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Koon Yew Yin's Blog

Author: Koon Yew Yin   |   Latest post: Wed, 1 Apr 2020, 8:51 AM

 

Dayang: My advice for the board of directors - Koon Yew Yin

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The company’s 4 quarterly announcements for 2019 and for 2018 are as shown below.

 

 

In 2918 its annual revenue was Rm 936 million and its annual net profit for shareholders was Rm 165 million. It also reported increasing profit for each of the 4 quarters.

In 2019 its annual revenue was Rm 1,448 million and its annual net profit for shareholders was Rm 236 million. Although the company’s revenue and net profit for shareholders are better than 2018, unfortunately, it is not showing increasing profit for each of the 4 quarters. Its latest 4th quarter result announcement of reduced profit   will depress the share price because many ignorant or less informed investors will rush to sell their holdings on Monday. They do not look at the overall annual profit which is better than the previous year. 

My advice:

When an investor buys Dayang shares, he expects to earn from its dividend yield and share price increase. Since the company cannot afford to give out much dividend, the increase of share price is very important to investors. The board must try to make as much profit as possible and report gradual increasing profit for each of the 4 quarters. As we all know, the quarterly profit is not audited, the figures can be adjusted to show that the company is making increasing profit for each of the 4 quarters. For example, its 3rd quarter EPS could be reduced so that its 4th quarter EPS can be more than its 3rd quarter. If the company reported its 4th EPS better than its 3th quarter, more investors will buy instead of selling their holdings on Monday. 

The board of directors must read my previous article namely “Dayang: the importance of share price” which I have posted on i3investors.com and on my blog: koonyewyin.com. In my article, I pointed out that the company could have save some dignity if it did not request for the 6 months extension to find buyers for the placement shares. In doing so, the company gave the impression that it is very short of money to do business. When the company first made its announcement to place out not more than 10% of the total issued shares, its share price was about Rm 1.00. Now the share price has gone up about 300%, how can the board expect to find buyers?    

I trust the board of directors will consider my advice seriously and be more careful in future announcements.    

Note: I have been a co-founder of many listed companies namely Mudajaya, Gamuda, IGB, Ipmuda, MBMR and IJM Corporation Bhd.    

 

 

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