Mieco Chiboard: my 2nd hopeless stocks lists

Why mieco, Still remember back 2 to 3 year ago, S&P , and also some stocks forum, analyser, all call for buy mieco. I remeber the S&P put it rating RM4.7 per share. From that day every one are buying. The higher shall be at 2.70 or 3.00. Today Mieco is at hang around 1.00. What happen to this counter.

Prior to investment in 2nd plant. The plant 1 is fully operate and achieve as high of 30 m profit for 2004. The management put high inbition to build a plant B is much more big capacity for plant A. The plant B will iddle from them. The over supply of capacity (everyone increased capacity during same time , especially Thailand). In additional problem of sourcing raw material in plant B too, force the company paying higher material price or importing. All those factors make the company turn to red after the commisison of plant B in 2005. It show a positive result in 2006-Q1 but is due to change in accounting policy of depreciation.

I am doubt the management decision making of build in plant B. Who suppose responsible for this fail investment? Shareholder like us. Whether those any back-up emergency plan if the thing go wrong. With big loan due from 2006 to 2009, equivalent to 175 M (not yet include interest 5%) Does the company ability to pay off the debt. when i review their financial report on 2005 Cashflow their ability to earn cashflow to settle the debt for 3 year only 120 m. How is the negetive 55 m been paid off.

There are few possiblity that i can think off


1. Increase short term borrowing, There already make use of it at 2006-Q1amounting to 40 m , turover is 150 m for each quarter,
maximum loading is about 100 m , this is temperary and last resource.
2. Right issued, 4 issued 1 or 3 issued 1, but this option can't work due to holding company
Bandaraya. Cash in hand only 18 M and it need 31 m to pay off the right issued since he holding 56% (as at 30.06.06)
3. Private placement, this is possible option, this option also not favaour to small shareholder.
4. Restructure the debt or capital repayment, this is unfavour option to the small shareholder too.


Any how, for small investor like us (including bandaraya shareholders) We are paying for the mistake of management will make.
The reason I learn here also include in my lists of reason why I fail in investment. Sad to said off