In my previous posting about Masterskill I wrote:
"Why would anyone not exercise a put option to sell ones shares for RM 1.10 per share, and then less than 4 months later accept an offer for RM 0.60 per share, a whopping 45% lower? For Siva Kumar the difference between the two offers is close to RM 60 Million cash...."
That is exactly what Focus Malaysia in their January 17-23, 2015 issue asked Siva Kumar, his answer:
"On this matter, Siva says though the deal was very attractive, he decided to sell his stakes to Creador and SMRT considering the uncertainty of the buyer being able to exercise the option on time. As such, he felt that selling his stake to Creador, which was already accumulating MEGB [Masterskill] shares then, would be the best choice."
Regarding "being able to exercise the option on time", it should be noted that Gary How entered in the option agreement on March 19, 2014. In other words, How had about nine months to actively arrange the money, not counting the time before the option was signed which probably also adds a few more months.
Showing posts with label Masterskill. Show all posts
Showing posts with label Masterskill. Show all posts
Saturday, 17 January 2015
Monday, 12 January 2015
Masterskill: why take 0.60 if one can get 1.10?
Masterskill announced:
"that it has today received a Notice of Conditional Take-Over Offer (“Notice”) from Arenga Pinnata Sdn. Bhd. (“APSB” or “Offeror”) through CIMB Investment Bank Berhad to undertake a conditional take-over offer to acquire all the remaining ordinary shares of RM0.20 each in MEGB (excluding treasury shares) (“Shares”) not already held by the Offeror (“Offer Shares”) at a cash consideration of RM0.60 (“Offer Price”) for each Offer Share (“Offer”)."
If RM 0.60 per share is a good price or a bad price, I honestly don't know.
Masterskill had produced a horrible set of numbers from the moment it was listed. Besides that, corporate governance did not appear to be one of their strongest points, to put it mildly. From that point of view, the deal doesn't look that bad.
On the other hand, the IPO price was RM 3.80, in that light the price looks pretty horrific. Many shareholders will be sitting on substantial losses.
However, something else is going on, something puzzling to say the least.
RM 0.60 is the price per share offered now, which Siva Kumar has accepted:
But Siva Kumar had a put option to sell his shares for the price of RM 1.10 per share, according to this announcement:
Why would anyone not exercise a put option to sell ones shares for RM 1.10 per share, and then less than 4 months later accept an offer for RM 0.60 per share, a whopping 45% lower? For Siva Kumar the difference between the two offers is close to RM 60 Million cash, a nice and tidy sum of money.
Are we missing something, a piece of the puzzle?
"that it has today received a Notice of Conditional Take-Over Offer (“Notice”) from Arenga Pinnata Sdn. Bhd. (“APSB” or “Offeror”) through CIMB Investment Bank Berhad to undertake a conditional take-over offer to acquire all the remaining ordinary shares of RM0.20 each in MEGB (excluding treasury shares) (“Shares”) not already held by the Offeror (“Offer Shares”) at a cash consideration of RM0.60 (“Offer Price”) for each Offer Share (“Offer”)."
If RM 0.60 per share is a good price or a bad price, I honestly don't know.
Masterskill had produced a horrible set of numbers from the moment it was listed. Besides that, corporate governance did not appear to be one of their strongest points, to put it mildly. From that point of view, the deal doesn't look that bad.
On the other hand, the IPO price was RM 3.80, in that light the price looks pretty horrific. Many shareholders will be sitting on substantial losses.
However, something else is going on, something puzzling to say the least.
RM 0.60 is the price per share offered now, which Siva Kumar has accepted:
But Siva Kumar had a put option to sell his shares for the price of RM 1.10 per share, according to this announcement:
Why would anyone not exercise a put option to sell ones shares for RM 1.10 per share, and then less than 4 months later accept an offer for RM 0.60 per share, a whopping 45% lower? For Siva Kumar the difference between the two offers is close to RM 60 Million cash, a nice and tidy sum of money.
Are we missing something, a piece of the puzzle?
Thursday, 18 December 2014
Masterskill: another deal aborted
I have written many times about Masterskill, I am afraid not often in a positive way.
The company recently aborted its proposed sale of its properties. Below information is from MSWG's newsletter, December 18, 2014:
According to the announcement released by MEGB on 16 December 2014, the independent valuer namely Cheston International (KL) Sdn Bhd, had ascribed an indicative market value of RM110.4 million for Masterskill (M) Sdn Bhd’s operating property assets in Cheras, Kota Kinabalu, Kuching and Pasir Gudang (“Properties 1”), which is significantly higher than the initial indicative sale consideration of RM75 million offered by Mr. Siva Kumar A/L M. Jeyapalan.
Following the above, the parties were unable to mutually agree on a revised sale consideration for the Properties 1. As such, the Board of MEGB had resolved to abort the proposed disposals and proposed ESOS and will consider other alternatives to implement its asset light strategy and raise funds for the company. The Board will make the relevant announcements in due course.
MSWG’S COMMENTS:
Again another corporate exercise of restructuring to revive the business of MEGB fell off eventually with a significantly higher indicative market value by the independent valuer. Shareholders are growing impatient and disappointed to go through multiple corporate proposals and more so they were also astounded by significant fluctuations in the market value of their shares upon the abortion of multiple proposals. The negotiation price of RM75 million, representing a deep discount of 32% to the indicative market valuation would raise the question on how it was possible that the Company could initially have considered such a low indicative sale consideration of RM75 million which was so much below the indicative market valuation although the offer was subjected to independent valuation and shareholders’ approval.
It is even weirder if we go back to the 3rd quarter result of 2013, the company posted a loss of RM 104 Million, and the (rather short) reason it gave was (emphasis mine):
The higher loss before tax was largely due to provision for impairment loss on goodwill and certain of the Group’s property, plant and equipment totaling RM88.2 million.
In other words, it had just written down its property by a large amount. And Siva Kumar offered to buy the property assets at this low valuation, "willing buyer, willing seller". The independent valuer, Cheston International, seems to think the deal is not that great for the other shareholders.
The company recently aborted its proposed sale of its properties. Below information is from MSWG's newsletter, December 18, 2014:
According to the announcement released by MEGB on 16 December 2014, the independent valuer namely Cheston International (KL) Sdn Bhd, had ascribed an indicative market value of RM110.4 million for Masterskill (M) Sdn Bhd’s operating property assets in Cheras, Kota Kinabalu, Kuching and Pasir Gudang (“Properties 1”), which is significantly higher than the initial indicative sale consideration of RM75 million offered by Mr. Siva Kumar A/L M. Jeyapalan.
Following the above, the parties were unable to mutually agree on a revised sale consideration for the Properties 1. As such, the Board of MEGB had resolved to abort the proposed disposals and proposed ESOS and will consider other alternatives to implement its asset light strategy and raise funds for the company. The Board will make the relevant announcements in due course.
MSWG’S COMMENTS:
Again another corporate exercise of restructuring to revive the business of MEGB fell off eventually with a significantly higher indicative market value by the independent valuer. Shareholders are growing impatient and disappointed to go through multiple corporate proposals and more so they were also astounded by significant fluctuations in the market value of their shares upon the abortion of multiple proposals. The negotiation price of RM75 million, representing a deep discount of 32% to the indicative market valuation would raise the question on how it was possible that the Company could initially have considered such a low indicative sale consideration of RM75 million which was so much below the indicative market valuation although the offer was subjected to independent valuation and shareholders’ approval.
It is even weirder if we go back to the 3rd quarter result of 2013, the company posted a loss of RM 104 Million, and the (rather short) reason it gave was (emphasis mine):
The higher loss before tax was largely due to provision for impairment loss on goodwill and certain of the Group’s property, plant and equipment totaling RM88.2 million.
In other words, it had just written down its property by a large amount. And Siva Kumar offered to buy the property assets at this low valuation, "willing buyer, willing seller". The independent valuer, Cheston International, seems to think the deal is not that great for the other shareholders.
Thursday, 18 September 2014
Masterskill: who is Gary How? (2)
I wrote before about the put and call option of Gary How.
Masterskill announced the termination of the said agreement.
He [Mr. How] has expressly confirmed that the he is unable to complete the purchase of the First Party’s shares within the Call Option Period (within 6 months from the date of Call and Put Option Agreement)
Was the agreement ever serious? I always had my doubts (as had the few people who commented on the posting), as expressed in above blog post. The whole sequence of events poses more questions than that is gives answers.
Gary How and related parties are still directors of the company, while holding only a very small percentage of the shares.
Masterskill announced the termination of the said agreement.
He [Mr. How] has expressly confirmed that the he is unable to complete the purchase of the First Party’s shares within the Call Option Period (within 6 months from the date of Call and Put Option Agreement)
Was the agreement ever serious? I always had my doubts (as had the few people who commented on the posting), as expressed in above blog post. The whole sequence of events poses more questions than that is gives answers.
Gary How and related parties are still directors of the company, while holding only a very small percentage of the shares.
Wednesday, 20 August 2014
Jobstreet, Masterskill, MH17, Madoff, Pension Funds
[1] Jobstreet announced that Seek has increased its offer from RM 1,730 million to RM 1,890 million, an increase of RM 160 million. Good news for the shareholders who held on to their shares. Probably good negotiations by Mark Chang.
[2] Masterskill announced that it sold its shares in Hong Kong listed company Gayety Holdings Ltd. for a total cash consideration of RM 33 million, netting Masterskill a profit of RM 12 million. I didn't believe much in this (in my opinion rather strange) acquisition, so this sale (and the profit) looks good for the company. Finally some good news for the minority shareholders.
[3] I never used to believe much in those typical US conspiracy theories, but these days, I am not so sure anymore. The following article looks interesting enough to share, although I can't guarantee the truthfulness of the contents (reader beware):
MH17 Verdict: Real Evidence Points to US-Kiev Cover-up of Failed False Flag
[4] Interesting article about the Madoff fraud case:
36,000 Madoff Victims Have Not Received a Dime in Restitution; 1,129 Fully Reimbursed
On May 5, 2014, Irving Picard, the court-appointed trustee in charge of finding and distributing Madoff’s swindled funds to investors released this statement in a press release announcing the fourth interim distribution of funds to victims: “…1,129 accounts will be fully satisfied following the fourth interim distribution. All allowed claims totaling $925,000 or less will be fully satisfied after the distribution.”
Just eight days later, Richard Breeden, the Special Master that’s working on behalf of the U.S. Department of Justice to distribute a separate pool of funds to Madoff’s victims reported that more than 36,000 claimants have filed documents with his office indicating that they haven’t yet received a dime of restitution. Yes, 36,000 people from all over the globe.
That’s bad enough but the story goes downhill from there. Almost six years from the date that Bernard Madoff turned himself in as the largest Ponzi fraudster in the history of finance, the U.S. Department of Justice is still scratching its head over just how much money Madoff actually ripped off from investors and puzzling over how to divvy up its inadequate pot of money
......
The only consistent message here is that the U.S. financial regulatory structure is just as bad at delivering fraud restitution as it is at detecting fraud.
[5] And lastly an article by Yves Smith: "How Your Pension Fund Became a Casino".
The original premise of the prudent-man rule was that pension-fund managers needed to operate as if their clients were widows and orphans. Sadly, experience has shown that the managers are often as vulnerable to exploitation as the people on whose behalf they are investing.
[2] Masterskill announced that it sold its shares in Hong Kong listed company Gayety Holdings Ltd. for a total cash consideration of RM 33 million, netting Masterskill a profit of RM 12 million. I didn't believe much in this (in my opinion rather strange) acquisition, so this sale (and the profit) looks good for the company. Finally some good news for the minority shareholders.
[3] I never used to believe much in those typical US conspiracy theories, but these days, I am not so sure anymore. The following article looks interesting enough to share, although I can't guarantee the truthfulness of the contents (reader beware):
MH17 Verdict: Real Evidence Points to US-Kiev Cover-up of Failed False Flag
[4] Interesting article about the Madoff fraud case:
36,000 Madoff Victims Have Not Received a Dime in Restitution; 1,129 Fully Reimbursed
On May 5, 2014, Irving Picard, the court-appointed trustee in charge of finding and distributing Madoff’s swindled funds to investors released this statement in a press release announcing the fourth interim distribution of funds to victims: “…1,129 accounts will be fully satisfied following the fourth interim distribution. All allowed claims totaling $925,000 or less will be fully satisfied after the distribution.”
Just eight days later, Richard Breeden, the Special Master that’s working on behalf of the U.S. Department of Justice to distribute a separate pool of funds to Madoff’s victims reported that more than 36,000 claimants have filed documents with his office indicating that they haven’t yet received a dime of restitution. Yes, 36,000 people from all over the globe.
That’s bad enough but the story goes downhill from there. Almost six years from the date that Bernard Madoff turned himself in as the largest Ponzi fraudster in the history of finance, the U.S. Department of Justice is still scratching its head over just how much money Madoff actually ripped off from investors and puzzling over how to divvy up its inadequate pot of money
......
The only consistent message here is that the U.S. financial regulatory structure is just as bad at delivering fraud restitution as it is at detecting fraud.
[5] And lastly an article by Yves Smith: "How Your Pension Fund Became a Casino".
The original premise of the prudent-man rule was that pension-fund managers needed to operate as if their clients were widows and orphans. Sadly, experience has shown that the managers are often as vulnerable to exploitation as the people on whose behalf they are investing.
Thursday, 1 May 2014
Masterskill: shocking loss and insufficient explanation (2)
I wrote before about Masterskill's horrific losses.
The company has announced its annual audited accounts. They do give some more information, but also pose many questions.
A huge impairment loss on their property, plant and equipment (PPE) of RM 71 million based on a valuation report provided by an independent valuer. Not much details are given. One issue that pops up is: property prices are record high, so one would expect higher valuations, not lower valuations. The impairment loss sounds rather puzzling.
Again a large impairment loss, this time on goodwill, again not many details.
A huge impairment loss on Trade and other receivables. Last year was already high, RM 24 million on a turnover of RM 149 million (16%), this time RM 38 million on a turnover of RM 59 million (64%). Again, not much details provided. Did the company book it's revenue too aggressive in previous years?
More impairments, this time on the property held for sale. Again, property prices are near their highest, why these impairments?
Very large impairments, not much detail given. Given the hugely disappointing performance so far since its IPO, I think shareholders deserve a much better explanation. For instance, when where the previous valuations done, when were the assets (property) acquired?
Hopefully the annual report will give more details.
The company has announced its annual audited accounts. They do give some more information, but also pose many questions.
A huge impairment loss on their property, plant and equipment (PPE) of RM 71 million based on a valuation report provided by an independent valuer. Not much details are given. One issue that pops up is: property prices are record high, so one would expect higher valuations, not lower valuations. The impairment loss sounds rather puzzling.
Again a large impairment loss, this time on goodwill, again not many details.
A huge impairment loss on Trade and other receivables. Last year was already high, RM 24 million on a turnover of RM 149 million (16%), this time RM 38 million on a turnover of RM 59 million (64%). Again, not much details provided. Did the company book it's revenue too aggressive in previous years?
More impairments, this time on the property held for sale. Again, property prices are near their highest, why these impairments?
Very large impairments, not much detail given. Given the hugely disappointing performance so far since its IPO, I think shareholders deserve a much better explanation. For instance, when where the previous valuations done, when were the assets (property) acquired?
Hopefully the annual report will give more details.
Monday, 31 March 2014
Masterskill: why the hurry to buy into noodles, dim sum and dessert?
I wrote recently about Masterskill, "Who is Gary How".
The ink was not yet dry, or more developments followed.
First of all three directors resigned and three new directors were appointed, one of them Gary How, another his wife.
In itself rather strange, since Gary How still doesn't own any shares in Masterskill, he only owns a call option, but there is no surety that the call option (or the put option of the majority shareholder) will be exercised. Or even if he is able to exercise it, if he has the means to do that.
Some details of the background of the new directors are revealed, but mysteries remain. Searches on the investment company of Mr. Gary How (Citi-Champ International Limited) do not reveal much additional information.
The share price did react rather strong to the news though:
For some parties involved (Masterskill Holdings Limited, Sami Ali A. Sindi and Richard Todd Scanlon), this seemed to be the ideal moment to offload some shares, more than 44 million shares in total:
Disposed 24/03/2014 8,600,000
Disposed 24/03/2014 2,000,000
Disposed 26/03/2014 1,000,000
Disposed 26/03/2014 250,000
Disposed 27/03/2014 16,995,077
Disposed 27/03/2014 1,724,923
Disposed 28/03/2014 12,800,000
Disposed 28/03/2014 1,400,000
But that is not all, today another announcement came, to buy 118 million shares in Hong Kong listed company Gayety Holdings limited (8179) for about RM 20 million cash.
Regarding the future plans of this company:
For those people who dare to ask what noodles, dim sum and dessert have to do with education for nurses, I am afraid I don't have the answer to that.
The company is featured in David Webb's site because of high concentration warnings in the past, in plain English: almost all the shares were in the hands of a few parties, it was thus very easy for these shareholders to control the share price. If that is still the case, I am not sure.
For reasons that are further not explained, the parties involved seem to be very much in a hurry:
I have written the following about Masterskill in the past:
"The worsening results of the company (both in revenue and profit), exactly after the IPO (when increased profits should be expected, due to the inflow of IPO funds) and the large write-off in the last quarter are very worrisome. I hope that the authorities will consider starting a thorough investigation, if all the representations and warranties as submitted in the due diligence of the IPO and the financial accounts Pre-IPO were indeed correct."
Given the rather peculiar recent events, I think a thorough investigation by the authorities is even more warranted.
The ink was not yet dry, or more developments followed.
First of all three directors resigned and three new directors were appointed, one of them Gary How, another his wife.
In itself rather strange, since Gary How still doesn't own any shares in Masterskill, he only owns a call option, but there is no surety that the call option (or the put option of the majority shareholder) will be exercised. Or even if he is able to exercise it, if he has the means to do that.
Some details of the background of the new directors are revealed, but mysteries remain. Searches on the investment company of Mr. Gary How (Citi-Champ International Limited) do not reveal much additional information.
The share price did react rather strong to the news though:
For some parties involved (Masterskill Holdings Limited, Sami Ali A. Sindi and Richard Todd Scanlon), this seemed to be the ideal moment to offload some shares, more than 44 million shares in total:
Disposed 24/03/2014 8,600,000
Disposed 24/03/2014 2,000,000
Disposed 26/03/2014 1,000,000
Disposed 26/03/2014 250,000
Disposed 27/03/2014 16,995,077
Disposed 27/03/2014 1,724,923
Disposed 28/03/2014 12,800,000
Disposed 28/03/2014 1,400,000
But that is not all, today another announcement came, to buy 118 million shares in Hong Kong listed company Gayety Holdings limited (8179) for about RM 20 million cash.
Regarding the future plans of this company:
For those people who dare to ask what noodles, dim sum and dessert have to do with education for nurses, I am afraid I don't have the answer to that.
The company is featured in David Webb's site because of high concentration warnings in the past, in plain English: almost all the shares were in the hands of a few parties, it was thus very easy for these shareholders to control the share price. If that is still the case, I am not sure.
For reasons that are further not explained, the parties involved seem to be very much in a hurry:
I have written the following about Masterskill in the past:
"The worsening results of the company (both in revenue and profit), exactly after the IPO (when increased profits should be expected, due to the inflow of IPO funds) and the large write-off in the last quarter are very worrisome. I hope that the authorities will consider starting a thorough investigation, if all the representations and warranties as submitted in the due diligence of the IPO and the financial accounts Pre-IPO were indeed correct."
Given the rather peculiar recent events, I think a thorough investigation by the authorities is even more warranted.
Friday, 21 March 2014
Masterskill: who is Gary How?
Masterskill made an announcement on March 20, 2014:
MEGB wishes to announce that the Company had in the evening of 19 March 2014 received a notification from its substantial shareholder Mr. Siva Kumar A/L M Jeyapalan (“Mr. Siva Kumar”), who is also an Executive Director of the Company that he has entered into a Call and Put Option Agreement (“the Agreement”) on 19 March 2014 with Mr. Gary How Soong Khong (“Mr. Gary How”) (NRIC No. 690511-10-6087) of RM1705, 17/F, Hip Kwan Comm Bldg, 38 Pitt Street, Yaumatei, Hong Kong.
This came one day after its share had a decent run up from RM 0.32 to 0.38 (+19%) in much higher volume. Did some people know about this announcement beforehand and act upon it?
The Star writes:
Very little is known about How, a Malaysian who is based in Hong Kong, and why he is offering to buy the shares at a steep premium to the market price.
That seems to be true, searches by Google or LinkedIn don't seem to shed any more light on this person. Rather remarkably, since he might have to come up with RM 132 million, quite a nice and tidy amount.
So who is this Gary How, and how credible is this announcement?
Also, if he does exercise his call option, does he have to make a general offer for the remaining shares? The amount of shares is just below 30%, so I would guess that it is not needed.
I have written many times about Masterskill, a company that has performed horribly since being listed:
Year Revenue PAT
2008 203M 72M
2009 273M 97M
2010 316M 102M <=== IPO
2011 250M 38M
2012 149M -28M
2013 59M -167M
Its revenue is down by more than 80%, it booked horrible losses in 2013 (partly one-off losses that are hardly explained), and this all despite raising money during the IPO.
MEGB wishes to announce that the Company had in the evening of 19 March 2014 received a notification from its substantial shareholder Mr. Siva Kumar A/L M Jeyapalan (“Mr. Siva Kumar”), who is also an Executive Director of the Company that he has entered into a Call and Put Option Agreement (“the Agreement”) on 19 March 2014 with Mr. Gary How Soong Khong (“Mr. Gary How”) (NRIC No. 690511-10-6087) of RM1705, 17/F, Hip Kwan Comm Bldg, 38 Pitt Street, Yaumatei, Hong Kong.
This came one day after its share had a decent run up from RM 0.32 to 0.38 (+19%) in much higher volume. Did some people know about this announcement beforehand and act upon it?
The Star writes:
Very little is known about How, a Malaysian who is based in Hong Kong, and why he is offering to buy the shares at a steep premium to the market price.
That seems to be true, searches by Google or LinkedIn don't seem to shed any more light on this person. Rather remarkably, since he might have to come up with RM 132 million, quite a nice and tidy amount.
So who is this Gary How, and how credible is this announcement?
Also, if he does exercise his call option, does he have to make a general offer for the remaining shares? The amount of shares is just below 30%, so I would guess that it is not needed.
I have written many times about Masterskill, a company that has performed horribly since being listed:
Year Revenue PAT
2008 203M 72M
2009 273M 97M
2010 316M 102M <=== IPO
2011 250M 38M
2012 149M -28M
2013 59M -167M
Its revenue is down by more than 80%, it booked horrible losses in 2013 (partly one-off losses that are hardly explained), and this all despite raising money during the IPO.
Sunday, 1 December 2013
Masterskill: shocking loss and insufficient explanation
I wrote in my last posting about Masterskill:
"And 2013 will most likely be much worse than 2012.".
It looks like, unfortunately, that statement will be very true. The company announced its third quarter results:
The revenue compared to the third quarter of the 2012 is down a shocking 56%.
The Profit Before Tax was hit by a RM 88 million "impairment loss for goodwill and PPE".
The reasons for these can be found in the following paragraph:
"13. Review of Performance
For the third quarter ended 30 September 2013, Masterskill Education Group Berhad
(MEGB) recorded a revenue and loss before tax of approximately RM15.6 million and
RM104.4 million respectively. Revenue was 56% lower than last year’s quarter due to
lower student population as a result of graduating students and low intake numbers.
The higher loss before tax was largely due to provision for impairment loss on
goodwill and certain of the Group’s property, plant and equipment totalling RM88.2
million."
I think investors of Masterskill deserve a much more detailed explanation than the above:
The results of the last six years:
Year Revenue PAT
2008 203M 72M
2009 273M 97M
2010 316M 102M <=== IPO
2011 250M 38M
2012 149M -28M
2013 51M -135M (based on 9 months)
The worsening results of the company (both in revenue and profit), exactly after the IPO (when increased profits should be expected, due to the inflow of IPO funds) and the large write-off in the last quarter are very worrisome.
I hope that the authorities will consider starting a thorough investigation, if all the representations and warranties as submitted in the due diligence of the IPO and the financial accounts Pre-IPO were indeed correct.
On 31 Oct, 2013 the company announced that Dato' Sri Dr. Santhara Kumar A/L Ramanaidu [the founder, previously in charge and previously its largest shareholder]:
"has accomplished all the task assigned to him as a former Group Chief Executive Officer and Director and vacated the position for a woman board member to be appointed".
Apparently a rising share price was not one of the tasks assigned to him:
"And 2013 will most likely be much worse than 2012.".
It looks like, unfortunately, that statement will be very true. The company announced its third quarter results:
The revenue compared to the third quarter of the 2012 is down a shocking 56%.
The Profit Before Tax was hit by a RM 88 million "impairment loss for goodwill and PPE".
The reasons for these can be found in the following paragraph:
"13. Review of Performance
For the third quarter ended 30 September 2013, Masterskill Education Group Berhad
(MEGB) recorded a revenue and loss before tax of approximately RM15.6 million and
RM104.4 million respectively. Revenue was 56% lower than last year’s quarter due to
lower student population as a result of graduating students and low intake numbers.
The higher loss before tax was largely due to provision for impairment loss on
goodwill and certain of the Group’s property, plant and equipment totalling RM88.2
million."
I think investors of Masterskill deserve a much more detailed explanation than the above:
- Students graduating: that happens every year.
- The low intake numbers: the company should give some relevant background why numbers have come down so much.
- The (hopefully one-off) provision, there needs to be much more detail, what exactly is written down and why.
The results of the last six years:
Year Revenue PAT
2008 203M 72M
2009 273M 97M
2010 316M 102M <=== IPO
2011 250M 38M
2012 149M -28M
2013 51M -135M (based on 9 months)
The worsening results of the company (both in revenue and profit), exactly after the IPO (when increased profits should be expected, due to the inflow of IPO funds) and the large write-off in the last quarter are very worrisome.
I hope that the authorities will consider starting a thorough investigation, if all the representations and warranties as submitted in the due diligence of the IPO and the financial accounts Pre-IPO were indeed correct.
On 31 Oct, 2013 the company announced that Dato' Sri Dr. Santhara Kumar A/L Ramanaidu [the founder, previously in charge and previously its largest shareholder]:
"has accomplished all the task assigned to him as a former Group Chief Executive Officer and Director and vacated the position for a woman board member to be appointed".
Apparently a rising share price was not one of the tasks assigned to him:
Monday, 19 August 2013
Masterskill in timing the IPO & Goldman Sachs
MasterSkill Education Group Bhd announced its half yearly numbers today, they were even worse than the year before, the revenue has collapsed and the loss has more then doubled:
The results so far have been:
Year Revenue PAT
2008 203M 72M
2009 273M 97M
2010 316M 102M <=== IPO
2011 250M 38M
2012 149M -28M
And 2013 will most likely be much worse than 2012.
The company was listed on Bursa Malaysia in 2010, exactly at the highest point of its revenue and its profit. Timed to perfection, with true masterskill, something that is (unfortunately) not unusual for companies listed in Malaysia.
The reader should also be reminded that companies actually raise money during an IPO, in other words, profits should be clearly higher after an IPO compared to before an IPO.
Not surprisingly given these bad results, shareholders who subscribed to the IPO at RM 3.80 have not had much reason to cheer, the share is down a whopping 87%:
What is surprising though, is that one executive director (most likely Edmund Santhara) continued to receive generous bonuses, despite the bad results and the poor share price performance.
In 2010:
In 2011:
In 2012:
As written before in this blog, a whopping RM 33.5 Million was paid out in professional fees, miscellaneous expenses, placement fee and selling commission for the listing exercise.
Goldman Sachs was one of the book runners for the IPO (together with CIMB).
According to this story in The Star:
Goldman Sachs Global Investment Research, in notes to clients yesterday, said Masterskill’s “fundamentals are intact with progress made on the university campus.”
“In our view, the negativity around the stock is unwarranted, as we see minimal likelihood of cessation of operations at Cheras or of any substantial financial penalty due to ongoing litigations.”
But also:
According to the shareholder list, sellers of Masterskill stock were mainly nominee accounts held under JPMorgan, Morgan Stanley and Goldman Sachs.
In other words: Goldman Sachs itself greatly benefitted from the IPO, it recommended certain clients to buy (or at least not sell), while others (possibly other clients of theirs) were actively selling at the same time.
For Goldman Sachs, that's all in a day's work. For those readers that might be surprised at these kind of ethics, I strongly recommend to read the following blog post from Jeff Matthews:
"Goldman 8, Public Zero…The Teachable Moment of Bare Escentuals"
...the acquisition of Bare Escentuals, a publically-traded cosmetics company (ticker BARE) based right here in San Francisco, by Shiseido, a large Japanese counterpart, for $18.20 a share in cold, hard, US dollars.
Now, as far as deals go, this really shouldn’t be an attention grabber, but stay with us while we get to the “teachable moment.”
The winners in the deal are, of course, existing Bare Escentuals shareholders, who happen to include the company founder, a private equity firm, and the many institutions and individuals who bothered buying the stock on their own free will.
The losers would mainly be short-sellers, who according to our Bloomberg are stuck with 5.3 million such shares they must now buy back (“He who sells what isn’t his’n,” as the old Jessie Livermore phrase goes, “must buy it back or go to prison”).
Another class of losers, however, would be pretty much anybody who took Goldman Sachs’ advice to sell their BARE stock just six weeks ago. Indeed, more than 5 million shares changed hands in the two days following Goldman’s early December move from the always-meaningless “Neutral” rating to the rare “Sell” rating, and the stock traded down $2, wiping out $200 million of the company’s valuation.
Now, there was good reason investors took Goldman Sachs’ advice to sell their BARE stock.
After all, it was Goldman Sachs who led the Bare Escentuals public offering back in November 2006, pricing 16 million shares at $22.00 a share.
And it was Goldman Sachs who successfully led a 12 million share secondary at $34.50 in early 2007, which Goldman’s crack Equity Research Team quickly followed by slapping a “Buy” rating on BARE stock, with a target price of $44.00 a share.
“But wait, there’s more!”
Three months later, it was Goldman Sachs who, once again, plugged the Street with more stock, this time selling 8 million shares of BARE at $36.50.
Finally, the Street had had enough of Bare Escentuals: the stock sold off ten points that summer and never really recovered.
But this did not deter Goldman’s Equity Research Team, for in the manner of equity research teams everywhere, Goldman’s Finest changed their “Buy” rating to a “Neutral” only after all the deals were done.
And Goldman's Finest stuck with that “Neutral”rating even while the stock performed in a decidedly non-Neutral fashion: it cratered all the way down to $2.45 a share in March 2009.
Now, you might think such a ridiculous price would have merited an upgrade: that $2.45 per-share valuation amounted to only 3-times EBITDA, a steel-company multiple for a non-steel-company-like 70% gross margin, 28% operating margin business.
Besides, if you liked it a $36.50, shouldn't you love it at $2.45?
You might think that, but you'd be wrong. In fact, Goldman kept its “Neutral” rating and thus missed a 425% rally in shares of BARE until the stock hit $13.00 a share—where Goldman’s Finest deemed the shares an outright “Sell” just over a month ago.
By our count, that’s three overpriced stock offerings and four bad research calls, for a score of Goldman 7, Public 0.
And it is here now that we get to our Teachable Moment.
You might think this sort of performance would hurt Goldman Sachs—i.e. that there might be some sort of loss of credibility in the matter of Bare Escentuals which would have a negative financial implication down the road for Goldman Sachs, Inc.
And you would already be wrong.
Because the financial advisor to Bare Escentuals in its acquisition by Shiseido is none other than…
Yes, you got it.
Goldman 8, Public 0.
The results so far have been:
Year Revenue PAT
2008 203M 72M
2009 273M 97M
2010 316M 102M <=== IPO
2011 250M 38M
2012 149M -28M
And 2013 will most likely be much worse than 2012.
The company was listed on Bursa Malaysia in 2010, exactly at the highest point of its revenue and its profit. Timed to perfection, with true masterskill, something that is (unfortunately) not unusual for companies listed in Malaysia.
The reader should also be reminded that companies actually raise money during an IPO, in other words, profits should be clearly higher after an IPO compared to before an IPO.
Not surprisingly given these bad results, shareholders who subscribed to the IPO at RM 3.80 have not had much reason to cheer, the share is down a whopping 87%:
What is surprising though, is that one executive director (most likely Edmund Santhara) continued to receive generous bonuses, despite the bad results and the poor share price performance.
In 2010:
In 2011:
In 2012:
As written before in this blog, a whopping RM 33.5 Million was paid out in professional fees, miscellaneous expenses, placement fee and selling commission for the listing exercise.
Goldman Sachs was one of the book runners for the IPO (together with CIMB).
According to this story in The Star:
Goldman Sachs Global Investment Research, in notes to clients yesterday, said Masterskill’s “fundamentals are intact with progress made on the university campus.”
“In our view, the negativity around the stock is unwarranted, as we see minimal likelihood of cessation of operations at Cheras or of any substantial financial penalty due to ongoing litigations.”
But also:
According to the shareholder list, sellers of Masterskill stock were mainly nominee accounts held under JPMorgan, Morgan Stanley and Goldman Sachs.
In other words: Goldman Sachs itself greatly benefitted from the IPO, it recommended certain clients to buy (or at least not sell), while others (possibly other clients of theirs) were actively selling at the same time.
For Goldman Sachs, that's all in a day's work. For those readers that might be surprised at these kind of ethics, I strongly recommend to read the following blog post from Jeff Matthews:
"Goldman 8, Public Zero…The Teachable Moment of Bare Escentuals"
...the acquisition of Bare Escentuals, a publically-traded cosmetics company (ticker BARE) based right here in San Francisco, by Shiseido, a large Japanese counterpart, for $18.20 a share in cold, hard, US dollars.
Now, as far as deals go, this really shouldn’t be an attention grabber, but stay with us while we get to the “teachable moment.”
The winners in the deal are, of course, existing Bare Escentuals shareholders, who happen to include the company founder, a private equity firm, and the many institutions and individuals who bothered buying the stock on their own free will.
The losers would mainly be short-sellers, who according to our Bloomberg are stuck with 5.3 million such shares they must now buy back (“He who sells what isn’t his’n,” as the old Jessie Livermore phrase goes, “must buy it back or go to prison”).
Another class of losers, however, would be pretty much anybody who took Goldman Sachs’ advice to sell their BARE stock just six weeks ago. Indeed, more than 5 million shares changed hands in the two days following Goldman’s early December move from the always-meaningless “Neutral” rating to the rare “Sell” rating, and the stock traded down $2, wiping out $200 million of the company’s valuation.
Now, there was good reason investors took Goldman Sachs’ advice to sell their BARE stock.
After all, it was Goldman Sachs who led the Bare Escentuals public offering back in November 2006, pricing 16 million shares at $22.00 a share.
And it was Goldman Sachs who successfully led a 12 million share secondary at $34.50 in early 2007, which Goldman’s crack Equity Research Team quickly followed by slapping a “Buy” rating on BARE stock, with a target price of $44.00 a share.
“But wait, there’s more!”
Three months later, it was Goldman Sachs who, once again, plugged the Street with more stock, this time selling 8 million shares of BARE at $36.50.
Finally, the Street had had enough of Bare Escentuals: the stock sold off ten points that summer and never really recovered.
But this did not deter Goldman’s Equity Research Team, for in the manner of equity research teams everywhere, Goldman’s Finest changed their “Buy” rating to a “Neutral” only after all the deals were done.
And Goldman's Finest stuck with that “Neutral”rating even while the stock performed in a decidedly non-Neutral fashion: it cratered all the way down to $2.45 a share in March 2009.
Now, you might think such a ridiculous price would have merited an upgrade: that $2.45 per-share valuation amounted to only 3-times EBITDA, a steel-company multiple for a non-steel-company-like 70% gross margin, 28% operating margin business.
Besides, if you liked it a $36.50, shouldn't you love it at $2.45?
You might think that, but you'd be wrong. In fact, Goldman kept its “Neutral” rating and thus missed a 425% rally in shares of BARE until the stock hit $13.00 a share—where Goldman’s Finest deemed the shares an outright “Sell” just over a month ago.
By our count, that’s three overpriced stock offerings and four bad research calls, for a score of Goldman 7, Public 0.
And it is here now that we get to our Teachable Moment.
You might think this sort of performance would hurt Goldman Sachs—i.e. that there might be some sort of loss of credibility in the matter of Bare Escentuals which would have a negative financial implication down the road for Goldman Sachs, Inc.
And you would already be wrong.
Because the financial advisor to Bare Escentuals in its acquisition by Shiseido is none other than…
Yes, you got it.
Goldman 8, Public 0.
Tuesday, 29 May 2012
Silverbird, Masterskill, SEGi
Absolutely shocking announcement of the forensic accounting report by PKF Advisory regarding Silverbird, 12 key areas of financial irregularities:
- incorrect accounting entries
- masquerading of transfers
- fake sales
- invoices not available
- transactions can not be verified
- unrecorded receipts and payments
- documents being destroyed
- computer file deletion
- physical damage to the hard drive
Masterskill posted a quarterly loss of RM 2.9 million, very disappointing.
And finally some good news, Affin Investment Bank, independent adviser for the General Offer for SEGi shares, finds the offer not fair, not reasonable and advises to reject the offer. Yes, finally, the independent advisers are getting better in Malaysia. Although it was long overdue, it is good to see this positive change.
- incorrect accounting entries
- masquerading of transfers
- fake sales
- invoices not available
- transactions can not be verified
- unrecorded receipts and payments
- documents being destroyed
- computer file deletion
- physical damage to the hard drive
Masterskill posted a quarterly loss of RM 2.9 million, very disappointing.
And finally some good news, Affin Investment Bank, independent adviser for the General Offer for SEGi shares, finds the offer not fair, not reasonable and advises to reject the offer. Yes, finally, the independent advisers are getting better in Malaysia. Although it was long overdue, it is good to see this positive change.
Tuesday, 21 February 2012
Masterskill hit by oversupply of new nurses
Masterskill listed on Bursa Malaysia almost two years ago, it has not been a happy ride for those that picked up the shares at the IPO:
One remarkable fact from the IPO brochure was not so much the RM 5.5 million in listing expenses, but the fees paid by the selling shareholders, which amounted to a staggering RM 33.5 million.
The renumeration of the CEO over 2010 was RM 8.5 million, which is (in my opinion) clearly too high for a company of this size, with such a short trackrecord as a listed company.
Below article is from the Business Times (Singapore), February 21, 2012:
By PAULINE NG IN KUALA LUMPUR
RIDING on a high at its initial public offering (IPO) in 2010 when it went on the market with a 15-20 premium over its peers, Masterskill Education Group - the country's biggest nursing school - has found the ground shifting under its feet owing to an oversupply of new nurses.
Equity analysts, such as Hwang-DBS Vickers, who cover the Bursa Malaysia listed company have trimmed their earnings forecast on expectations of weaker enrolment, following a recent news report that slightly more than half of private nursing diploma graduates in 2010 could not land a job four months after graduating.
This is also in big part because of a mismatch in needs, Health Minister Liow Tiong Lai said recently, since most private nursing colleges only offer general training even though the private sector requires specialised nurses.
However, the writing was arguably already on the wall around the time of Masterskill's listing. Officiating at its prospectus launch, Higher Education Minister Mohamed Khaled Nordin announced a moratorium on new private nursing institutions to prevent an oversupply of nurses given the mushrooming of such colleges.
The proliferation of such colleges had ostensibly been allowed in an effort to improve the nurse to population ratio to international standards of 1:200 from 1:490 currently.
Of 106 institutions, some 60-odd are reportedly private providers, 11 are public institutions, while the health ministry runs the rest.
Some 37,000 students are said to be enrolled in nursing diploma courses with the private providers. About 12,000 students graduate annually, but only 1,500 are absorbed by the private sector.
Masterskill specialises in nursing and allied sciences programmes, and has an estimated student population of 14,000, with about a third currently enrolled in its nursing courses. Perceived as a leader in nurse training with an estimated 16 per cent market share of student enrolment, the training institution contends that its students have far greater success with employment.
But the negative publicity has hurt, especially because it is less diversified compared with its peers Help International and SEGI International.
Demand for its courses last year had already been eroded by other factors including a higher minimum entry requirement for nursing programmes, as well as the reduction in the maximum amount loaned by a government fund for students enrolling in such courses.
Hwang has trimmed its projected net profit for the fiscal year ended Dec 11 by about 7 per cent to RM42 million (S$17.4 million), and forecast earnings for FY12 and 13 at RM28.5 million and RM32.5 million respectively. For FY10, Masterskill had posted a profit of RM102 million.
Its share price has been on the decline since its listing in May 2010 at RM3.80 per share, and is currently trading at about RM1.16.
Controlled by businessman Edmund Santhara, Masterskill now plans to diversify into offering other courses including business, law and hospitality.
One remarkable fact from the IPO brochure was not so much the RM 5.5 million in listing expenses, but the fees paid by the selling shareholders, which amounted to a staggering RM 33.5 million.
The renumeration of the CEO over 2010 was RM 8.5 million, which is (in my opinion) clearly too high for a company of this size, with such a short trackrecord as a listed company.
Below article is from the Business Times (Singapore), February 21, 2012:
"Analysts cut forecast on expectations of weaker enrolment"
Equity analysts, such as Hwang-DBS Vickers, who cover the Bursa Malaysia listed company have trimmed their earnings forecast on expectations of weaker enrolment, following a recent news report that slightly more than half of private nursing diploma graduates in 2010 could not land a job four months after graduating.
This is also in big part because of a mismatch in needs, Health Minister Liow Tiong Lai said recently, since most private nursing colleges only offer general training even though the private sector requires specialised nurses.
However, the writing was arguably already on the wall around the time of Masterskill's listing. Officiating at its prospectus launch, Higher Education Minister Mohamed Khaled Nordin announced a moratorium on new private nursing institutions to prevent an oversupply of nurses given the mushrooming of such colleges.
The proliferation of such colleges had ostensibly been allowed in an effort to improve the nurse to population ratio to international standards of 1:200 from 1:490 currently.
Of 106 institutions, some 60-odd are reportedly private providers, 11 are public institutions, while the health ministry runs the rest.
Some 37,000 students are said to be enrolled in nursing diploma courses with the private providers. About 12,000 students graduate annually, but only 1,500 are absorbed by the private sector.
Masterskill specialises in nursing and allied sciences programmes, and has an estimated student population of 14,000, with about a third currently enrolled in its nursing courses. Perceived as a leader in nurse training with an estimated 16 per cent market share of student enrolment, the training institution contends that its students have far greater success with employment.
But the negative publicity has hurt, especially because it is less diversified compared with its peers Help International and SEGI International.
Demand for its courses last year had already been eroded by other factors including a higher minimum entry requirement for nursing programmes, as well as the reduction in the maximum amount loaned by a government fund for students enrolling in such courses.
Hwang has trimmed its projected net profit for the fiscal year ended Dec 11 by about 7 per cent to RM42 million (S$17.4 million), and forecast earnings for FY12 and 13 at RM28.5 million and RM32.5 million respectively. For FY10, Masterskill had posted a profit of RM102 million.
Its share price has been on the decline since its listing in May 2010 at RM3.80 per share, and is currently trading at about RM1.16.
Controlled by businessman Edmund Santhara, Masterskill now plans to diversify into offering other courses including business, law and hospitality.
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