There is a new one which I am just taking notice. It is called YFG, formerly known as PJI Holdings. While I am just trying to find a trend, I could not see one except for the followings:
- revenue trend is on the increase;
- it has a changed in management and I believe in some of the people behind it to do the right things;
- it was a poorly run company, linked to a politician whose party is on the decline, hence without the political influences it was of no use to the investors at that time.
Revenue trend at the increase
Why is then the margin so low? This is for me very hard to understand. There could be more than one reasons to it. Firstly, because of the company was in trouble, it has to slowly write-off some of the bad debts, which one may not be able to notice in the accounts Or, the management themselves do not reveal. DO not ask me why this happens, but let's just say it happens. Even auditors sometimes may close one eye - the largest among them. SHIT happens, OK. This one is not shit though as the balance sheet shows that at this moment it is manageable, hence the auditors may just let it go. (This is something which I am not able to qualify by looking at the accounts for this one)
Secondly, it could be another case of building the momentum towards a better company. When an acquisition takes place, it needs time to adjust and phase off the dead woods. Hence, for the first few years, operational costs may even be higher rather than lower, as the company may just need to have 2 person to do 1 person's job as it is just waiting for the dead wood to resign.
|3rd quarter results for FYE2014|
Thirdly, it is still a poorly run company. Sometimes, although there is a will and idea, it may not be executed as plan. Look at MAS and many other companies that were rescued time and again.
YFG though, to me may not be that type as it is in a space that is seeing some growth - electrical and mechanical engineering for buildings, civil etc. Over the last few years, Malaysia is seeing lots of activities in this space due to domestic driven initiatives by the government - i.e. MRT, WCE, other rails etc. One can notice that in YFG's revenue as well and it is not stopping at now. YFG as I see it is looking for growth - as can be noticed in its MOA for the small hydro power plant in Indonesia.
And if the management manages to turnaround the company, which I am putting some bets on this, it will not be a RM70 million company, where it is trading at for the moment.