Tuesday, April 28, 2015

Misleading investors?

There are companies that provide actual true information, and be frank about things - not very many of them in Malaysia.

There are companies that do not provide much information, so much so that their Annual Reports are pretty much copy and paste from previous years. We can forgive them for not knowing about corporate responsibility and not doing the right job of informing - these probably covers the most companies in Malaysia, the number of companies under this category decreasing (improving) though.

Then there are companies that continues to mislead - time again and again - quite a few of them. One cannot just feign ignorance as some of them are pretty clever. If one knows how to mislead, they cannot claim ignorance.

Just read below and try to identify which category this company comes under.

It says here, clear market leadership position. I am wondering how does it justify that? There is www.mudah.my, does it have more adverts than mudah.my?

Read my previous article then one can probably figure out the actual intention. The announcement in September 2014 was not meant to be executed, is it true? The announcement was to tell people of their stocks value through subsidiary / associate holdings. But they can't sell as there probably has not much market to sell to. That announcement caused their shares to rise.

Just an example iProperty.com, see below 5 years performance. Even the one year, it made profit in 2013 was due to an accounting entry. (Ironically the profit was mainly due to its sale of iCar, which it claimed accounting profits)

Will iCar experience the same trend as iProperty? That is a very high chance, given the competition and poor ability to charge in this business. Maybe even worse as developers have money to spend, by advertising with iProperty. Second hand car dealers are poorer. For the second hand car market, most - if not almost all adverts are free. That's the problem.

5 years of performance of iProperty
Again if you look above, do you see any thing that's amiss. Revenue increase was followed by costs increase, hence EBITDA does not improve much. (you see good companies do not use EBITDA, but in this case, I just provide that chance, since they use EBITDA to tell their story).

If you looked at Jobstreet many years ago (unfortunately Bursa now just limit to 5 years), revenue increase would have commensurate with profit increase, almost in the same quantum. Why? Because dotcom business like Jobstreet, pretty much has their costs remain - things like building, staffs costs, electricity etc. Their fixed costs remain pretty stable. There are not much variable costs.

I do not see that in iProperty.

1 comment:

M.A. Wind said...