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The Hidden Gem
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Stockking
Master |
28-Jun-2006 19:24
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Great Jobs to all. "Good Post" given to all who contributed, either positive or negative information are welcome! Any one out there have GMG annual report? We should be able to find the depreciation information there. Can share the info here? I'm starting to get a better picture of GMG and I believe after the half year result is out, we will be able to know more about the company!! |
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shplayer
Elite |
28-Jun-2006 18:36
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Hi All, Very interesting discussion. Let me make a few contributions. Now that we all agree that FY05 depr is 17.4m over non curr asset of 263m (of which most are on the rubber trees), this works out to be 6.6% => depre over approx 15 yrs. This is about right. Rubber trees have a productive life of about 12 to 15 years. In my cals of the P&L forecast for FY06, based on ave price of $3000 per MT, net profit came out to about $29.5m .......eps came out at about 1.5cts...ballpark figures. Every $500 increase in ave price, eps will increase by 1.0 cts ....i..e based on approx 2 bil issued shares, net profit will increase by $20m..... If ave price is $3500/MT, eps is 2.5cts.....$4000/MT, eps is 3.5cts. The above are ballpark cals. Thus, I think with the F06 earnings potential, they should have no problem meeting the $12.5m outstanding loan. To answer Bullrun's question if the spent trees can be exported to Europe, I think this may not be practical cos today, most furniture manufacture are located in Asia....namely China, Malaysia and Vietnam. Besides, Europe does not have the infrastructure to process the logs. |
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HenryAng570
Member |
28-Jun-2006 15:30
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Thanks Stockking Senior. If we can get hold of a copy of the audit report, it would state the life span of the various assets. Have a great day. |
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Stockking
Master |
28-Jun-2006 15:13
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HenryAng570, "In the plantations, rubber trees are cut down and replaced with new stock when latex production tends to diminish with age and when the tree is so tall that its heavy crown is often damaged by the monsoon winds. This replacement of the trees takes place usually between 30 and 35 years. " I got this from my research. It seemed to make sense!! |
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scotty
Senior |
28-Jun-2006 13:32
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Aiyah... no problem lah. We are all here to share info. Sometimes there are typos and mistakes. Part of the sharing process. |
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HenryAng570
Member |
28-Jun-2006 12:08
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Dear all, I make a terrible ignorance mistake. Biological Assets (refer to living animals or plants) in this case refer to the rubber trees ........ I think. Sorry to the wrong info. Henry |
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HenryAng570
Member |
28-Jun-2006 11:51
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Why would I distort the fact? To what I know, bioliogical assets refer to agricultural assets. They are assets collectively. I was looking at P1 & P 5 on the amt of dpn. I think there are no other places showing dpn on biological assets. I take a relook at the balance sheet, yes, it is 17.4 m taking 280.8m minus 263.4m You are rite on this point. And I am wrong. |
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BullRun
Elite |
28-Jun-2006 11:30
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HenryAng570, To be fair to other investors, let not distort the information. You are talking of Biological asset. Please refer to page 3 of the report under the non-current asset depreciation, for Biological, property, plant and equipments. The depreciation accounted for was 17.4m instead of the 7m you claimed. |
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HenryAng570
Member |
28-Jun-2006 11:19
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where to find the $7.4 m dpn to be more exact. Is in Page 1 (other disclosure) & P5 (Cash flow statemment) Bullrun, you are free to express. Go ahead ........ |
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HenryAng570
Member |
28-Jun-2006 11:00
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Stockking Snr hi, based on the Bal Sheet, the $263m is classified as biological asset $247.7m & $15.6m plant & machinery. Is not land or bldg. If based on 2.7% depn the asset life span is more than 35 years! Is it reasonable? If one compute juz based on rubber prices assuming yearly dpn is only $7m ......... rubber price at high level among other factors ... it seem ok. But what puzzled me is that rubber price does not suddenly jump to present level. GMG would have benefitted earlier higher prices too . But where is the money? (Only have abt $800 000 cash!) But we must know ..... assets ... plant / machinery besides dpn, also needs repair maintenance, replacement, mid-life upgrade etc ..... they eat into your profit ........ To say the the Co is turning around, where is the evidence? Would appreciate experts out there to provide evidence not lecture pse. Colin Powell said he will make key decision if he is satisfied with the availability of 70% reliable information and 30% on chance or intuition ......... The Q is do we have 70% reliable financial data? ........ Sure, some people would bet even they have less than 70% ...... Is an ind choice. Henry |
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BullRun
Elite |
28-Jun-2006 10:42
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HenryAng570, How you get the 7m? Please refer to page 3 of the report under the non-current asset depreciation, for Biological, property, plant and equipments. The depreciation accounted for was 17.4m instead of the 7m you claimed. I disagree with you that we are here just to share what we know. I think we are here also to share our thoughts and our investment philosophy. |
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Stockking
Master |
28-Jun-2006 10:26
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HenryAng570, Thanks for the help....more questions since I don't really know how to read those numbers in the result announcement. 1. What are in GMG asset? I guess the main items include the Land, Rubber Trees, some simple machinery, rubber inventories. I'm know nothing about accounting. How do we account for depreciation of Land and rubber inventories? Is it possible that some assets such as machinery and tress may be fully depreciated but still in working conditions. 2. You mentioned debts problem is still there. My questions is that if GMG can 35m in FY06, can they resolve the debts (12.5m) problem? 3. Based on DEC 05 data (the best we can have since GMG only annouce result every 6 months) will the 35m profit make in FY06 able to change GMG financial situation? 4. I guess what Bullrun is trying to say is that GMG is at the turning point IF NR price remain above $3000 for the next few years. Do you agree? |
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HenryAng570
Member |
28-Jun-2006 09:39
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First of all, thanks to Singaporegal for your generous rating. To add to earlier postings, for any comments to be useful, need to be specific. There are several specific Qs being raised. Launching into a lecture-like reply like investments involves risk, do your own homework is unnecessary and not helpful. I suppose the purpose of this forum is to share what you know. The point about looking into the bright future and not dealing with past problems - I think the problem is still there. It is a common knowledge that some Sporeans are still paying for some dinners they ate a year ago. The debt, the problem does not go away. If a person has illness, they have to seeking treatment before a bright future can emerge. Likewise, for a Co. To reply to Stockking Snr, Some of financial data have been highlighted earlier. They are dated back 31 Dec 05. No current financial data are available. There is one more observation I made - GMG total non-current asset is $263 million (biological asset, plants & machinery). The depreciation provided for the FY ended 31 Dec 05 is only $7m i.e.2.7%! To me, is a major concern ....... tyically, the lifespan of most asset last between 8-10 years. Dividing 263 by 10, Profit would be reduced by $26m. I may not be rite here, would appreciate any contribution on this point too. Henry |
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Stockking
Master |
28-Jun-2006 08:44
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I'm not good at financial data. Can someone help to evaluate the followings: 1. With the current NR price, if the asset of GMG is a valuation is to be done now, is GMG asset going to worth a lot more. 2. With a projected earning of say 35m (very very conservative) for FY06, is GMG able to pay the 12.5m outstanding debts and after paying the debts is their financial strength going to improved? 3. Taking into items 1 and 2 into consideration, is GMG at the point of turnaround? |
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BullRun
Elite |
28-Jun-2006 00:06
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Any possibility of selling those woods to Europe to command a higher price? |
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shplayer
Elite |
27-Jun-2006 19:37
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Rubber wood is processed for the furniture industry. It is a pretty hard wood....not soft like pine....and good quality for the price. The raw wood is first processed (shave off bark, remove sap, cut and joined) before it can be sent to the furniture factories to be made into furniture. In Msia and Vietnam, they have the infrastructure to do all these. I don't think they have this in Africa. If they do sell the rubber wood to Msia/Vietnam, it will probably be at a price which reflects the mkt price less transport cost. |
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BullRun
Elite |
27-Jun-2006 18:49
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"The SMR 20 rubber price this year has reached RM8 per kg, the highest in 20 years, while the price of rubber wood is currently estimated at RM19,000 per ha compared with just a mere RM6,000 per ha three years ago." I'm learning more about the rubber business each day. Something new today....even at the end of life, the rubber wood also can be sold for money and even price of rubber wood had gone up by more than 100% !! |
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singaporegal
Supreme |
27-Jun-2006 15:52
Yells: "Female TA nut" |
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Bullrun and HenryAng570, I've given you good posts each! good contributions to the forum. And it adds flavour to my TA analysis as well! |
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BullRun
Elite |
27-Jun-2006 12:38
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Henryang570, I'm here to offer a different perspective too!! It is common that people build up certain perception base on their experiences. We have been in the stock market for long enough to know all the risk involve. Don't have to go so far to look at Baring since there are many good example in sgx already! Stock market is all about risks and rewards one willing to take. I'll look for few hundred percentage return on the unpolished gem, so my risk level is definitely higher. I understand that and accepted. Not too sure if you track NR trend and GMG and I have been doing that for the last 7 years! In buying share, we look at the future and not the past. Find the unpolished gem is all about looking forward and project the company performance for the next few years. If you can see the future, you invest in it, if you can't then you better avoid it. If you care to do some research on GMG, you will be ale find all the answers to your question easily. No secret and nothing to hid and they had been telling you all the sad story over the last 7 years. It is time that the end the sad story and look for a happier future. Again, I not suggesting anyone one to buy GMG but I'm here just to share my thoughts and I like the joy and excitement every time when I uncover the unpolished gem! You are welcome to challenge my thoughts! |
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HenryAng570
Member |
27-Jun-2006 11:50
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BullRun, I am only offering different perspectives. No such thing as one is rite the other is wrong. We all need different perspectives rather than fall into the trap of "groupthink." We need to present facts so that we can evaluate objectively. Saying that the Co has been around for last 7 years etc will not do. Baring was more than a 100 years before it went bankrupt. LTCM - an investment Co has a dreamt team of analyst including noble prize winner in economics - nearly went under if not to a rescue plan. LTCM is well known. Juz key in LTCM in the web...... Would appreciate since you have been trackig GMG for last 7 years, tell us the reasons why GMG is not able repay loan when due. How come so have so little cash? Do you know the age of their biologiical eqpt - are they due for replacement or major repairs. They will eat into their profit. Kindly let us know the dividend payment records. Thanks. |
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