I really lost my confidence in the local business reporting scene after reading an article from Business Times Online. It has to do with Hap Seng Consolidated and it's company performance for the year ending 31st January 2008. Hap Seng Consolidated recently listed their plantation unit (Hap Seng Plantations) and successfully raised RM601.6 million from it.
The article in question I've posted below. Take note of the bold sentences.
Gain from the listing of its plantation unit drives the group's net profit for the quarter to RM666.5 million
HAP SENG Consolidated Bhd, a diversified group, said its fourth quarter net profit surged 16-fold, thanks to a gain from the listing of its plantation unit. Revenue jumped 49 per cent to RM634.7 million for the quarter to January 31 2008, driven by its plantation, credit financing, quarry and building materials and fertilizer trading divisions.
Its net profit for the quarter was RM666.5 million.
"The plantation division recorded a significant improvement in performance attributable to higher crude palm oil (CPO) and palm kernel (PK) sales volume as well as improved CPO average price and PK average price," it told Bursa Malaysia yesterday.
The article in question I've posted below. Take note of the bold sentences.
Gain from the listing of its plantation unit drives the group's net profit for the quarter to RM666.5 million
HAP SENG Consolidated Bhd, a diversified group, said its fourth quarter net profit surged 16-fold, thanks to a gain from the listing of its plantation unit. Revenue jumped 49 per cent to RM634.7 million for the quarter to January 31 2008, driven by its plantation, credit financing, quarry and building materials and fertilizer trading divisions.
Its net profit for the quarter was RM666.5 million.
"The plantation division recorded a significant improvement in performance attributable to higher crude palm oil (CPO) and palm kernel (PK) sales volume as well as improved CPO average price and PK average price," it told Bursa Malaysia yesterday.
It said the fertilizer trading division recorded a sterling performance with higher sales volume and improved margins due to higher average selling prices achieved from both the Malaysian and Indonesian markets. For the full year, the group's net profit jumped eight-fold to RM809.9 million while revenue was up 29 per cent to RM2.24 billion. The Group anticipates competitive trading conditions to continue. The board of directors are also proposing a total dividend payout of 56.5 sen for 2008.
In the last paragraph it states their full year profit was RM809.9 mil, again forgetting to state RM601 mil was from the listing. And finally it states that and I quote " The board of directors are also proposing a total dividend payout of 56.5 sen for 2008." Huh??
From the quarterly report, 49.5 sens of that dividend has already been paid and only 7 sens are to be proposed for the last quarter. So how the heck did they come out with the last sentence when 88% of the dividends are already paid?? Misleading? It sure is.
Now for another article from The Star Online Business Section;
It said revenue of RM634.7mil for the fourth quarter was 49% higher than a year ago due to higher revenue recorded in the company's plantation, credit financing, quarry and building materials and, fertiliser trading divisions.
The company said in a statement the plantation division recorded a significant improvement in performance attributable to higher crude palm oil (CPO) and palm kernel (PK) sales volume.
It added that CPO average price had also improved to an average RM2,289 per tonne compared with RM1,549 in 2006/2007 while PK average price had improved to RM1,739 per tonne against RM917 before.
For the financial year ended Jan 31 (FY08), Hap Seng saw its net profit balloon by 602% to RM846.9mil and revenue expand 515% to RM2.24bil compared with FY07.
The company said the results included a gain of RM601.6mil resulting from the listing of its plantation business, Hap Seng Plantations Holdings Bhd last November.
It said in a note to its financial statement that basic earnings per share (EPS) for FY08 at 139.89 sen was 676% higher than the preceding year's 18.03 sen while excluding the other non-operating items, basic EPS for FY08 was 33.87 sen or 88% higher than in FY07.
In a separate statement, Hap Seng Plantations said it recorded a net profit of RM54mil on revenue of RM135.64mil for the quarter ended Jan 31while for FY08, net profit came in at RM165.56mil which was 8.7% higher than the post acquisition profit forecast.
The company said EPS for the fourth quarter was 13.65 sen and 41.86 sen for FY08.
Compared to the article from the Business Times Online, it looks actually better but still guilty of one thing they both did which was to hype up the counter with big numbers and exaggerating the reasons for such a performance.
I mean what is the point of stating "1,375%" for other than to make it seem like a big deal. Since almost 90% of that "1375%" is from the listing. Again it hype the big numbers with "net profit balloon by 602% to RM846.9mil and revenue expand 515% to RM2.24bil". Uhmmm maybe someone should tell them to not mislead people into believing the company actually made such a big profit from operations. I wonder why it didn't state anything about dividends, maybe RM0.07 a share is too small after stating all those huge figures.
After taking a closer look at the financial report, Hap Seng did pretty well for the quarter reaping rewards of higher prices of CPO. Without all the fanfare of "1375%", they almost doubled their operating profits. Which is actually very good.
Probably the most accurate report about Hap Seng's quarterly performance was from The Edge Daily Online which attempted to separate the net profit gains from the EPS and operating profit calculations. Also included were separate division performances and a quote from Hap Seng managing director "Even excluding the gain from the listing of Hap Seng Plantations and other non-operating items, the group recorded a notable 93% rise in profit after tax."
Reading The Edge Daily article and comparing it with the other two articles, you can clearly see who has actually interviewed the company itself compared to just relying on extracting and exaggerating figures from the quarterly report. Definitely a more accurate portrayal of the financial performance of Hap Seng. Now I know who to actually rely on for accurate financial information and detailed explanation.
Discussion on the Lowyat.Net Stock Exchange Forums convinced me that Hap Seng is not to be blame for all these, but rather the people reading it tend to be misled themselves by erroneous reporting.
The company said in a statement the plantation division recorded a significant improvement in performance attributable to higher crude palm oil (CPO) and palm kernel (PK) sales volume.
It added that CPO average price had also improved to an average RM2,289 per tonne compared with RM1,549 in 2006/2007 while PK average price had improved to RM1,739 per tonne against RM917 before.
For the financial year ended Jan 31 (FY08), Hap Seng saw its net profit balloon by 602% to RM846.9mil and revenue expand 515% to RM2.24bil compared with FY07.
The company said the results included a gain of RM601.6mil resulting from the listing of its plantation business, Hap Seng Plantations Holdings Bhd last November.
It said in a note to its financial statement that basic earnings per share (EPS) for FY08 at 139.89 sen was 676% higher than the preceding year's 18.03 sen while excluding the other non-operating items, basic EPS for FY08 was 33.87 sen or 88% higher than in FY07.
In a separate statement, Hap Seng Plantations said it recorded a net profit of RM54mil on revenue of RM135.64mil for the quarter ended Jan 31while for FY08, net profit came in at RM165.56mil which was 8.7% higher than the post acquisition profit forecast.
The company said EPS for the fourth quarter was 13.65 sen and 41.86 sen for FY08.
Compared to the article from the Business Times Online, it looks actually better but still guilty of one thing they both did which was to hype up the counter with big numbers and exaggerating the reasons for such a performance.
I mean what is the point of stating "1,375%" for other than to make it seem like a big deal. Since almost 90% of that "1375%" is from the listing. Again it hype the big numbers with "net profit balloon by 602% to RM846.9mil and revenue expand 515% to RM2.24bil". Uhmmm maybe someone should tell them to not mislead people into believing the company actually made such a big profit from operations. I wonder why it didn't state anything about dividends, maybe RM0.07 a share is too small after stating all those huge figures.
After taking a closer look at the financial report, Hap Seng did pretty well for the quarter reaping rewards of higher prices of CPO. Without all the fanfare of "1375%", they almost doubled their operating profits. Which is actually very good.
Probably the most accurate report about Hap Seng's quarterly performance was from The Edge Daily Online which attempted to separate the net profit gains from the EPS and operating profit calculations. Also included were separate division performances and a quote from Hap Seng managing director "Even excluding the gain from the listing of Hap Seng Plantations and other non-operating items, the group recorded a notable 93% rise in profit after tax."
Reading The Edge Daily article and comparing it with the other two articles, you can clearly see who has actually interviewed the company itself compared to just relying on extracting and exaggerating figures from the quarterly report. Definitely a more accurate portrayal of the financial performance of Hap Seng. Now I know who to actually rely on for accurate financial information and detailed explanation.
Discussion on the Lowyat.Net Stock Exchange Forums convinced me that Hap Seng is not to be blame for all these, but rather the people reading it tend to be misled themselves by erroneous reporting.
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