Today, I would like to share with you another example of finding unfavourable factors of a company.
CAM RESOURCES BHD
·
Palm Oil Mil - Processing and sale of crude palm
oil, palm kernel and other related products
·
Manufacturing of aluminium, stainless steel,
melamine and plastic household products and palm fibre
·
Trading of household products
|
Price, RM : 0.245
|
NTA, RM : 0.54
|
|
PE :
6.13
|
No. of shares : 177.2m
|
|
R0E, % : 7.41
|
Market cap., RM : 43.4m
|
|
D/Y, % : 0
|
|
I believe before the quarter report of FY15Q1 out, the
pretty result of CAMRES was able to attract many investors. To be frank, I am
one of them. By just looking at the results, it is normal one will think that
CAMRES is growing or CAMRES fundamental is improving.
Firstly, Palm Oil Mill contributed the largest portion of revenue in
CAMRES, which is around 60%. Look at the palm oil monthly price chart above.
When the palm oil price getting lower and lower, it means that CAMRES net
profit margin will be heavily hit. The operating expenses and the volume they
sell are the same but the sales value they received is getting much lower. It had
a bad effect for CAMRES which we can seen in CAMRES latest quarter report. It
mentioned that the sales from palm oil mill had been reduced.
|
Borrowing, RM
|
16,686,562
|
35,910,616
|
48,524,840
|
55,292,351
|
|
Free cash flow, RM
|
6,825,757
|
5,656,759
|
9,418,505
|
7,725,416
|
|
Net cash, RM
|
(9,860,805)
|
(30,253,857)
|
(39,106,335)
|
(47,566,935)
|
Secondly, CAMRES borrowing is increasing from year to year
while its cash doesn’t seem to increase. Its net debt is already up to RM47m!
FYI, market capitalization for CAMRES is only RM43.4m, which is lower than its
net debt! That’s mean theoretically even though the company disposed all its
shares and sold it, it still not enough to pay off its debt!
If the economy crisis really coming one day, a company with
huge of debt and little cash flow will be the first to hit! The company might
not be able to turn the situation. It will be a disaster.
Thirdly, CAMRES don’t even have any business description on
its website. As investors, we can’t get to know more about the company and its
business. Even the last update in its annual report section was on Oct 2010,
which is almost 5 years ago. The company seems like do not bother to update
their investors. It had reduced my interest on this company. FYI, almost every
listed company website is up to date and packed with company information.
Lastly, one of the executive directors of CAMRES, Mr. Hia
had disposed 2m shares, which are equivalents to 1.3% on June 2015. Normally,
company director will acquire more shares since they knew the company operation
well. But, when they disposed, it is a sign that a company director had lost
its confidence to the company. Since we can’t access too much company
information, it’s better to keep away from such company.
As a conclusion, everyone had their own method of analysis
and screening. I hope this will help most of the investors to choose more
wisely in the future. Feel free to comment if you disagree with me or have any
opinion.
Just for sharing.
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