Untuk membantu “Retail Investor” yang mungkin terpedaya oleh cybertroopers yang diupah Ageson, saya telah menjemput rakan saya yang sedang mengambil kursus perakaunan untuk memberi komen mengenai Quarterly Results Ageson.
So here is the sharing of my friend’s analysis of Ageson Berhad financials, news, and company announcements since 1 July 2019, this analysis is also used for his school project. The analysis has been mainly focusing on the construction business and have not covered the new sand business to large extent as this will be updated again in future. Selection criteria of Company to analyse included the following but not limited to:
1. Company receiving multiple queries from Bursa
2. Penny stocks which share price increased significantly since Covid-19
3. Company in construction business
Feel free to comment. Need guidance to improvise the analysis.
Analysis of Income Statement:
1. Revenue, Cost of Sales and Gross Profit
- Q2 Revenue increased by 105%, but Cost of Sales reduced by 11%? What kind of construction business can possibly bill for higher Revenue with reduction in Cost? Please explain what Construction Revenue Recognition Method is use.
- Cumulated Gross Profit Margin was handsome at 57% for Q4. Such results during this Covid-19 period surpasses all leading construction listed company in Malaysia with average GP of 20%, and even surpass all leading development listed company in Malaysia with average GP od 30%. Really wonder which project continued operation during MCO can generate 36m revenue for Ageson.
- Some people say they sell sand that’s why so high profit, but based on Q4 Report, Item 9 Segmental Information, seems like no sand transaction was done yet. The reported Segment was only for Construction and Property Development.
2. Expenses
- Operating Expenses. Sudden jump of 14.3m (20.5m – 6.2m) in Q3. Probably Ageson expanded incredibly during Covid-19 and MCO lockdown period in March 2020, just that they deem insignificant and do not need to make announcement on this since everyone busy coping with Covid-19? Miracally, Q4 operating expenses suddenly dropped by 7m as “Operating Income”. Impressive, as every company were busy cutting down operating expenses while Ageson manage to actually generate operating income.
- Finance Cost. The finance cost come and go as if they own the bank. Notwithstanding that Q4 has outstanding bank borrowings of 21.6m, but zero finance cost? Did we miss any interest-free financing package available in the market?
- Share of Associated Company Results. Only Q4 got associated Company and other quarters no Associated Company? No where in the announcements have mentioned about the associated Company.
- Tax. So much profit but no Provision for Tax? A closer look at both Income Statement and Balance Sheet shows that there were no single cent of tax expense or tax provision made.
Does it mean that those “Revenue” and “Profits” are non-operating in nature, i.e. purely paper profits, and hence not taxable?
Could it be due to capital gain? Unsure as no disclosure of material capital gain made.
Or did we miss any new special tax exemption scheme by the Malaysia government?
Analysis of Balance Sheet (Assets):
To simplify things, lets focus on the changes between June 2020 and June 2019 only, instead of by Quarter:
1. Many movements in the various accounts under Non Current Asset, but ultimately, Non Current Asset increased by 41m, which coincidentally, Goodwill has also increased by 41m. Have we missed any major acquisition by Ageson which resulted in Goodwill recognition? Is Ageson a Billion dollar company whereby such increase of 41M goodwill does not warrant a disclosure of the source?
2. Goodwill increase of RM 41m was almost equivalent to the nett decrease in Net Current Asset of 40.5m.
3. Increase in total Equity of 17.6m was also almost equivalent to the decrease of Non-Current Liabilities of 17m.
Summary:
4. Where did the Net Profit of RM 37m went to? For operating profit, Net-Current Asset should have increased by 37m. Profit of 37m and recognition of Goodwill for 41m? Hmmm….Debit Goodwill, Credit Revenue? Magic…
5. Furthermore, where did the cash from Preference Share of 48m went to? Increase in Equity should also follow by increase in Asset if all else remain constant.
6. What is more surprising is, reserves had actually decreased by 103m. So lets look at the Q3 Statement of Changes in Equity Below:
7. Is Prinsiptek (M) Sdn Bhd Still A Subsidiary of Ageson?
In Q4 Capital Reserve has reduced substantially by 124,949 under item “Changes of Stakes in a Subsidiary Company”!! There was no announcement of any major disposal or changes in subsidiary from 1 April to 30 June 2020 (or up till 31 August 2020), so how come suddenly there is this huge change?
A careful read of the Q4 result announcement, Item 12 Changes in Composition of the Group, Ageson Berhad reported the following:
There were no material changes in the composition of the Group for the current financial quarter under review.
Almost forgotten to mention, Ageson has on 27 December 2019 announced that that Prinsiptek (M) Sdn Bhd (“PMSB”) was a former subsidiary of Ageson. The also Board highlighted that as at 1 July 2019, Prinsiptek (M) Sdn Bhd (“PST”) had ceased to be a principal subsidiary of the Company.
If this is the case, what could it be? Possible misreporting? Only Bursa can investigate and provide us an clearer picture.
8. If Prinsiptek (M) Sdn Bhd is not Subsidiary of Ageson, who delivers the Construction Revenue and Results?
Based on 2019 Annual Report of Prinsiptek Corporation / Ageson Berhad, Prinsiptek (M) Sdn Bhd is a wholly owned subsidiary, and it hold all of the group Construction business.
Prinsiptek Corporation mentioned in the Annual Report page 5 the following:
The Group started with one of its largest and longest established subsidiaries, namely Prinsiptek (M) Sdn Bhd (“PST”), which was incorporated on 18 October 1990 to undertake building and construction activities. PST has grown over the years and is now a Class “A” and Grade G7 registered contractor with the Sijil Perolehan Kerja Kerajaan and the Construction Industry Development Board respectively, allowing PST to bid and undertake construction projects of unlimited value. Furthermore, PST has expanded its business into other related fields such as Turnkey Contractor, Property Developer and Trading House for Construction Raw Materials.
But now since Ageson Berhad already dishonestly (no better words) disown Prinsiptek (M) Sdn Bhd by announcing in Q2 results that Prinsiptek (M) Sdn Bhd became a “non-subsidiary” due to dilution of shares (but yet latest SSM results still shows Ageson holds 92% shares in Prinsiptek (M) Sdn Bhd), so which company is Ageson Berhad Construction Arm?
If Prinsiptek (M) Sdn Bhd is no longer a subsidiary, which entity significantly contributed to the Construction segment revenue and results? Perhaps the other construction related subsidiary listed in the annual report or the 2 new subsidiaries of Ageson Berhad as follows?
1. Ageson Enterprise Sdn Bhd (formerly knowsn as Esa Pile Sdn Bhd)
2. Ageson BIM Sdn Bhd
3. Ageson System Sdn Bhd
However, a quick check on the Malaysia CIDB website today shows that the above companies were not even a registered contractor with CIDB. They don’t even have a G1 licence.
Further Thoughts:
1. As Ageson Berhad had always make announcement on Memorandum of Understanding, Letter of Intent etc whereby all these “ARE NOT COMMITTED PURCHASES”, they will definitely make announcement on new construction projects, be it the first day they met XXX party for the first time with no firm plan and commitment for new projects too right? But so far there was no single announcement on new construction projects, not even a plan. Mystery of the day, what Construction Project is Ageson Berhad working on, and under which entity, contributing to the exceptionally good construction segment revenue and results?
2. Grant Thornton Malaysia (AF 0737) (“GT”) resigned as Auditors of the Company with immediate effect on 6 August 2020, 22 days prior to the deadline for the Company Q4 announcement. Could this be a potential red flag? GT was first appointed as Auditor during the Annual General Meeting held on 25 November 2019. GT has not completed its 1st year audit of the Company.
Thank you and have a nice day…
- To the investor of Ageson Berhad….May the odds be ever in your favor…
