Sunday, 5 July 2015

Ire-Tex: MD resigns and is reappointed same day (2)

Interesting article by Errol Oh in The Star: "A pattern of turbulence".

The article zooms in on the events at the Ire-Tex AGM, but also those at Wintoni Group's AGM, some snippets:


Wintoni Group Bhd held its latest AGM on June 26. Seven resolutions were tabled but the majority of the shareholders at the meeting approved only two – the ones on the directors’ fees and the reappointment of the auditors.

The four directors who were up for re-election didn’t get enough votes and the company, a provider of automation systems, subsequently announced their retirement. It didn’t end there though.

On the same day, all four were appointed to the board and they assumed their previous roles. Retired lieutenant general Datuk Khairuddin Mat Yusof returned as non-executive chairman. Soo Tee Wei was reinstated as executive director. Mohd Sopiyan Mohd Rashdi and Ansari Abdullah continue as independent directors and members of the audit and nomination committees. It’s as if the AGM outcome was a mere blip.


From a corporate governance point of view a rather remarkable set of events, to put it mildly.

The article continues:


The similarities between Ire-Tex and Wintoni draw attention to Tey [Datuk Larry Tey Por Yee] as an investor because in the past couple of years, he has surfaced as a substantial shareholder in several listed companies: Ire-Tex, Wintoni, Protasco Bhd, Asdion Bhd and Malaysia Pacific Corp Bhd.


And then the writer details the diversification plans and the "signs of turbulence" for the above five companies.

Instead of "diversification" the term "diworsification", coined by investor Peter Lynch, might be more appropriate:

"when a company diversifies its business so broadly, it lacks a core focus. Management becomes distracted by the different, unrelated operations, and the whole firm begins to suffer."

Tey Por Yee did by the way also invest in Maemode, but that company went under so fast that there might not have been time for a diversification.

For students in CG, Tey Por Yee is definitely an interesting person to follow.

Friday, 3 July 2015

JES: will the CEO take action against her father?

In Singapore SGX listed (China based) company JES announced that an employee of the company has run away with the company's account books, chequebooks and financial seals, delaying the probe into financial irregularities of Mr. Jin Xin.

Apparently the books were not digitally stored in the "cloud", in which case a simple back-up would have been enough to preserve the data.

The company promised to take necessary action against Jin Xin:


Strong words by the CEO, and certainly a great assurance for the beleaguered shareholders (JES's shares are suspended for four months already) that appropriate action will be taken, until one realizes that Jin Yu is actually the daughter of Jin Xin.

From the Straits Times:


A female employee has delayed an investigation into dubious payments to the former boss of Chinese shipbuilder JES International by "absconding" with the company's books.

JES International has begun legal proceedings in China against the woman, administrative officer Ju Li Li, to recover the documents.

After Mr Jin Xin, the group's former chief executive and chairman, resigned in March, Ms Ju "absconded" with the group's administration records and seals of all its Chinese subsidiaries, JES told the Singapore Exchange last night.

JES, now helmed by Mr Jin's daughter, Ms Audrey Jin Yu, said it had intended to investigate its financials after uncovering possible irregularities during a periodic review. These included "questionable transactions" between the group and companies in which Mr Jin's interests were not declared, JES said.

But "the financial records of the group, including account books, chequebooks and financial seals, had been removed... by relatives of Mr Jin", JES said in its filing.

Mr Jin, who resigned from his post as executive director due to "health issues" on May 25, is not the only one to have quit.

On May 15, JES appealed to the Singapore bourse to extend its deadline for announcing first-quarter earnings, citing "a severe shortage of manpower" after half of its finance department resigned.

JES assured shareholders yesterday that if the books are recovered and Mr Jin is found at fault, "necessary action" would be taken. Trading of JES shares has been suspended since March 4. The shares last traded at 2.6 Singapore cents.

Thursday, 2 July 2015

Ire-Tex: MD resigns and is reappointed same day

A remarkable set of events, the company has provided the following clarification:


Reference is made to the Company’s announcement on 29 June 2015 in relation to the retirement of Dato’ Dr Yap Tatt Keat (“Dato’ Dr Yap”) as Managing Director and his subsequent re-appointment on the same day.

The Board of Directors wishes to inform that Dato’ Dr Yap had expressed his intention for early retirement effective from 29th June 2015, post the Company's 13th Annual General Meeting (“AGM”) after 20 years of service with the Ire-Tex Group. Hence, he did not offer himself for re-election at the AGM.

However, due to concerns raised by key stakeholders namely bankers, customers and suppliers, to Dato’ Dr Yap's unexpected early retirement, the Board of Directors had persuaded Dato’ Dr Yap to defer his retirement plans. Consequently, in the best interest of Company, Dato’ Dr Yap had accepted his re-appointment as Managing Director of the Company in the Board meeting held immediately after the AGM. As such, he will remain in the Board until a succession plan is put in place.


Ire-Tex is a company with several, possibly large, problems.

It has just acquired subsidiaries which don't seem to be performing well at all:



There was a large variation in results, always a red flag:




Many changes in directorship in the last year:

 
 
The accounts were qualified (always a large red flag):


In addition to that, the following "emphasis of matter":



An investigative accountant has been appointed, with a very wide scope, 28 action points in total, including allegations in an anonymous letter.

The largest shareholder of Ire-Tex is Tey Por Yee, the third largest is Ooi Kock Aun, the same duo we already met in the Protasco affair:


 
 

GrabTaxi worth more than AirAsia?

According to this article in the Wall Street Journal:


More cash is pouring into the increasingly competitive ride-hailing business in Asia, fueling local competitors to global market leader Uber Technologies Inc.

Southeast Asia-focused ride-hailing app GrabTaxi is getting an infusion of over $200 million in fresh capital in its latest fundraising round led by U.S. hedge fund Coatue Management LLC, according to a person familiar with the situation. The investment values the company at over $1.5 billion including the fresh capital from the latest fundraising, according to the person.


USD 1.5 Billion is equivalent to RM 5.7 Billion, clearly higher than the current marketcap of AirAsia, which is RM 4.4 Billion.

Is that really fair, if we look at revenue, profits, assets, barriers to entry (landing rights) etc?

I have doubts about that, but time will tell.

Regarding a company operating in the same industry (but on a global level), Uber, an article asks the question:

"Uber is seeing $470M in operating losses: Can it ever be profitable?".