Don't Put ALL YOUR EGGS IN MESDAQ STOCKs

STI received a comment said swap the megan into potential high grow mesdaq counter, hahaha This is one of the experience I want to share with all before depart for long weekend.


Do you still remember, OPCOM, AKNMSG,REDTONES......If you are in mesdaq few year ago, when this counters share up sharply (almost 5 to 10 time compared to current price) All analysts or stocks expert keep calling "BUY" "BUY" .......
As per today AKNTEC, left 20 cent compared to higher about RM 4 per share, all my goodness is 20 time lower than now. and so on. I sale my akn tec when it drop to 90 cent or low. CUT LOSS, if not cut, i wll incurred another heavy loss. But stupid still keep the opcom until today.

Where is the analysts to call " buy" "buy" .. from daily newspaper, the edge and so many forum like to discuss about it. Now where are they now? This is market Trend to up certain industries. and later back to their own fundamental. Today I also saw many call for buy mesdaq counter. Does any % will success to grow to be strong to fight in oversea market. Tell you won't more than 5% or even less in few year later. Today MTOUCHE, GREENPACKET may high like hell, tell you. it may be drop like akntec 1 day. That we DONNO AND WE CANNOT TO PREDICT.

Why not we invest in certain counter with sure win or beat the market like I share with you the 15 point in my first posts. Invest in something uncertainty or you do not understand the whole. Just like gambling in Genting. WIN SMALL MONEY BETTER THAN LOST ALL YOUR CAPITAL.

lastly, HAPPY DEPPA-RAYA

why Megan under my top hopeless stocks

Why MEGAN? I think many of us listen recommendation to buy Megan. Not only from analysis, many stocks forum like Cari, Sam gang and so on. But why today remain will drop around 60 cent. Standard & Poor just ranking this counter for sales and 12month target price at 60 cent.

Why like that? Standard & Poor estimate 07 & 08 financial year-end net profit at 35 cents per share or equivalent to PE less than 2. Super earning, why still recommend to “SELL”.

Many of us noticed that during FY 2005.Megan making huge Capital investment of RM 5 Billion or equivalent to 73-year equivalent payback period (Not consider the PV).
Wrong expectation of market and profit margin of product (DVD-R) make this company become risks in liquidity (see Table below). Cash crisis for repayment of loan from 2007 to 2012, the company still contractual another RM 110 Million for 2007 to 2008.
· Does anything the management done to reduced the gearing or waiting for liquidity, I am doubt the future ability to paid debt. Over estimated of market and make a big investment.
· Does any risk management and proper feasibility done before such decision? For small cap counter, 5 Billion is huge amounts, any proper record and discussion for BOD before this decision.
· Who protect small investor like us? With incremental profit of 20 m after such big expansion. The pay back period may be as long as 250 year! Some may argue here this is replacement of technology; even we take the yearly net profit at 80 m per year it will take another 62 year of repayment. What the stupid decision.

Is useless to comment on the profitability of single digit PE, What is the % of depreciation and so on. Let review the forecast cashflow as table below :

('000) 2007 2008 2009 2100 2111 2112
Cashflow from operation 110,000 110,000 110,000 110,000 110,000 110,000

Purchase of Fixed assets (55,000) (55,000)

Repayment of loan & HP (16,313) (16,313) (65,250) (65,250) (65,250)
bai adm islam loan (40,000) (40,000) (40,000) (60,000) (60,000) (70,000)

Balance/(Deficit) (1,313) (1,313) 4,750 (15,250) (15,250) 40,000

from the table, you will see the cash deficit for the rest of the period, why they still plan for investment, future uncertainty will make this investment useless, and bank won't borrow money to our gear company. here assume many factor un-quo. so it is dangerous for company to continous expansion.


Propose - Action
As we know that margin of CD or CD-R continuous fall and margin will tight from time to time. They should reduce the outsourcing to sub- con. Start their own in house production. This is similarly in many industries with tight margin. The profit will highly depend on volume and production efficiency. In Megan case, if next 2 year expansion is buy some 2nd hand machine for these lines. I am agreed on that too, but not for those lines with uncertain market condition. To hold all of other investment of RM110 million for other equipment. Try to reduced gearing of the company by 5-year time. Later then consider other investment opportunity. At the mean time by given reasonable dividend to shareholder. High Dividend yield is the trend in equity market. So paid said 5% dividend to shareholder is better than investing in stupid equipment. With this hope will build investor confident on that. Disposal of singapore factory to reduced the gearing, since the company already moving operation to malaysia.


What reason I learn

I am holding Megan from day 1 it listing and continuous average down to 1.2 then I stop. Now with market price 60 cent, I also make a big paper loss on that. It is one of the small caps and makes many criteria in my 15-point mention. What I will do, I will hold it for another 2 Quarter, see any action taken by management. Otherwise I will dispose it permanently due to foreseeable liquidity risks. sad to said this company problem is expansion too fast, then become over gear. now they need to take a break for few year.

I will not able to attend Megan AGM on coming, if any one want attend, I would like to give the proxy to you, just mail to me (limkwongwee@hotmail.com ) . Please help to forward this issued during AGM.

If figure can tell.... Comparison of Singapore and Malaysia after 43 year of Divorce.

TQ for comment, I am not the menion smart guy, I just an normal man who live in Johor and earn the RM. Alhough I got choice to be work in Singapore and be PR. I still choice to be in Johor. One of the reason behind is I love Malaysia!

Yesterday, Again Singapore stocks Market Break the record high at 2666, I still dream when is our Bursa 1300, More disappointment is newspapers tell us dream of1,000 next year. Oh my god! What happen just 10 year of our stocks market separate. Does any one of us earn enough money from stocks market this few year. If you are like me, this 10 year spent the the time in non blue chip counter. no need said more, we all understand what happen.

When the corruption index in annoucence again we at 25 out of 30 country been selected. Where is singapore? top 5 or 10 ?? when the top university lists come out, we happy because only university of malaya is down a bit in term of ranking , our other universitiy show good bench mark and improving and we are so exciting to tell our people. Look we are so great.
University of singapore , old time just a subsi for UM, today they are AT RANKING 19. When we can achieve that standard ? I am dreaming again. I still remember when last year the ranking come out , we still arguing for what is the bench mark for ranking, time won't wait us.

When ASLI publish the bumi share holding is Malaysia, then we realised all the while when government said something like 18% . The standard is using "PAR VALUE" again what is par value a LCCI student can tell you that is irelevent to prove anything. But yet we accept the data publish by government. Until this day. When ASLI using market capitalised as basic of calculation. We call this is "Rubbish Report" . So what is conclusion, the actual % ? Goverment said ask us don't ask just accept their figure. the real reason behind we all understand. But i believe our people standard stilll baby standard.. Only baby won't ask why and what... Ohhhh BABY.

Lastly when the newspaper announce that millionaire in Asia. I am so exciting to look at our ranking. But i can't find malaysia . WE been grouping in to "OTHER or lain lain ". Even Indonesia also in ranking. No doubt Singapore already make got 5 0,000 people or equivalent to 200, 000 house hold or 10% of the population either themselves or population...... Where our stand. Does money will come down from heaven? Yes ! For limited time only! after our resource is finish. Where we will go?

This is be love land we stay, My family, kids , friends all here. We hope it will be better and better for sure. now " Mak himpit" going to be our minister one day.. may be.. hahaha
I am sympathy to those top people like the email lists I receive from some one. They shall help our country become better.

I will stop my argument here. This is investing blog. not the politic blog. May be i will go to open an politic blog one day. Next topic i will pick 10 hopeless counter in Bursa. I still at stages pick up the counter and do analyst. Hope can be publish next week.