维持这样,体质肯定越来越差。如果没有办法改变,也许进ICU的时期,会跟股东们讨血来救命。




SUCCESS reported a bad quarter result with eps 0.18sen. This is due to its O&G subsidiary reported a huge loss.

SEB is a 65% owned subsidiary for SUCCESS and its Q42014 has reported about RM9mil loss. From the performance review, it mentioned due to cost over-run on a particular project.

SEB's revenue is 1/3 of total revenue of SUCCESS. Thus, its effect must not be ignored. O&G business still doing fine before a quick and big fall in crude oil price. Furthermore, PETRONAS has announced to cut its CAPEX and this will definitely bring bad influence to O&G business very soon.

Recently, there is question arise and seek my advice on SUCCESS. Below is my feedback which to include my view after I have done another round of further research on the company's accounting figures.

SUCCESS seems cheap and attractive, but it come with some cautions as well.
1) Receivable is increasing and the customer payment credit term is too long. Impairment on receivable is happened year by year.
- This will act like a parasite to the company and erode its profit every year.
2) Free Cash Flow is negative for almost every year. The main reason is due to high CAPEX.
- It seem like the blood generation in the body is unable to recover its bleeding. In long run, the body will getting weak. If the condition unable to recover in proper manner, there is a chance for entering in to ICU condition and it will ask blood donation from you (shareholder).

With above reasons, maybe it is why SUCCESS is offering in cheap PE valuation.
The problem may cause by the company expansion is too aggressive and cause it unable to stabilize its balance sheet yet or its is a natural of the company business.

I think big funds will only appreciate the share price if management able to rectify the problems, Else, it will only look nice in the outlook, but not inner side.

It is a challenge for company to rectify the accounting worries as mentioned above (if it really can happen). Couple with bad prospect in O&G field, and with strict fundamental selection criteria to invest, I guess it will be very difficult for the company share price to fly.

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