Look at the cash level as of 30 June 2015. Look at the amount of convertible bond. Basically the company does not have or did not prepare for the coming due of bond redemption.
Are they trying their luck and having 'fun' that those bond holders will not ask for bond redemption and not sue the company.
I try not to elaborate too much. Just try to use common sense to think about it.
not vested
(27-07-2015, 08:14 AM)Behappyalways Wrote: In their 1Q2015 result, the balance sheet stated that the group has RMB420m. Why is the money 'sitting' in the bank and not used to pay off the bond. The interest payment on bond extension is not cheap. The company has ample time(the due dates of the bonds are known) and funds to redeem the bonds. That's why I said the company is not profit maximising but for FUN.
Theoretically the group has RMB420m as of 31 Mar 2015. THEORETICALLY........
As for the thai investor. Some investors based their faith on the thai investor. My suggestion is to invest in the thai company rather than Sino Grandness. Most probably you get to keep your shirt at the end of the fiasco......
13-08-2015, 01:29 PM (This post was last modified: 13-08-2015, 10:23 PM by portuser.)
(12-08-2015, 08:50 PM)BlueDogMeow Wrote: What terrible results. No news on IPOD. No news on debt repayment whatsoever even after ~3 weeks.
Here are a few interesting red flags.
Cash burn was $122m RMB. Here is the breakdown:
Receivables rose $160m. Not a single reprieve in receivables since the IPO. Rose from 165 days in Q4 2014 to 198 days today. That is a 33 days in 6 months.
inventories rose $124m, albeit some will argue this ride is seasonal.
A good portion of the payables SinoG drew down was repaid. This shows SinoG has no leverage against its suppliers.
Even though the company recorded a 66m tax charge, the company paid 31.5m. This created a deferred tax liability line item. Will be interesting to see if this DTL will get paid down.
SG&A rose 65.2% against a 14.5% move in inventories.
I shorted some SinoG a day before the results because it was a highly asymmetric bet.
I see that the RMB160m increase you refer to is the change of the sum of trade receivables and other receivables between 1Q 15 and 2Q 15:
..................................................RMB m
...................................2Q 15......1Q 15........4Q 14
Trade receivables.............953.......1,133.........1,110
Other receivables.............698..........356............317
Total...........................1,651.......1,499..........1,427
Trade receivables decreased as a result of better credit management. The company has added that after 2Q, RMB 320m was collected in the month of July.
Other receivables comprise VAT receivables, export tax refund, deposit and prepayments. They are not assets at risk as the first two items are owed by government and the last two are advances to suppliers and contractors.
The annual report shows that of the RMB 317m other receivables as at 31 Dec 14 were made up of the following:
.....................................................RMB m
(1) VAT receivables..............................121
(2) export tax refund..............................48
(3) advances to suppliers of PPE...............55
(4) advances to suppliers........................77
(5) others............................................16
You have also pointed out the tax (RMB 31.5m as shown in cash flow statement ) paid in 2Q was lower than the tax (RMB 66m as shown in the P&L statement) attributable to 2Q profit, and wondered whether Sino has the means to settle the tax.
Is the concern valid as Sino paid the following taxes (in RMB m) in the past 4 years?
Well, as I said, calling a duck a Cadillac does not make it a Cadillac. The sentence regarding DTL is just pointing out the fact that cash burn would be worse if the tax was paid in full.
(13-08-2015, 01:29 PM)portuser Wrote:
(12-08-2015, 08:50 PM)BlueDogMeow Wrote: What terrible results. No news on IPOD. No news on debt repayment whatsoever even after ~3 weeks.
Here are a few interesting red flags.
Cash burn was $122m RMB. Here is the breakdown:
Receivables rose $160m. Not a single reprieve in receivables since the IPO. Rose from 165 days in Q4 2014 to 198 days today. That is a 33 days in 6 months.
inventories rose $124m, albeit some will argue this ride is seasonal.
A good portion of the payables SinoG drew down was repaid. This shows SinoG has no leverage against its suppliers.
Even though the company recorded a 66m tax charge, the company paid 31.5m. This created a deferred tax liability line item. Will be interesting to see if this DTL will get paid down.
SG&A rose 65.2% against a 14.5% move in inventories.
I shorted some SinoG a day before the results because it was a highly asymmetric bet.
I see that the RMB160m increase you refer to is the change of the sum of trade receivables and other receivables between 1Q 15 and 2Q 15:
...................................2Q 15......1Q 15........4Q 14
Trade receivables.............953.......1,133.........1,110
Other receivables.............698..........356............317
Total...........................1,651.......1,499..........1,427
Trade receivables decreased as a result of better credit management. The company has added that in the month of July, RMB 320m was collected.
Other receivables comprise VAT receivables, export tax refund, deposit and prepayments. They are not assets at risk as the first two items are owed by government and the last two are advances to suppliers and contractors.
The annual report shows that of the RMB 317m other receivables as at 31 Dec 14 were made up of the following:
.....................................................RMB m
(1) VAT receivables..............................121
(2) export tax refund..............................48
(3) advances to suppliers of PPE...............55
(4) advances to suppliers........................77
(5) others............................................16
You have also pointed out the tax (RMB 31.5m as shown in cash flow statement ) paid in 2Q was lower than the tax (RMB 66m as shown in the P&L statement) attributable to 2Q profit, and wondered whether Sino has the means to settle the tax.
Is the concern valid as Sino paid the following taxes (in RMB m) in the past 4 years?
(12-08-2015, 08:50 PM)BlueDogMeow Wrote: What terrible results. No news on IPOD. No news on debt repayment whatsoever even after ~3 weeks.
Here are a few interesting red flags.
Cash burn was $122m RMB. Here is the breakdown:
Receivables rose $160m. Not a single reprieve in receivables since the IPO. Rose from 165 days in Q4 2014 to 198 days today. That is a 33 days in 6 months.
inventories rose $124m, albeit some will argue this ride is seasonal.
A good portion of the payables SinoG drew down was repaid. This shows SinoG has no leverage against its suppliers. Even though the company recorded a 66m tax charge, the company paid 31.5m. This created a deferred tax liability line item. Will be interesting to see if this DTL will get paid down.
SG&A rose 65.2% against a 14.5% move in inventories.
I shorted some SinoG a day before the results because it was a highly asymmetric bet.
Hi BlueDogMeow,
I hope you don't mind if I state my humble opinion on your statement. No offence, please don't take it hard.
The deferred tax liability ("DTL") are not resultant due to difference between tax expense in the profit and loss as compared to tax paid. You may refer to FRS 12 paragraph 15 to 18. A copy of FRS 12 attached. Income tax expense recognised to profit and loss consisted of tax on the relevant period plus any adjustments in respect of prior periods plus deferred taxation (which will include any adjustments in respect of prior period). You may refer to EY specimen financial statements disclosure notes on the attached pdf file page 94/234 for an idea. There are other Big 4 specimen FS available online also which users may also refer to. (I not from nor advertising for EY).
Generally, when carrying value larger than tax base, it gives rise to a taxable temporary difference which is multiplied by the applicable tax rate to derive the deferred taxation. In this case, a DTL.
Look at the cash level as of 30 June 2015. Look at the amount of convertible bond. Basically the company does not have or did not prepare for the coming due of bond redemption.
Are they trying their luck and having 'fun' that those bond holders will not ask for bond redemption and not sue the company.
I try not to elaborate too much. Just try to use common sense to think about it.
not vested
(27-07-2015, 08:14 AM)Behappyalways Wrote: In their 1Q2015 result, the balance sheet stated that the group has RMB420m. Why is the money 'sitting' in the bank and not used to pay off the bond. The interest payment on bond extension is not cheap. The company has ample time(the due dates of the bonds are known) and funds to redeem the bonds. That's why I said the company is not profit maximising but for FUN.
Theoretically the group has RMB420m as of 31 Mar 2015. THEORETICALLY........
As for the thai investor. Some investors based their faith on the thai investor. My suggestion is to invest in the thai company rather than Sino Grandness. Most probably you get to keep your shirt at the end of the fiasco......
Not vested
Hi Behappyalways,
No offence meant, from the announcements made by Sino till now, I thought it are the Convertible Bond Holders who keeps initiating the extension of maturity date? Sorry if I got the wrong perceptions.
If such is the case, I think the CB holders opined that converting into equity shares upon IPO will brings about higher value compared to redemption else they won't be extending the maturity consistently.
13-08-2015, 02:55 PM (This post was last modified: 13-08-2015, 02:56 PM by Behappyalways.)
Look at the latest balance sheet and cashflow statement. Isn't it very clear who is the one initiating the extension.
For example let's say you owe someone $10 and you only have $5 with you. Would you ask your creditor to come over for payment or otherwise. Although the debtor may claim otherwise to the public.....
(12-08-2015, 10:38 PM)BlueDogMeow Wrote: See the cash flow statement. It is trade receivables + other receivables. It seems trade receivables are dropping of but other receivables are rising. Perhaps SinoG is trying to trick investors to thinking that they are monetising their working capital, but I would say....if it looks like a duck, swims like a duck, and quacks like a duck, then it probably isn't a Cadillac.
(12-08-2015, 10:32 PM)Oldman9 Wrote:
(12-08-2015, 08:50 PM)BlueDogMeow Wrote: What terrible results. No news on IPOD. No news on debt repayment whatsoever even after ~3 weeks.
Here are a few interesting red flags.
Cash burn was $122m RMB. Here is the breakdown:
Receivables rose $160m. Not a single reprieve in receivables since the IPO. Rose from 165 days in Q4 2014 to 198 days today. That is a 33 days in 6 months.
inventories rose $124m, albeit some will argue this ride is seasonal.
A good portion of the payables SinoG drew down was repaid. This shows SinoG has no leverage against its suppliers.
Even though the company recorded a 66m tax charge, the company paid 31.5m. This created a deferred tax liability line item. Will be interesting to see if this DTL will get paid down.
SG&A rose 65.2% against a 14.5% move in inventories.
I shorted some SinoG a day before the results because it was a highly asymmetric bet.
Hi Bluedogmeow
Question. How do you get the value of $160m for receivables?
Thanks
Oldman.
Hi,
No offence meant. Just to check if you are referring to their HY 15 cash flows numbers?
Noted Trade & Other Receivables to the following dates as follows:-
30/6/15 @ 1,651,043 [Trade 952,740 + Others 698,303]
31/12/14 @ 1,427,346 [Trade 1,110,207 + Others 317,139]
Thus increased 223,697 for HY ended 30/6/15.
The increase is reflected as cash outflow on the statement of cash flows on page 4 of the annoouncement. All the numbers used are plucked from the announcement & can be cross referenced.
My opinion is that showing the cash flows impact of trade & other receivables as a single line item on the statement of cash flows do not contravene the FRS, this is commonly applied and you may also refer to the example stated in the FRS. Refer to FRS 7 IE page 5/9.
There are also further disclosures in the announcement which investors may refer to the announcement page 10/13 which disclosed the reasons for the decrease and increase in trade & other receivables respectively.
I opined these complied with applicable FRS.
May refer to EY specimen FS page 35/234 which showed the same.
To add on, noted there were previous talks among forumers who are worried on the increasing trade receivables. Noted trade receivables decreased which management attributed to better credit management. I thought that is a positive move, isn't it?
You may refer to FRS 7 Statement of Cash Flows & its Illustrative Examples attached.
13-08-2015, 03:27 PM (This post was last modified: 13-08-2015, 03:30 PM by butcher.)
(13-08-2015, 02:55 PM)Behappyalways Wrote: Look at the latest balance sheet and cashflow statement. Isn't it very clear who is the one initiating the extension.
For example let's say you owe someone $10 and you only have $5 with you. Would you ask your creditor to come over for payment or otherwise. Although the debtor may claim otherwise to the public.....
Hi Behappyalways,
I really can't interpret from the balance sheet nor cash flows statements that the company is initiating the extension.
I think investors should also consider whether there are any and how much of unutilised committed financial facilities granted by financial institutions.
Balance sheet only shows financial position of the entity as at that date.
If you want to check on the lifeline of the company, the cash flows are a very good avenue. From what I seen in the announcement, HY15 cash flows from operations stands at 108,083 (pg 5) which improved on yoy basis.
I think by deriving the Free Cash Flows and analysing with FCF will bear more meaningful analysis.
13-08-2015, 03:54 PM (This post was last modified: 13-08-2015, 03:54 PM by Behappyalways.)
The bond interest are quite high. As a rational businessman the first thing you do when you have the opportunity to redeem is to redeem it with a lower interest instrument and not extend it. That why's my initial posting said that the company is for fun....imagine how many loquat drinks they have to sell to earn the interest.
All these signs point to ....
Most probably my guess is the bond holders will have to accept partial payment and converting the bonds into shares. They will have to get their $$$ back thru the public by selling the shares.
And company has to find another 'smart' Thai to invest in the company......
Convertible bonds are usually unsecured. Not privy to the terms of CB1 and CB2, but if really pushed...... company goes bankrupt. They lose too. So these CB investors are really in the same boat as equity investors (but better cos they are earning interests). BUT that is only as long as SFGI is an ongoing business. It really is in their interests for SFGI to do well. Hence these forwards and backward discussions between them. What is the Best case for them? I would say extend the maturity, earn more interest, wait for IPO later on at a better price. Everybody wins. Worst case? Force SFGI hand, SFGI decide to raise cash to pay off them (thru rights or private placements again). Really.....we do not know enough. But it is not really a one sided case in favor of the CB holders, more like a dance.
Homepage
PR Newswire
